FOR: I-DESIGN GROUP PLC
AIM SYMBOL: IDG
June 23, 2008
I-DESIGN GROUP PLC ("i-design" or "the Group" or "the Company") Announces Interim Results for the Six Months to
31 March 2008
LONDON, UNITED KINGDOM--(Marketwire - June 23, 2008) - I-DESIGN GROUP PLC (AIM:IDG) ("i-design" or "the Group"
or "the Company") -
i-design provides a market leading ATM advertising solution (called ATM:ad) which enables ATM network owners to
run both third party advertising and their own internal marketing campaigns on their ATM screens and receipts.
Highlights
Financial Highlights
- Revenue increased by 84% to Pounds Sterling 947,000 (2007: Pounds Sterling 515,000)
- Operating loss of Pounds Sterling 347,000 (2007: Pounds Sterling 176,000) - reflects planned growth in cost
base
- Loss before taxation of Pounds Sterling 291,000 (2007: Pounds Sterling 172,000)
- Basic loss per share of 0.02p (2007: 0.02p)
- Total assets at 31 March 2008 of Pounds Sterling 3.02m (2007: Pounds Sterling 0.88m) with cash of Pounds
Sterling 2.4m (2007: Pounds Sterling 0.5m)
Operational Highlights
- Landmark contract signed with The Royal Bank of Scotland plc:
-- largest ATM network owner in UK
-- first stage of roll-out to commence with ATMs at Tesco UK stores
-- exclusive rights to sell third party advertising
- Existing customer, Nationwide Building Society, increased ATMs available for third party advertising
- Successful deployment of ATM:ad for Alliance & Leicester plc
-- agreement to sell branch-based ATMs to third party advertisers
-- multi-network advertising campaign post period end
- Total number of bank-owned ATMs now licensed to use ATM:ad increased to 11,600 (ie 34% of ATMs owned by
financial institutions):
-- implementation currently in process
- Advertiser base continues to grow:
-- high profile campaigns for Government and blue chip brands
-- media sales revenue 76% ahead of last year on same ATM estate
- First overseas win secured with major bank in Greece post period end
Board very positive about long term prospects for business although impact of rescheduling the deployment of
ATM:ad for one customer will affect results in short term
James Faulds, Chairman, commented,
"The business continues to make significant progress. A highpoint in the first half was in January 2008 when we
secured a landmark contract with The Royal Bank of Scotland plc. The agreement represents i-design's largest
win to date and followed a major agreement signed in September 2007 with Alliance & Leicester plc.
These major wins mean that, since the launch of ATM:ad in 2004, approximately 34% of UK ATMs operated by
financial institutions in the UK today are either utilising ATM:ad or are in the process of implementing our
advertising solution. The full benefit of these agreements will come through from third party advertising once
ATM:ad has been activated across the ATM estates.
While in the short term, results will be affected by a rescheduling of the implementation of ATM:ad for one
customer, we remain very positive about i-design's prospects. The potential to build a substantial business
remains and since our overall market offering, especially our technology, is market leading, we feel that i-
design is well-positioned to expand both within the UK and abroad."
/T/
Enquiries:
i-design group plc Ana Stewart, Chief Executive T: 020 7448 1000
Ian Sunter, Finance Director Thereafter: 01382 541 041
Biddicks Katie Tzouliadis T: 020 7448 1000
Sophie Lane
Arbuthnot Tom Griffiths T: 020 7012 2000
Securities Alasdair Younie
/T/
CHAIRMAN'S STATEMENT
Introduction
The business continues to make significant progress. A highpoint in the first half was in January 2008 when we
secured a landmark contract with The Royal Bank of Scotland plc ("RBS"). RBS, which owns the largest number of
ATMs in the UK, has bought a licence to use our advertising solution, ATM:ad, across its ATM estate. The
contract is expected to roll out in stages, commencing with RBS ATMs at Tesco stores. The agreement represents
i-design's largest win to date and followed a major agreement signed in September 2007 with Alliance &
Leicester plc.
These major wins mean that since ATM:ad's launch in 2004, approximately 11,600 ATMs in the UK today are either
utilising ATM:ad or are in the process of implementing our advertising solution. This represents some 34% of UK
ATMs operated by financial institutions. The full benefits of these software licence wins comes through from
third party advertising sales revenues once ATM:ad has been fully activated across an ATM estate.
Results
Revenue for the six months to 31 March 2008 rose by 84% to Pounds Sterling 947,000 (2007: Pounds Sterling
515,000) and gross profit increased by almost sixfold to Pounds Sterling 305,000 (2007: Pounds Sterling
55,000). Revenues across each of our income streams, software, media and media production sales, were ahead of
the corresponding period last year.
In line with our previously announced growth plans, our cost base increased significantly to Pounds Sterling
697,000 from Pounds Sterling 257,000. This largely reflected our recruitment programme to strengthen our sales
teams, continued investment in ATM:ad and our move to larger offices, and resulted in an operating loss of
Pounds Sterling 347,000 (2007: Pounds Sterling 176,000). Higher bank balances throughout the period led to
increased finance income of Pounds Sterling 61,000 (2007: Pounds Sterling 12,000). The loss before taxation was
Pounds Sterling 291,000 (2007: Pounds Sterling 172,000). The loss after taxation was Pounds Sterling 291,000
(2007: Pounds Sterling 142,000) and the basic loss per share was 0.02p (2007: 0.02p).
Higher levels of activity resulted in higher trade receivables and trade payables. Cash and equivalents as at
31 March 2008 were a healthy Pounds Sterling 2,385,000 (2007: Pounds Sterling 485,000). Total assets at 31
March 2008 stood at Pounds Sterling 3,015,000 (2007: Pounds Sterling 882,000).
There was a cash outflow from operating activities of Pounds Sterling 263,000 (2007: Pounds Sterling 23,000)
which, with a net outflow from investing and financing activities of Pounds Sterling 5,000 (2007: Pounds
Sterling 24,000), resulted in a decrease in cash and cash equivalents of Pounds Sterling 268,000 (2007: Pounds
Sterling 47,000). Outstanding borrowings were Pounds Sterling 79,000 (2007: Pounds Sterling 135,000).
Business Progress
The period saw us announce the landmark contract with RBS, which owns the largest number of ATMs in the UK.
Under the terms of the contract, which was signed in January 2008, RBS has acquired software licences to use
ATM:ad for its ATM estate and agreed exclusive terms with us to sell third party advertising on 2,500 RBS ATMs
located in Tesco UK stores. The agreement represents our largest win to date and will contribute to revenues in
the second half of the year.
The roll-out of our advertising solution had been expected to be completed by the end of the first half of the
financial year but has now been rescheduled for completion in the second half of the year. While this will not
impact on income generated from our software licence agreement, it will affect anticipated income from third
party advertising in the short term. This, taken together with the mutual agreement with HSBC plc not to
proceed with the implementation of ATM:ad, means that results for the full year will fall short of market
expectations. Importantly, our relationship with HSBC remains good and we continue to work with them on ATM
screen branding.
In September 2007, we announced a five year contract with Alliance & Leicester plc for the provision of ATM:ad.
As previously announced, the contract includes the exclusive rights for i-design to sell third party
advertising space on both Alliance & Leicester's branch-based and non-branch based ATMs. The contract has
contributed software and maintenance revenue in the first half of the year and the benefit of media sales
revenue will be felt in the second half of the financial year.
We believe that there is significant scope to develop sales outside the UK. It was therefore pleasing to
announce after the period end, in May 2008, that we had secured our first overseas win, with a major banking
ATM network owner in Greece. The bank will be deploying our solution initially to run its own internal
marketing campaigns across its ATM network, but we are optimistic that this will lead to third party
advertising in due course, mirroring our experience in the UK. The win was secured after a rigorous tender
process and is also noteworthy in being our first sale secured via a channel partner, Mellon Financial Products
SA.
Once the implementation of our solution, ATM:ad, is fully deployed across the ATMs we have newly secured, the
potential for us to generate third party advertising revenue will increase significantly, with available third
party advertising sites increasing fivefold, from over 1,000 ATMs to over 5,000 ATMs. In the meantime, it is
pleasing to note that revenue from media sales in the first half of the year increased by 76% over the same
period last year on the same size of ATM estate. In October 2007, we ran an advertising campaign for mobile
phone top ups on certain Nationwide Building Society branch-based ATMs. As a result of a significant uplift in
the volume of top ups at ATMs where the advertisements were running, Nationwide has now made selected branch-
based ATMs available for third party advertising.
Our base of advertising clients continues to grow. We saw a 50% increase on last year in the number of brands
utilising ATM:ad space, with 27 brands choosing to advertise on ATMs during the period compared to 18 brands in
the same period last year. Of the advertising campaigns we secured in the first half, three were large scale
government campaigns, including 'Drink Drive' which ran in December 2007 and a Tax Returns campaign, which ran
in January. Additionally, we ran our first multi-network advertising campaign this month, for Orange, the
mobile communications company. This is extremely significant because it validates our unique multi-network
capability as well as our platform independent technology.
Business Model
i-design has developed an ATM advertising solution, called ATM:ad, which enables retail banks to generate a new
source of revenue, from one-to-one advertising on ATM screens and receipts.
ATM:ad provides a comprehensive solution, handling all aspects of campaign management from booking, scheduling,
distribution, playback and reporting. Importantly, any advertising is displayed during the 'dead space' in an
ATM transaction, while customers are waiting for their cash, card or receipt, and therefore does not extend
customers' time at the cash machine. ATM:ad is also unique in being platform independent, running on any type
of Windows-based ATM environment.
In selling ATM:ad, we are able to generate three main sources of revenue, as set out below. However, software
sales and media sales represent our key revenue generators.
- Software sales
These are generated through the sale of software licences to ATM network owners for the use of ATM:ad. Income
is also generated from associated maintenance fees and integration services.
- Media sales
Advertising commission is generated from selling advertising space on behalf of ATM network owners. The
revenues generated from advertising commission are split between the network owner and i-design.
- Media Production sales
These derive from fees generated from ATM screen design services to banks and for the creation of
advertisements or the conversion of existing advertisements into the appropriate ATM format for advertisers.
Currently, i-design's offering is unrivalled in being the only dedicated ATM advertising solution in the UK
which combines both the software and media sales capability necessary to enable network owners to generate
revenue from third party advertising.
Outlook
We are greatly encouraged by our major contract wins with RBS and Alliance & Leicester. The wins demonstrate
the value of our advertising solution both as a means for retail banks to communicate with customers and to
generate new revenues from their ATMs through third party advertising.
While in the short term certain delays in the roll-out of our advertising solution are disappointing, we remain
very positive about i-design's prospects. The potential to build a substantial business remains. Since our
overall market offering, especially our technology, is market leading, we feel that i-design is well-positioned
to expand both within the UK and abroad.
We will continue to target ATM networks with large ATM estates and to develop both direct and channel sales
into overseas territories. We remain confident of future growth in all areas.
Jim Faulds, Chairman
/T/
I-DESIGN GROUP PLC
Consolidated income statement for the six months ended 31 March 2008
---------------------------------------------------------------------------
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Mar 31 Mar 30 Sept
2008 2007 2007
Pounds Pounds Pounds
Note Sterling 000 Sterling 000 Sterling 000
Revenue 947 515 1,029
Cost of sales (642) (460) (904)
----- ----- -----
Gross profit 305 55 125
----- ----- -----
Other income 45 26 33
Administrative expenses (697) (257) (814)
----- ----- -----
Operating loss (347) (176) (656)
Finance income 61 12 47
Finance expenses (5) (8) (12)
----- ----- -----
Loss before taxation (291) (172) (621)
Taxation 5 - 30 30
----- ----- -----
Loss for the financial
period attributable to
equity holders of the
company (291) (142) (591)
----- ----- -----
----- ----- -----
(Loss)/earnings per share
Basic and diluted loss
per share (pence) 4 (0.02) (0.02) (0.06)
I-DESIGN GROUP PLC
Consolidated balance sheet as at 31 March 2008
----------------------------------------------------------------------------
Unaudited Unaudited Audited
31 Mar 31 Mar 30 Sept
2008 2007 2007
Note Pounds Pounds Pounds
Sterling 000 Sterling 000 Sterling 000
Assets
Non current assets
Property, plant and equipment 75 50 49
---- ---- ----
75 50 49
------- ------- -------
Current assets
Trade and other receivables 525 272 346
Corporation tax 30 75 30
Cash and cash equivalents 2,385 485 2,653
------- ------- -------
Total current assets 2,940 832 3,029
------- ------- -------
Total assets 3,015 882 3,078
------- ------- -------
------- ------- -------
Liabilities
Current liabilities
Trade and other payables 657 562 439
Current borrowings 50 56 53
------- ------- -------
Total current liabilities 707 618 492
------- ------- -------
Non current liabilities
Non current borrowings 29 79 54
------- ------- -------
Total liabilities 736 697 546
------- ------- -------
Equity
Share capital 7 533 17 533
Share premium account 3,433 1,177 3,433
Retained earnings 6 (1,687) (1,009) (1,434)
------- ------- -------
Total equity 2,279 185 2,532
------- ------- -------
Total equity and liabilities 6 3,015 882 3,078
------- ------- -------
------- ------- -------
I-DESIGN GROUP PLC
Consolidated cash flow statement for the six months ended 31 March 2008
-------------------------------------------------------------------------
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Mar 31 Mar 30 Sept
2008 2007 2007
Pounds Pounds Pounds
Sterling 000 Sterling 000 Sterling 000
Cash flows from operating
activities
Operating loss (347) (176) (656)
Depreciation 6 3 6
(Increase)/decrease in trade
and other receivables (192) 39 (34)
Increase in trade and other
payables 232 129 5
Taxation receipts - - 45
Release of SEF grant - (21) (21)
Share based payment 38 3 27
------ ------ ------
Net cash outflow from operating
activities (263) (23) (628)
------ ------ ------
Cash flows from investing
activities
Purchases of property, plant
and equipment (33) - (1)
------ ------ ------
Net cash outflow from investing
activities (33) - (1)
------ ------ ------
Cash flows from financing
activities
Net proceeds from issue of
share capital - - 2,773
Repayment of borrowings (25) (25) (50)
Capital element of finance
leases (3) (3) (6)
Interest received 61 12 47
Interest paid (5) (8) (13)
------ ------ ------
Net cash inflow/(outflow) from
financing activities 28 (24) 2,751
------ ------ ------
Net (decrease)/increase in cash
and cash equivalents (268) (47) 2,121
Cash and cash equivalents at
beginning of period 2,653 532 532
------ ------ ------
Cash and cash equivalents at
end of the period 2,385 485 2,653
------ ------ ------
------ ------ ------
/T/
I-DESIGN GROUP PLC
Notes to the financial information
----------------------------------------------------------------
1 This interim statement for the six month period to 31 March 2008 is unaudited and was approved by the
directors on 20 June 2008. The information set out does not constitute statutory accounts within the meaning
of Section 240 of the Companies Act 1985.
2 Report and financial statements
The statutory accounts for the financial year ended 30 September 2007 which were prepared in accordance with
International Financial reporting Standards as adopted by the EU (IFRSs) and with those parts of the Companies
Act 1985 applicable to companies reporting under IFRS have been delivered to the Registrar of Companies. The
report of the auditors was unqualified and did not contain a statement under section 237 (2) or (3) of the
Companies Act 1985. Copies of the financial statements for 2007 are available from the Company's registered
office at 16-18 Boat Road, Newport-on-Tay, Fife DD6 8EZ and from the Company's website at www.i-design.co.uk.
3 Accounting policies
Basis of preparation
The financial information has been prepared in accordance with the group's principal accounting policies set
out in the 2007 financial statements. It has been prepared under the historical cost convention.
The preparation of financial statements in conformity with Adopted IFRSs requires the directors to make
judgements, estimates and assumptions that affect the application of policies and reported amounts of assets
and liabilities, income and expense. The estimates and judgements are based on historical experience and
various other factors that are believed to be reasonable under the circumstances, the results of which form the
basis of making judgements about carrying amounts of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates.
Standards not yet effective
The directors do not expect any of the standards detailed below which are issued but not yet effective to have
a material impact on the financial information.
IAS 23 Borrowing Costs (revised 2007) (effective 1 January 2009)
IFRIC 12 Service Concession Arrangements (effective 1 January 2008)
IFRIC 13 Customer Loyalty Programmes (effective 1 July 2008)
IFRIC 14, IAS19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
(effective 1 January 2008)
Although the following standards will not have a material effect on the results they will have a material
effect on the disclosures:
IAS 1 revised (effective 1 January 2009)
IFRS 8 Operating Segments (effective 1 January 2009)
4 Earnings per share and dividends
No dividends have been paid during the period ended 31 March 2008.
The earnings per share have been calculated on a weighted average basis. This assumes the 8,954,000 shares
issued at the reverse takeover have been in issue for the entire prior period and for the period up to 25 June
2007 (the date of transaction).
/T/
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Mar 31 Mar 30 Sept
2008 2007 2007
Pounds Pounds Pounds
Sterling 000 Sterling 000 Sterling 000
(Loss)/profit for financial period (291) (142) (591)
--- --- ---
--- --- ---
No. No. No.
Weighted average no of shares 14,105,437 8,954,000 9,970,174
---------- --------- ---------
---------- --------- ---------
Basic and diluted loss per share (0.02) (0.02) (0.06)
/T/
5 Taxation
Taxation for the 6 months ended 31 March 2008 is based on the effective rate of taxation which is estimated to
apply to the year ending 30 September 2008.
The group has not recognised a deferred tax asset in respect of tax losses within one of the subsidiaries as
the subsidiary generates losses and is expected to continue to do so in the short term.
/T/
6 Statement of changes
in equity Share Share Retained
capital premium earnings Total
Pounds Pounds Pounds Pounds
Sterling 000 Sterling 000 Sterling 000 Sterling 000
Balance at 1
October 2007 533 3,433 (1,434) 2,532
Total recognised
income and expense - - (291) (291)
Shared based
payment - - 38 38
------ ------ ------ ------
Balance at 31
March 2008 533 3,433 (1,687) 2,279
------ ------ ------ ------
------ ------ ------ ------
Balance at 1
October 2006 17 1,177 (870) 324
Total recognised
income and expense - - (142) (142)
Share based payments - - 3 3
------ ------ ------ ------
Balance at 31
March 2007 17 1,177 (1,009) 185
------ ------ ------ ------
------ ------ ------ ------
Balance at 1
October 2006 17 1,177 (870) 324
Arising on share
issues 516 2,256 - 2,772
Total recognised income
and expense - - (591) (591)
Share based payments - - 27 27
------ ------ ------ ------
Balance at 30
September 2007 533 3,433 (1,434) 2,532
------ ------ ------ ------
------ ------ ------ ------
7 Share capital
31 March 2008 31 March 2007 30 September 2007
No. Pounds No. Pounds No. Pounds
000 Sterling 000 Sterling 000 Sterling
000 000 000
Company
Authorised
Ordinary shares of
10p each 20,000 20,000 20,000 2,000 20,000 2,000
Allotted, called up
and fully paid
Ordinary shares of
Pounds Sterling
1 each - - 17 17 - -
(Existing share
capital of
i-design
multimedia at
date
of reverse
acquisition)
Ordinary shares of
10p each 14,105 1,410 - - 14,105 1,410
------ ------ ------ ------ ------ ------
14,105 1,410 17 17 14,105 1,410
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
Group
Issued and fully
paid
Ordinary shares of
Pounds Sterling
1 each 18 18 17 17 18 18
(Existing share
capital of
i-design
multimedia at
date
of reverse
acquisition)
Ordinary shares of
20p each 5,151 515 - - 5,151 515
------ ------ ------ ------ ------ ------
5,169 533 17 17 5,169 533
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
/T/
On incorporation 2 ordinary shares were issued at par. The company issued 8,953,998 ordinary shares as
consideration for the acquisition of 100% of i-design multimedia limited.
A further 5,151,437 shares were issued on 20 July 2007 through a placing of ordinary 10p shares at 67p each.
The share capital of i-design group plc consists of ordinary shares with a par value of 10p. All shares are
equally eligible to receive dividends and represent one vote at the shareholders' meetings of i-design group
plc. All shares issued at 31 March 2008 are fully paid.
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
i-design group plc
Ana Stewart
Chief Executive
020 7448 1000
Thereafter: 01382 541 041
OR
i-design group plc
Ian Sunter
Finance Director
020 7448 1000
Thereafter: 01382 541 041
OR
Biddicks
Katie Tzouliadis
020 7448 1000
OR
Biddicks
Sophie Lane
020 7448 1000
OR
Arbuthnot Securities
Tom Griffiths
020 7012 2000
OR
Arbuthnot Securities
Alasdair Younie
020 7012 2000
-0-
i-design group plc