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26 November 2009

I-DESIGN GROUP PLC

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

Preliminary Results 

for the year ended 30 September 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.

Key Points

• Revenue increased 14% to £2.37m (2008: £2.07m)

• Operating loss of £1,143,000 (2008: £623,000)

• Loss before tax of £1,112,000 (2008: £536,000)

• Loss per share of £0.08 (2008: £0.04)

• Net cash and cash equivalents position at the year-end of £1.7m (2008: £1.6m)

• Media sales growth of 81% year-on-year - particularly pleasing in challenging market

• Continued investment in the Company's operations  

• Well placed for growth as banking and advertising sectors stabilise and recover

Commenting on the results, Chairman, Jim Faulds, said,

"The financial year to 30 September 2009 has been a challenging one, set against the background of the economic downturn and banking crisis. While this has undoubtedly affected our trading results for the year, as we previously announced, I am pleased to report that the Group made further progress in the development of the business.  Total revenues grew by 14% compared to the previous year, with revenues from media sales increasing by 81%.  Financially, the Group's cash position is healthy, with negligible borrowings.  

The potential to roll out our advertising solution across further ATM networks and scale the business remains substantial. In addition, the Group's market position and track record in delivering advertising campaigns across multiple ATM networks remains unsurpassed. As we look ahead, we consider that the business is well placed for growth as the banking and advertising sectors stabilise and recover."

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 delighted to present i-design's third set of annual results as an AIM quoted company. 

The financial year to 30 September 2009 has been a challenging one, set against the background of the economic downturn and banking crisis. While this has undoubtedly affected our trading results for the year, as we previously announced, I am pleased to report that the Group made further progress in the development of the business. Total revenues grew by 14% compared to the previous year, with revenues from media sales increasing by 81%. 

i-design's software product, atmAd, is licensed to approximately 12,000 ATMs and has been installed across some 6,400 ATMs in the UK and over 300 in Europe. 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 Company in a strong position to generate future revenue growth as the banking and advertising sectors pick up. 

Results 

Revenue for the year ended 30 September 2009 increased by 14% to £2.37 million from £2.07 million in 2008. As a result of lower software revenues than in 2008, gross profit decreased to £466,000 from £796,000 in 2008. All other revenue types grew year-on-year. 

 

The planned investment in both staff and infrastructure to support the Company's growth resulted in higher administrative costs compared to last year and an increased operating loss of £1,143,000 against £623,000 in 2008. The loss before tax increased from £536,000 in 2008 to £1,112,000. The basic loss per share increased from £0.04 in 2008 to £0.08 this year.

The net cash outflow from operating activities was £402,000 (2008 - outflow of £538,000), other investing and financing inflows were £500,000 (2008 - outflow £533,000) resulting in a cash inflow of £98,000 in the year (2008 - outflow of £1,071,000). Investing activities included the encashment of bonds totalling £499,000 (2008 - purchase £496,000). 

Outstanding borrowings at 30 September 2009 have reduced to £27,500 (2008 - £54,000) and the Group's net cash and cash equivalents position at the year-end was £1.7 million (2008 - £1.6 million). 

Dividend

As previously indicated, the Directors intend to devote the Company's cash resources to growing its operations. However, we will reconsider the Company's dividend policy as and when the Company is in a position to pay a dividend.

 

Business Progress

As we reported at the half year, we began the financial year to 30 September 2009 with a significantly enlarged estate of ATMs available for third party advertising. This strengthened position was principally as a result of our major contract win with the Royal Bank of Scotland in 2008 as well as the addition of further ATMs to our existing contracts. 

At the beginning of the financial year, approximately 4,500 ATMs were available for third party advertising, which compared with 1,000 at the same point in the prior year. As a result, I am pleased to report that we have been able to drive the growth of the Group's media income from third party advertising campaigns and, year-on-year, media sales increased by 81%. This increase was achieved both through repeat bookings from existing customers as well as new customers and brands choosing to advertise via our ATM networks. New advertisers included Costa Coffee, PayPal, Coca Cola Enterprises and National Express, and we have broken into new sectors such as fast service restaurants. I am also pleased to report that despite the increasing pressure which advertising budgets generally came under this year, our average booking values have been maintained over the year.  

In the announcement of the Group's interim results on 25 June 2009, we stated that the pattern of advertising spend had changed as the economic environment deteriorated and that lead times for bookings had shortened. This trend of shorter lead times continued into the second half and, for the time being at least, we see this continuing.  

Further research conducted during the year reinforced the findings of previous research which show that consumer recall of ATM advertising messages is high, reflecting the interactive and highly engaged nature of the ATM transaction itself. Point of Sale data also demonstrates the success of ATM receipts, used in redemption campaigns, in driving consumer 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. Currently, we can offer advertisers the potential to reach some 633 million of these transactions and atmAd is available on 46% of all cash withdrawal transactions at retail based ATMs in the UK.  

We see scope to increase media sales from our existing ATM estate and, as we sign additional software licences for atmAd, the potential for us to drive this income stream increases. Our objective is to increase the size of our estate of ATMs substantially over time and it was therefore disappointing earlier in the year to announce that two banking contracts which we had expected to sign had been put on hold. While our relationships with both potential customers remain excellent, it is clear that the ongoing turmoil in the banking sector makes it much more difficult to predict the timing of the outcome of any discussions. Our current focus, both in the UK and abroad, is on engaging with ATM owners who own large ATM estates. We are also engaging with additional channel partners, including LD Systems, a self-service equipment and technology provider, in the USA. 

While the trading environment toughened over the year, our market positioning in the UK and overseas remains unchanged. Our advertising solution, atmAd, continues to be unrivalled in being the only ATM advertising solution which combines both the software and media sales capability to enable network owners to generate revenues from third party advertising. We expect to maintain this market leading position and continue to look at incorporating additional technical features to our software suite which will enhance our competitive advantage.  

 Team Effort 

On behalf of the Board, I would like to thank all of our staff for their hard work and commitment during the year. We are also grateful for the continued support of our customers and shareholders.

Prospects

It has been a challenging year, with the issues in the banking sector and global economic recession impacting our results and, in the short term, curbing the Company's rate of growth. Despite this, the potential to roll out our advertising solution across further ATM networks and scale the business is substantial. In addition, the Group's market position and track record in delivering advertising campaigns across multiple ATM networks remain unsurpassed.  

We continue to monitor our cost base closely and the Group's cash position remains healthy with negligible borrowings.  

As we look ahead, we consider that the business is well placed for growth as the banking and advertising sectors stabilise and recover.

 

James Faulds

Chairman

 

INCOME STATEMENT 

For the year ended 30 September 2009 

		2009	2008
	Note	£	£
Revenue	3	2,369,661	2,070,986
Cost of sales		(1,903,165)	(1,275,060)
		_________	_________
Gross profit		466,496	795,926
Other income		16,088	44,500
Administrative expenses		(1,625,937)	(1,463,371)
		_________	_________
Operating loss before interest and tax	4	(1,143,353)	(622,945)
Finance income		35,693	94,686
Finance costs		(4,255)	(8,080)
		_________	_________
Loss before taxation		(1,111,915)	(536,339)
Taxation		-	-
		_________	_________
Loss for the financial year		(1,111,915)	(536,339)
		========	========
Earnings per share (pence)
Basic and diluted	5	(0.08)	(0.04)
		========	========

All revenues and losses arise from continuing operations.

  GROUP BALANCE SHEET 

at 30 September 2009 

		2009	2008
		£	£
Assets
Non-current assets
Property, plant and equipment		86,752	100,646
		_________	_________
		86,752	100,646
		_________	_________
Current assets
Trade and other receivables		534,461	854,822
Loans and receivables		-	499,177
Cash and cash equivalents		1,680,422	1,582,423
		_________	_________
Total current assets		2,214,883	2,936,422
		_________	_________
Total assets		2,301,635	3,037,068
		========	========
Liabilities
Current liabilities
Trade and other payables		1,252,888	916,055
Current borrowings		15,000	26,667
		_________	_________
Total current liabilities		1,267,888	942,722
		_________	_________
Non-current liabilities
Non-current borrowings		12,500	27,500
		_________	_________
Total liabilities		1,280,388	970,222
		_________	_________
Equity
Share capital		533,052	533,052
Share premium account		3,433,399	3,433,399
Retained earnings		(2,945,204)	(1,899,605)
		_________	_________
Total equity		1,021,247	2,066,846
		_________	_________
Total equity and liabilities		2,301,635	3,037,068
		========	========

 

 STATEMENT OF CHANGES IN EQUITY

For the year ended 30 September 2009

	Share  capital	Share premium	Retained Earnings	Total
	£	£	£	£
Balance at 30 September 2007	533,052	3,433,399	(1,433,708)	2,532,743
Loss for the period	-	-	(536,339)	(536,339)
	________	_________	_________	_________
Total recognised income and expense	533,052	3,433,399	(1,970,047)	1,996,404
Share based payments	-	-	70,442	70,442
	________	________	_________	_________
Balance at 30 September 2008	533,052	3,433,399	(1,899,605)	2,066,846
Loss for the period	-	-	(1,111,915)	(1,111,915)
	________	_________	_________	_________
Total recognised income and expense	533,052	3,433,399	(3,011,520)	954,931
Share based payments	-	-	66,316	66,316
	________	________	_________	_________
Balance at 30 September 2009	533,052	3,433,399	(2,945,204)	1,021,247
	=======	=======	========	========

  CASH FLOW STATEMENT 

For the year ended 30 September 2009 

	2009	2008
	£	£
Cash flows from operating activities
Operating loss	(1,143,353)	(622,945)
Depreciation	18,192	15,387
Decrease/(Increase) in trade and other receivables	320,361	(509,203)
Increase in trade and other payables	336,833	477,527
Taxation receipts	-	30,494
Share based payment expense	66,316	70,442
	_________	________
Net cash outflow from operating activities	(401,651)	(538,298)
	_________	________
Cash flows from investing activities
Purchases of property, plant and equipment	(4,298)	(67,282)
Encashment/(Purchase) of bonds	499,177	(495,750)
Interest received	35,693	91,259
	_________	________
Net cash received/(used) from investing activities	530,572	(471,773)
	_________	________
Cash flows from financing activities
Repayment of borrowings	(26,667)	(50,000)
Payment of finance lease liabilities	-	(3,011)
Interest paid	(4,255)	(8,080)
	_________	_________
Net cash outflow from financing activities	(30,922)	(61,091)
	_________	_________
Net increase/(decrease) in cash and cash equivalents	97,999	(1,071,162)
Cash and cash equivalents at beginning of year	1,582,423	2,653,585
	_________	_________
Cash and cash equivalents at the end of the year	1,680,422	1,582,423
	========	========

 

NOTES TO THE FINANCIAL STATEMENTS 

1. Publication of non-statutory accounts

The financial information contained in this announcement does not constitute statutory accounts within the meaning of section 434 Companies Act 2006. The figures for the years ended 30 September 2008 and 2009 have been extracted from the audited financial statements. The financial statements for 2009 will be delivered to the Registrar of Companies following the Annual General Meeting and will be sent to shareholders on or around 18th December 2009. Additional copies will be available to the public free of charge, 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-designplc.com.

The financial statements for the years ended 30 September 2008 and 2009 received an unqualified auditors' report which did not contain a statement under section 498 (2) or (3) Companies Act 2006. 

2.  Accounting policies

The significant accounting policies that have been used in the preparation of the financial statements are summarised below.

Basis of preparation

The financial statements have been prepared on a going concern basis. The business model of the Company together with the principal risks & uncertainties are set out in the Operating and Financial Review. Additionally the current financial position of the Company is described in the Chairman's statement and note 17 to the Financial Statements highlights the Company's Risk management objectives and policies.  

Having reviewed cash flow projections, the Directors believe that the Company has adequate resources to continue in operation for the foreseeable future and have therefore adopted the going concern basis in preparing these financial statements. Whilst there has been turmoil in the wider economy, which has had a negative impact on results in 2009 the Directors believe that the progress made in identifying revenue streams through overseas resellers along with an expectation of software licence revenue from the UK banking sector and the redirection of advertising sales focus mean that current projections are achievable. 

In addition, the Directors have considered scenarios where software sales are delayed beyond the next 12 months.  Under these scenarios the Directors are satisfied that the cost base can be reduced accordingly to enable the company to continue to operate within its current funding limits for at least 12 months from the date of signing these financial statements.

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations endorsed by the European Union (EU) and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The International Accounting Standards Board and the International Financial Reporting Interpretations Committee have issued the following standards and interpretations with an effective date after the date of these financial statements: 

IAS 1 Presentation of Financial Statements (revised 2007) (effective 1 January 2009)

IAS 23 Borrowing Costs (revised 2007) (effective 1 January 2009) 

IAS 27 Consolidated and Separate Financial Statements (revised 2008) (effective 1 July 2009)

Amendment to IFRS 2 Share-based Payment - Vesting Conditions and Cancellations (effective 1 January 2009) 

Amendment to IAS 39 Financial Instruments: Recognition and Measurement - Eligible Hedged Items (effective 1 July 2009) 

Improvements to IFRSs (effective 1 January 2009 other than certain amendments effective 1 July 2009)

IFRS 3 Business Combinations (revised 2008) (effective 1 July 2009)

IFRS 8 Operating Segments (effective 1 January 2009)

IFRS 7 Financial instruments: Disclosures - Improving Disclosures and Financial Instruments (Amendments) (effective 1 January 2009)

IFRIC 18 * Transfers of Assets from Customers (effective 1 July 2009)

IAS 39 & IFRIC 9 Embedded Derivatives (Amendment) (effective 30 June 2009)

* Not endorsed by the EU as at the date of approval of these financial statements. 

The Group does not anticipate early adoption of the revised IFRS 3 and so will apply it prospectively to all business combinations on or after 1 October 2009. Whilst it is not possible to estimate the outcome of adoption, the key features of the revised IFRS 3 include a requirement for acquisition-related costs to be expensed and not included in the purchase price, and for contingent consideration to be recognised at fair value on the acquisition date (with subsequent changes recognised in the income statement and not as a change to goodwill).  The standard also changes the treatment of non-controlling interests (formerly minority interests) with an option to recognise these at full fair value as at the date control is obtained, with gains and losses recognised in the income statement.

The amendment to IFRS 7 which is mandatory for periods beginning on or after 1 January 2009 requires enhanced disclosures about fair value measurements and liquidity risk. Among other things, the new disclosures: 

• clarify that the existing IFRS 7 fair value disclosures must be made separately for each class of financial instrument 

• add disclosure of any change in the method for determining fair value and the reasons for the change 

• establish a three-level hierarchy for making fair value measurements

• add disclosure, for each fair value measurement in the statement of financial position, of which level in the hierarchy was used and any transfers between levels 

IFRS 8 requires disclosure based on information presented to the Board on the financial performance of the Group's operating segments. The Group will apply IFRS 8 for its accounting period commencing 1 October 2009 though does not consider that the future adoption of this standard will have any material impact on the financial statements as presented given that the business is regarded as, and financial performance is reported to the Board in respect of, one segment due to the nature of services provided and the methods used to provide these services. 

    

The revised IAS 1 will have no impact on the measurement of the Group's results or net assets but will result in certain changes in the presentation of the Group's financial statements from 2009 onwards. A Statement of Comprehensive Income, which can be presented in one of two ways, will be required, and the Statement of Changes in Equity will no longer be a primary statement.

IAS 23 has been revised to require capitalisation of borrowing costs when such costs relate to a qualifying asset. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. In accordance with the transitional provisions in the Standard, the Group will adopt this as a prospective change. Accordingly, borrowing costs will be capitalised on qualifying assets with a commencement date of 1 October 2009. No changes will be made for borrowing costs incurred prior to this date that have been expensed.

IAS 27 revised is effective for annual periods beginning on or after 1 July 2009, with earlier application only permitted when the revised IFRS 3 is applied. The revised standard applies retrospectively with some exceptions. IAS 27 revised no longer restricts the allocation to minority interest of losses incurred by a subsidiary to the amount of the non-controlling equity investment in the subsidiary. A partial disposal of equity interest in a subsidiary that does not result in a loss of control will be accounted for as an equity transaction and will have no impact on goodwill nor will it give rise to any gain or loss. Where there is loss of control of a subsidiary, any retained interest will have to be re-measured to fair value, which will impact the gain or loss recognised on disposal. The Group is currently assessing the impact on its financial statements from adopting IAS 27 revised.

The Directors do not anticipate that the adoption of the remaining standards and interpretations will have a material impact on the Group's financial statements in the period of initial application.

Business combinations 

The financial statements incorporate the financial statements of the company and all its subsidiaries. Unrealised gains on transactions between the group and its subsidiaries are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the cost of the acquisition over the fair value of assets and liabilities is recorded as goodwill. If the cost of the acquisition is less than the fair value of the net assets of the subsidiary acquired the difference is recognised directly in the income statement.

On 25 June 2007 i-design group plc became the legal parent company of i-design multimedia limited in a share for share transaction. Due to the relative size of the companies, i-design multimedia limited shareholders became the majority shareholders of the enlarged share capital. Furthermore, the company's continuing operations and executive management became those of i-design multimedia limited. Under IFRS3 this combination has been accounted for as a reverse acquisition in 2007.

In a reverse acquisition, the cost of the business combination is deemed to have been incurred by the legal subsidiary (e.g. the acquirer for accounting purposes) in the form of equity instruments to the owners of the legal parent (e.g. the acquiree for accounting purposes). Because such consolidated financial statements represent a continuation of the financial statements of the legal subsidiary, the assets and liabilities of i-design multimedia limited have been recognised and measured in the consolidated financial statements at their pre-combination carrying amounts. The retained earnings and other equity balances recognised in the consolidated financial statements are the retained earnings and other equity balances of i-design multimedia limited immediately before the business combination and the amount recognised as issued equity instruments in the consolidated financial statements has been determined by adding to the issued equity of i-design group plc immediately before the business combination the cost of the combination, being the market value of the shares of i-design group plc.

Revenue recognition 

Revenue is measured by reference to the fair value of consideration received or receivable for goods and services provided in the normal course of business, excluding VAT and trade discounts. Revenue is recognised upon the performance of services or transfer of risk to the customer. 

Software

On a contract by contract basis revenue is recognised fully at the point of transfer of risk and rewards of ownership to the customer. For each contract, revenue is not recognised until it is probable that economic benefit will flow to the Group. 

Support

Invoiced annually in advance and recognised evenly with reference to the period over which the support will be provided.

Professional services and consultancy 

Invoiced and recognised on the performance of the service.  Invoiced once identifiable and agreed stages of completion of the service has been completed based on charge out terms as agreed with the client on a short term basis.

Advertising 

Is invoiced on the date that the advertising campaign commences (except for campaigns lasting more than three months which are invoiced each month in advance) and is recognised evenly with reference to the period over which the campaign will run.

Cost of sales 

Cost of sales includes direct wages and direct costs relating to atmAd advertising revenue.

Interest income  

Bank interest is recognised as it is earned on an accruals basis.

Expense recognition 

Operating expenses are recognised in the income statement upon utilisation of the service.

Intangible assets

Research & development

All research costs which consist predominantly of salaries are charged to the income statement as incurred.

Development costs are capitalised as an intangible asset when recognition criteria are met and, in particular, it is clear that the development expenditure will generate future economic benefit. Otherwise development costs are charged to the income statement as incurred.

Tangible assets

Property, plant and equipment

Property, plant and equipment are shown at cost, net of depreciation and any provision for impairment. Depreciation is provided on all property, plant and equipment at varying rates calculated to write off cost to the expected current residual value by equal annual instalments over their estimated useful economic lives. The principal rates employed are:

Buildings                     -    2% to 10%

Office furniture             -    20%

Computer equipment    -    33%

Disposal of assets 

The gain or loss arising on the disposal of an asset is determined as the difference between the disposal proceeds and the carrying amount of the asset and is recognised in the income statement. The gain or loss arising from the sale is included in "other income" or "administrative expense" in the income statement. 

Lease and hire purchase commitments  

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. Assets held under leases are capitalised in the balance sheet at the fair value of the leased assets or, if lower, at the present value of the minimum of lease payments plus incidental expenses, if any, to be borne by the lessee and are depreciated over their useful lives. The capital element of future obligations under the contract is included in liabilities in the balance sheet.    

The interest element of the rental obligations is charged to the income statement over the period of the lease and represents a constant proportion of the balance of capital repayments outstanding.

All other leases are classified as operating leases and rentals and are charged to the income statement on a straight line basis over the lease term.

Pensions

Defined contribution pension scheme

The Group operates a defined contribution pension scheme for certain employees. Contributions to this scheme are charged to the income statement in the period to which they relate.

Financial assets

Trade and other receivables 

Trade and other receivables are initially recognised at fair value and thereafter at amortised cost using the effective interest rate. A provision for impairment of trade receivables is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of these receivables. The amount of the provision is recognised in the income statement. Trade receivables do not carry any interest charge.  

Bonds are initially recognised at fair value plus acquisition costs. After initial recognition, such assets are carried at fair value.

Cash 

Cash includes cash in hand, deposits held at call with banks, and bank overdrafts. Bank overdrafts are shown within current liabilities on the balance sheet. 

Financial liabilities

Trade payables

Trade payables are non-interest-bearing and are initially measured at fair value and thereafter at amortised cost using the effective interest rate. 

Borrowings

Interest-bearing loans and bank overdrafts are initially carried at the fair value. Finance charges, including premia payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis to the income statement using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

Share based payments 

All equity settled share-based payment arrangements granted after 7 November 2002 that had not vested prior to 1 April 2005 are recognised in the financial statements.

All goods and services received in exchange for the grant of any share-based payment are measured at their fair values. Where employees are rewarded using share-based payments, the fair values of employees' services are determined indirectly by reference to the fair value of the instrument granted to the employee. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example, profitability and sales growth targets).

All equity-settled share-based payments are ultimately recognised as an expense in the income statement with a corresponding credit to reserves.  

If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting.

Upon exercise of share options the proceeds received net of attributable transaction costs are credited to share capital, and where appropriate share premium.

Government grants

Revenue grants are taken direct to the income statement and are shown as other income. Where grants are potentially repayable under certain conditions they are treated as a liability until such time as there is objective evidence that the grant will not be repayable at which time they are taken to income statement. 

Taxation 

Current tax is the tax currently payable based on taxable results for the year.

Deferred income taxes are calculated using the liability method on temporary differences. However, deferred tax is not provided on the initial recognition of an asset or a liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. In addition, tax losses available to be carried forward as well as other income tax credits to the company are assessed for recognition as deferred tax assets.  

Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.

Foreign currencies

Transactions in foreign currencies are translated at the exchange rate ruling at the date of transaction. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. 

Equity     

Equity comprises the following:

• "share capital" represents the nominal value of equity shares.

• "share premium" represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.

• retained earnings include all current and prior period results as disclosed in the income statement. 

• in the Group balance sheet share capital represents the nominal value of the shares in the subsidiary prior to the business combination, and the nominal value of shares issued in the company subsequent to the transaction.

Critical judgements in applying the company's accounting policies

In the process of applying the Group's accounting policies, management has made the following judgements that have the most significant effect on the amounts recognised in the financial statements.

Research and development 

No research and development expenditure has been capitalised as an intangible asset and amortised as the company was not sufficiently certain that it met the relevant criteria regarding technical feasibility and future financial prospects at the time it was incurred.

Deferred taxation 

No deferred taxation asset has been recognised as the likelihood of future taxable income offsetting existing tax losses is not yet probable.

    

Key sources of estimating uncertainty

There are no key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities.

3. Revenue segmental information
Segmental information is presented in respect of the Group's geographical segments. All operating activities are conducted from the UK and as such the Directors consider that there is only one business segment.
	2009	2008
	£	£
UK	2,249,969	1,824,508
Europe	57,524	234,593
Rest of the World	62,168	11,885
	________	________
	2,369,661	2,070,986
	=======	=======

 

4. Operating loss		2009	2008
		£	£
The operating loss is stated after charging/(crediting): Directors' remuneration Depreciation
		239,554	287,222
	- owned assets	18,192	15,387
	- leased assets	-	-
Auditors' remuneration
	- audit	21,750	21,250
	- non audit    -    subsidiary company audit	5,250	5,250
Share options Research and development costs  Exchange gains Operating leases - land and buildings		66,316	70,442
		338,064	294,840
		13,433	65
		110,321	107,034
		======	======
Included in share options is £ 41,803 (2008 - £41,803) relating to Directors.

  

5. Earnings per share and dividends
No dividends have been paid during the year ended 30 September 2009.  The earnings per share have been calculated on a weighted average basis.
	2009	2008
	No.	No.
Weighted average number of shares in issue	14,105,437	14,105,437
	========	========
The basic earnings per share has been calculated using the net results attributable to the shareholders of the company as follows:
		£
Year ended 30 September 2009		(1,111,915)
Year ended 30 September 2008		(536,339)
		========
The Directors consider the ordinary shares relating to share options to be anti-dilutive as their conversion to ordinary shares would decrease the loss per share from continuing operations.

6. Share based payments

The following options remain exercisable under certain conditions by employees under share based payment schemes. The options are in i-design group plc, 20,000 as identified below were originally granted in i-design multimedia limited.

The fair value of options granted is calculated using the Black Scholes option pricing model incorporating the following assumptions:

Number of options	728,500	20,000
Volatility	30%	30%
Spot price	£0.67	£0.67
Interest rate	5.5%	5.5%
Dividend yield	Nil	Nil
Vesting period	3 years	3 years
Option value weighted average exercise price	£0.25	£0.42

 

Summary of options

Exercise Price	Exercise Date	Expiry Date	30 Sept 2008	Granted	Lapsed	30 Sept 2009	Weighted average exercise  price
Enterprise management incentive scheme
£0.67	2010	2017	457,500		(125,000)	332,500	£0.25
£0.34	2010	2017	20,000	-	-	20,000	£0.42
Unapproved scheme
£0.67	2010	2017	396,000	-	-	396,000	£0.25
			_______	______	________	_______
			873,500	-	(125,000)	748,500
			======	=====	=======	======

    

This preliminary announcement was approved by the Board of Directors on 25th November 2009. Copies are available from the Company's registered office at 16-18 Boat Road, Newport on Tay, Fife DD6 8EZ and from its website at www.i-designplc.com.

 

ENDFR UVVNRKARAUAA