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IDG

I-DESIGN GROUP PLC

('i-design' or 'the Group' or 'the Company')

Unaudited Interim Results

for the six months to 31 March 2009

i-design provides a market leading ATM advertising solution (called atmAd) which enables ATM network owners to run both third party advertising and their own internal marketing campaigns on their ATM screens and receipts.

Highlights

• Revenue increased by 46% to £1,379,000 (2008: £947,000) 

• Operating loss of £382,000 (2008: £347,000)  

• Loss before taxation of £368,000 (2008: £291,000)

• Basic loss per share of 0.03p (2008: 0.02p)

• Total assets at 31 March 2009 of £2.91m (2008: £3.02m) with net cash of £1.9m (2008: £2.4m)

• Revenue growth in all areas

• Media sales revenues increased by 72% in a difficult advertising environment

• Near term results will be impacted by difficult trading conditions but long term growth prospects remain positive 

James Faulds, Chairman, commented, 

'The Group continues to make progress. While results in the near term will be affected by the current banking environment, the increase in advertising revenues is very encouraging and we remain positive about i-design's long term growth prospects. Worldwide interest in our solution is high and our overall offering is market leading. We continue to see the potential to build the Group substantially as the trading environment improves.'

  

Enquiries:

i-design group plc	Ana Stewart, Chief Executive Ian Sunter, Finance Director	T: 020 7448 1000 Thereafter: 01382 541 041
Biddicks	Katie Tzouliadis	T: 020 7448 1000
	Sophie Lane
Arbuthnot Securities	Tom Griffiths	T: 020 7012 2000
	Alasdair Younie

  CHAIRMAN'S STATEMENT

Introduction

I am pleased to report interim results for the six months ended 31 March 2009. Against an increasingly difficult economic environment and the specific problems of the banking sector, we have achieved a creditable performance with the benefits of the ATM networks added over the past year coming through. 

Results

For the six months to 31 March 2009, revenue increased by 46% to £1,379,000 (2008: £947,000), with income from  software & consultancy sales, media sales and creative sales all showing growth over the corresponding period last year. Gross profits rose by 41% to £431,000 (2008: £305,000). 

Our cost base increased by 18% to £820,000 from £697,000 last year. This largely reflected the recruitment of additional sales staff in the second half of the financial year ended 30 September 2008 as well as marketing-related initiatives undertaken. As a result, the operating loss was £382,000 (2008: £347,000). Much lower deposit interest rates led to decreased finance income of £18,000 (2008: £61,000). The loss before taxation was £368,000 (2008: £291,000). The loss after taxation was £368,000 (2008: £291,000) and the basic loss per share was 0.03p (2008: 0.02p). 

Higher levels of activity resulted in higher trade receivables and trade payables. Cash and equivalents as at 31 March 2009 were a healthy £1,920,000 (2008: £2,385,000). Borrowings were only £35,000 (2008: £79,000) and total assets at 31 March 2009 stood at £2,911,000 (2008: £3,015,000).

There was a cash outflow from operating activities of £166,000 (2008: outflow of £263,000) which, with a net inflow from investing and financing activities of £490,000 mainly arising from the sale of bonds (2008: outflow of £5,000), resulted in an increase in cash and cash equivalents of £328,000 (2008: decrease of £268,000). 

Business Model

i-design has developed an ATM advertising solution, called atmAd, which enables retail banks to generate a new source of revenue, from one-to-one advertising on ATM screens and receipts. 

atmAd provides a comprehensive solution, handling all aspects of advertising campaign management from booking, scheduling, distribution, playback and reporting. Any advertising is displayed during the 'dead space' in an ATM transaction, while customers are waiting for their cash, card or receipt, and therefore customers' time at the cash machine is not extended. atmAd is also unique in being platform independent, running on any type of Windows-based ATM environment.

The Company generates three main sources of revenue from the provision of atmAd, as set out below.  Of these, software & consultancy sales and media sales represent our key revenue generators.

• Software & consultancy sales

These are generated through the sale of software licences to ATM network owners for the use of atmAd. 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.

• Creative 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.

 

Business Development

i-design's software product, atmAd, is now licensed to approximately 12,000 ATMs and has been installed across some 6,000 ATMs in the UK, with the last financial year representing a breakthrough year as we signed our largest contract to date. These 12,000 ATMs account for just over one-third of all UK ATMs operated by financial institutions. The Company remains the only provider, both in the UK and overseas, with the ability to facilitate ATM advertising, deliver third party advertisers and run multi-network advertising campaigns. This places the business in a good position to generate future revenue growth. 

As a result of last year's major contract win as well as the contract extensions we secured, the Company started the current financial year with a significantly increased estate of ATMs available for third party advertising, some 4,500 ATMs in total. We were therefore expecting to see a major uplift in revenues from media sales and I am encouraged to report that in a difficult advertising environment, media sales revenues increased by 72% over the same period last year. 

We saw average booking values increase and have continued to broaden our advertiser base, both from the point of view of new advertisers and new market sectors. New advertisers included mobile phone and broadband provider, O2, and fast food chains, Burger King and Subway. Repeat bookings are also up year-on-year including the renewal of a 12 month contract with British Airways. 

There is no doubt though that the pattern of advertising spend has changed as the economic environment has deteriorated and, as a result, our visibility of bookings has shortened. However, with the current need for advertising spend to demonstrate tangible returns, advertising on ATMs remains highly attractive to brands. Independent research data shows that consumer recall of ATM advertising is very high, reflecting the extremely engaged nature of the ATM transaction. Electronic Point of Sale (EPOS) data also shows the effectiveness of ATM receipts used in redemption campaigns, with the success of these campaigns enhanced by the proximity of the ATMs to retail outlets.  An example of this is a recent advert for Coca Cola Enterprises, which included a money-off voucher against its Appletiser fruit-flavoured drinks. During the period of the campaign, sales of these drinks rose by 6%, with the coupon redeemed in a fifth of overall sales. 

In 2008, there were 2.75 billion cash withdrawal transactions at ATMs in the UK of which 94% were from ATMs owned by financial institutions. With the enlargement in our third party ATM estate, we can offer advertisers the potential to reach some 633 million of these transactions, providing potential for future media sales growth.

We are continuing to seek to increase our ATM estate and, during the period, negotiations on two major new UK contracts progressed well despite the prevailing conditions in the banking sector. Progress was such that we had expected a positive outcome to these negotiations during the current financial year. However, as we announced on 22 May 2009, it became clear that our original timeframes required revision. These delays are extremely disappointing but we continue to engage with major ATM network owners and our relationships remain very good. We also see good opportunities to expand overseas and having secured our first overseas contract last year with a European bank, atmAd is now installed on several hundred ATMs in Greece.  

Outlook

We are greatly encouraged by the increase in revenues in a very difficult trading environment. Whilst issues in the banking sector will have an adverse impact on our results in the short term, we continue to see worldwide interest among ATM network owners and our track record in delivering multi-network advertising campaigns remains unrivalled.

We continue to monitor the cost base closely and the Group's cash position is healthy with negligible borrowings. The resources are in place to facilitate sustainable growth as the banking sector recovers. 

We will continue to target ATM networks with large ATM estates and to develop both direct and channel sales into overseas territories.  As we look ahead we remain confident that the long term opportunity to build on our market leading position is very encouraging. 

James Faulds

Chairman

 

 I-DESIGN GROUP PLC
Consolidated interim income statement for the six months ended 31 March 2009 

		Unaudited 6 months ended	Unaudited 6 months ended	Audited Year ended
		31 Mar	31 Mar	30 Sept
		2009	2008	2008
	Note	£000	£000	£000
Revenue		1,379	947	2,071
Cost of sales		(948)	(642)	(1,275)
		____	____	_____
Gross profit		431	305	796
		____	____	_____
Other income		7	45	44
Administrative expenses		(820)	(697)	(1,463)
		____	____	_____
Operating loss		(382)	(347)	(623)
Finance income		18	61	95
Finance expenses		(4)	(5)	(8)
		____	____	____
Loss before taxation		(368)	(291)	(536)
Taxation	5	-	-	-
		____	____	____
Loss for the financial period attributable to equity holders of the Company		(368)	(291)	(536)
		====	====	====
(Loss) per share
Basic and diluted loss per share (pence)	4	(0.03)	(0.02)	(0.04)

  I-DESIGN GROUP PLC

Consolidated interim balance sheet as at 31 March 2009 

		Unaudited 31 Mar	Unaudited  31 Mar	Audited 30 Sept
		2009	2008	2008
	Note	£000	£000	£000
Assets
Non current assets
Property, plant and equipment		96	75	101
		___	___	___
		96	75	101
		___	___	___
Current assets
Trade and other receivables		895	525	855
Loans and receivables		-	-	499
Tax recoverable		-	30	-
Cash and cash equivalents		1,920	2,385	1,582
		______	______	______
Total current assets		2,815	2,940	2,936
		______	______	______
Total assets		2,911	3,015	3,037
		=====	=====	=====
Liabilities
Current liabilities
Trade and other payables		1,142	657	916
Current borrowings		15	50	27
		______	______	______
Total current liabilities		1,157	707	943
		______	______	______
Non current liabilities
Non current borrowings		20	29	27
		______	______	______
Total liabilities		1,177	736	970
		______	______	______
Equity
Share capital	7	533	533	533
Share premium account		3,433	3,433	3,433
Retained earnings	6	(2,232)	(1,687)	(1,899)
		______	______	______
Total equity		1,734	2,279	2,067
		______	______	______
Total equity and liabilities	6	2,911	3,015	3,037
		=====	=====	=====

  I-DESIGN GROUP PLC

Consolidated interim cash flow statement for the six months ended 31 March 2009 

	Unaudited 6 months ended	Unaudited 6 months ended	Audited Year ended
	31 Mar	31 Mar	30 Sept
	2009	2008	2008
	£000	£000	£000
Cash flows from operating activities
Operating loss	(382)	(347)	(623)
Depreciation	9	6	15
Exchange gain on cash	(14)	-	-
Increase in trade and other receivables	(40)	(192)	(509)
Increase in trade and other payables	226	232	478
Taxation receipts	-	-	30
Share based payment	35	38	71
	____	____	____
Net cash outflow from operating activities	(166)	(263)	(538)
	____	____	____
Cash flows from investing activities
Purchases of property, plant and equipment	(4)	(33)	(67)
Sale/(purchase) of bonds	496	-	(496)
Interest received	21	61	91
	_____	_____	_____
Net cash used from investing activities	513	28	(472)
	_____	_____	_____
Cash flows from financing activities
Repayment of borrowings	(16)	(25)	(50)
Payment of finance lease liabilities	(3)	(3)	(3)
Interest paid	(4)	(5)	(8)
	_____	_____	_____
Net cash outflow from financing activities	(23)	(33)	(61)
	_____	_____	_____
Net increase/(decrease) in cash and
cash equivalents	328	(268)	(1,071)
Effects of exchange rate changes on cash and cash equivalents	14	-	-
Cash and cash equivalents at beginning
of period	1,582	2,653	2,653
	_____	_____	_____
Cash and cash equivalents at end of the period	1,920	2,385	1,582
	====	====	====

  I-DESIGN GROUP PLC

Notes to the interim financial information

  1    This interim statement for the six months ended 31 March 2009 is unaudited and was approved by the Directors on 24 June 2009. The information set out in this announcement does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.

 

  2    Report and financial statements

 

The statutory accounts for the financial year ended 30 September 2008 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 2008 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 interim financial information has been prepared in accordance with the Group's principal accounting policies and estimation techniques as will be adopted in the Group financial statements for the year ending 30 September 2009.The Group financial statements for the year ended 30 September 2008 were prepared under International Financial Reporting Standards. These interim financial statements have been prepared on a consistent basis and format; however IAS 34 'Interim Financial Reporting' has not been applied in full, since as an AIM quoted company we are not required to do so.  

 

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.  

 

  4    Earnings per share and dividends

 

No dividends have been paid during the period ended 31 March 2009.

 

Basic earnings per share are calculated by dividing the earnings attributable to ordinary shareholders by the weighted average shares in issue during the period. Diluted earnings per share takes into account the dilutive effect of the share options outstanding under the Company's employee option schemes. The earnings per share have been calculated on a weighted average basis.  

  

    

	Unaudited 6 months ended	Unaudited 6 months ended	Audited Year ended
	31 Mar	31 Mar	30 Sept
	2009	2008	2008
	£000	£000	£000
(Loss)/profit for financial period	(368)	(291)	(536)
	===	===	===
	No.	No.	No.
Weighted average no of shares	14,105,437	14,105,437	14,105,437
	========	========	========
Basic and diluted loss per share	(0.03)	(0.02)	(0.04)

  5    Taxation

 

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.

 

6	Statement of changes in equity	Share	Share	Retained
		capital	premium	earnings	Total
		£000	£000	£000	£000
	Balance at 30 September 2007	533	3,433	(1,434)	2,532
	Loss for the period	-	-	(291)	(291)
		_____	_____	______	______
	Total recognised income and expense			(1,725)	2,241
	Shared based payment	-	-	38	38
		_____	_____	______	______
	Balance at 31 March 2008	533	3,433	(1,687)	2,279
		====	====	=====	=====
	Balance at 30 September 2008	533	3,433	(1,899)	2,067
	Loss for the period	-	-	(368)	(368)
		_____	_____	______	______
	Total recognised income and expense			(2,267)	1,699
	Share based payments	-	-	35	35
		_____	_____	______	______
	Balance at 31 March 2009	533	3,433	(2,232)	1,734
		====	====	=====	=====
	Balance at 30 September 2007	533	3,433	(1,434)	2,532
	Loss for the period		-	(536)	(536)
		_____	_____	______	______
	Total recognised income and expense			(1,970)	1,996
	Share based payments	-	-	71	71
		_____	_____	______	______
	Balance at 30 September 2008	533	3,433	(1,899)	2,067
		====	====	=====	=====

 

7	Share capital
		31 March 2009		31 March 2008		30 September 2008
		No.	£000	No.	£000	No.	£000
		000		000		000
	Company
	Authorised
	Ordinary shares of 10p each	20,000	2,000	20,000	2,000	20,000	2,000
	Allotted, called up and fully paid
	Ordinary shares of 10p each	14,105	1,410	14,105	1,410	14,105	1,410
		______	_____	____	____	_____	_____
		14,105	1,410	14,105	1,410	14,105	1,410
	Group	=====	====	=====	====	=====	====
	Issued and fully paid
	Ordinary shares of £1 each	18	18	18	18	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	5,151	515
		______	_____	____	____	_____	_____
		5,169	533	5,169	533	5,169	533
		=====	====	=====	====	=====	====

 

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 2009 are fully paid.  

 

  8    Availability of interim statement

 

Copies of the interim statement will be 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.  

ENDIR SELFMLSUSEEM