30 June 2010

IDG

I-DESIGN GROUP PLC

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

 

Unaudited Interim Results

for the six months ended 31 March 2010

 

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

 

·      Trading backdrop remained challenging - although sentiment in banking sector improving

-      post period end two significant banking contract wins overseas

 

·      Revenue of £911,000 (2009: £1,379,000)

 

·      Operating loss of £664,000 (2009: £382,000)

 

·      Loss before tax of £660,000 (2009: £368,000)

 

·      Loss per share of £0.04 (2009: £0.03)

 

·      Balance sheet remains robust - at 31 March 2010:

-      net cash of £1.04m

-      negligible borrowings

 

·      Post period end, secured two significant new contracts overseas:

-      first contract agreed in the USA, with Cardtronics, Inc., the world's largest non-bank owner of ATMs

-      first contract agreed in South America, with a major bank in Ecuador

 

·      The two new contract wins substantially increase i-design's estate of third party ATMs

-      when contracts are fully on stream, third party ATM estate will total 9,100 from 5,600 last year

 

·      Growth opportunities remain encouraging

 

 

James Faulds, Chairman, commented,

 

"While the trading backdrop over the period remained challenging for us, with media advertising budgets still constrained, we are seeing signs of sentiment improving in the banking sector.  This change is obviously helpful to us as we pursue discussions with both existing bank customers and new customers, in the UK and overseas.

 

After the period end, we secured two significant new contracts, which move the business into new territories.  Most significantly, in May 2010, we signed our first contract in the USA, with Cardtronics, Inc., the world's largest non-bank owner of ATMs, operating over 33,700 ATMs globally.  This was followed in June by our first contract in South America, providing a major bank in Ecuador with our atmAd solution. Both of these contracts demonstrate the attractions of our unique ATM advertising solution, which remains the only ATM marketing solution capable of being deployed across multiple ATM platforms.

 

Our latest contract wins, which increase our third party advertising ATM estate to 9,100 ATMs from 5,600 last year, demonstrate the continuing attractions of our solution and we believe that there remain substantial opportunities for further expansion both in the UK and overseas.  We expect to see further progress over the remainder of the year and continue to view long term prospects for the business very positively."   

 

 

 

 

Enquiries:

 

i-design group plc	Ana Stewart, Chief Executive Ian Sunter, Finance Director	T: 020 7448 1000 (today) T: 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 our results for the six months ended 31 March 2010. While the trading backdrop over the period remained challenging for us, with media advertising budgets still constrained, we are seeing signs of sentiment improving in the banking sector.  This change is obviously helpful to us as we pursue discussions with both existing bank customers and new customers, in the UK and overseas.  We have made encouraging progress here, although, as we have previously highlighted, it remains difficult to predict with certainty the timing of any outcome of these discussions.

 

After the period end, we secured two significant new contracts, which move the business into new territories.  Most significantly, in May 2010, we signed our first contract in the USA, with Cardtronics, Inc., the world's largest non-bank owner of ATMs, operating over 33,700 ATMs globally.  This was followed in June, by our first contract in South America, providing a major bank in Ecuador with our atmAd solution. Both of these contracts demonstrate the attractions of our unique ATM advertising solution, which remains the only ATM marketing solution capable of being deployed across multiple ATM platforms.

 

Results

 

Revenue for the six months to 31 March 2010 reduced by 34% to £911,000 from £1,379,000 in 2009 and, as a result, gross profit decreased to £91,000 from £431,000 in 2009.  

 

Careful control of costs has resulted in a 12% reduction in administrative expenses to £755,000 from £820,000 in 2009.  The operating loss was £664,000 from £382,000 in 2009 and the loss before tax was £660,000 from £368,000 in 2009.  A taxation credit of £153,000, relating to research & development tax credits, was received in May 2010.  This credit relates to 2008 and 2009 and has been recognised in these financial statements.  The basic loss per share was £0.04 from £0.03 in 2009.

 

The net cash outflow from operating activities was £626,000 (2009: outflow of £152,000), other investing and financing outflows were £10,000 (2009: inflow of £490,000 mainly arising from the sale of bonds) resulting in a cash outflow of £636,000 in the year (2009: inflow of £338,000). 

 

Outstanding borrowings at 31 March 2010 have reduced to £20,000 (2009: £35,000) and the Group's net cash and cash equivalents position at the period end was healthy at £1,044,000 (2009: £1,920,000).

 

Business Model

 

i-design has developed an ATM advertising solution, called atmAd, which enables ATM network owners 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 worldwide which combines both the software and media sales capability necessary to enable network owners to generate revenue from third party advertising.

 

Business Development

 

As reported in full year results in November 2009, the trading environment toughened over the last financial year. Conditions have stabilised during the current financial year although there is still pressure on advertising budgets. 

Against this backdrop, however, it was encouraging to see new advertisers such as HTC, the mobile phone provider, Schuh, the footwear retailer, The Mirror newspaper and Visa, the payments business, use our advertising medium. The level of repeat bookings is steady year on year, with repeat bookings from brands including Beiersdorf, the global skin care company, British Airways and Pizza Hut (which both signed 12 month contracts).  In February 2010, we made new appointments to the Media Sales teamwith the objective of strengthening our direct sales capability.  We are seeing good progress being made in this area and since the period end, we have also seen an upturn in new advertising clients, including Muller, Colgate,  ITV, Cadbury's and Peugeot.

 

As we seek to increase the size and scope of our ATM estate, we continue to engage with additional ATM network owners, both in the UK and overseas, as well as with existing customers.  In addition, we are adding new channel partners to assist us in targeting international growth opportunities without scaling up our cost base. 

 

Since the period end, we have achieved significant progress with our international growth objectives, signing two important new contracts.  In May 2010, we secured our first ATM network in the USA.  This is with Cardtronics, Inc. ("Cardtronics"), the largest global non-bank owner of ATMs with over 33,700 ATMs worldwide.  Cardtronics will be licensing and deploying atmAd across 3,000 of its ATMs, 2,200 in the USA and the remaining 800 in the UK.  These 800 ATMs in the UK comprise approximately one third of the ATM estate of Cardtronic's UK subsidiary, Bank Machine.  Under the terms of the contract, we have also agreed the exclusive rights to sell third party advertising on behalf of Cardtronics.  This contract, with such a prominent global network owner, is a very high profile endorsement of atmAd's flexibility and scope.  In securing our win with Cardtronics, we commissioned independent consumer research to test US consumer reaction to an ATM campaign we piloted.  The results were very positive, showing that over 95% of ATM customers could recall the brand and 94% agreeing that the ATM transaction was a better experience when the atmAd campaign was playing. 

 

Our contract with Cardtronics was followed this month with the announcement of i-design's first contract win in South America.  Under the terms of this agreement, which was secured through our South American channel partner, our advertising solution will be deployed across the ATM network of a major bank in Ecuador, comprising approximately 500 ATMs.  The contract brings recurring revenues for the ongoing use of i-design's proprietary systems which facilitate the management of advertising across ATM networks.  It is a strategically important win for us, establishing atmAd in a new territory and helping to open up further opportunities for us in South America. 

 

Once atmAd is fully deployed across these two new ATM estates, i-design will have a network of 9,100 ATMs available for third party advertising, with approximately a third of these overseas.  This compares with 5,600 ATMs available at this point last year.  The recently added ATMs are expected to come on stream in the beginning of the fourth quarter of this calendar year.

 

Outlook

 

The recent contract wins represent not only a significant expansion of our network since the start of the year but also a major step forward in terms of our growth strategy.  The two new overseas contracts establish our presence in North and South America, both of which offer attractive growth opportunities, whilst in the UK, we continue to engage in productive negotiations with additional ATM network owners.  Furthermore, we are deepening our relationships with existing customers. 

 

Our latest contract wins, which increase our third party advertising ATM estate to 9,100 ATMs from 5,600 last year, demonstrate the continuing attractions of our solution and we believe that there remain substantial opportunities for further expansion both in the UK and overseas.  We expect to see further progress over the remainder of the year and continue to view long term prospects for the business very positively.   

 

 

 

James Faulds

Chairman

 

I-DESIGN GROUP PLC

 

Interim statement of comprehensive income for the six months ended 31 March 2010

 

 

 

		Unaudited 6 months to	Unaudited 6 months to	Audited Year to
		31 Mar	31 Mar	30 Sept
		2010	2009	2009
	Note	£000	£000	£000
Revenue		911	1,379	2,370
Cost of sales		(820)	(948)	(1,904)
		____	____	_____
Gross profit		91	431	466
		____	____	_____
Other income		-	7	16
Administrative expenses		(755)	(820)	(1,625)
		____	____	_____
Operating loss before interest and tax		(664)	(382)	(1,143)
Finance income		4	18	35
Finance expenses		-	(4)	(4)
		____	____	____
Loss before taxation		(660)	(368)	(1,112)
Taxation	5	153	-	-
		____	____	_____
Loss and total comprehensive income for the financial period		(507)	(368)	(1,112)
		====	====	=====
(Loss) per share
Basic and diluted loss per share	4	(0.04)	(0.03)	(0.08)

 

I-DESIGN GROUP PLC

 

Interim statement of financial position as at 31 March 2010

 

 

 

		Unaudited 31 Mar	Unaudited  31 Mar	Audited 30 Sept
		2010	2009	2009
	Note	£000	£000	£000
Assets
Non-current assets
Property, plant and equipment		84	96	87
		___	___	___
		84	96	87
		___	___	___
Current assets
Trade and other receivables		787	895	535
Cash and cash equivalents		1,044	1,920	1,680
		______	______	______
Total current assets		1,831	2,815	2,215
		______	______	______
Total assets		1,915	2,911	2,302
		=====	=====	=====
Liabilities
Current liabilities
Trade and other payables		1,370	1,142	1,253
Current borrowings		15	15	15
		______	______	______
Total current liabilities		1,385	1,157	1,268
		______	______	______
Non-current liabilities
Non-current borrowings		5	20	13
		______	______	______
Total liabilities		1,390	1,177	1,281
		______	______	______
Net assets		525 =====	1,734 =====	1,021 =====
Equity
Share capital	6	533	533	533
Share premium account		3,433	3,433	3,433
Retained earnings		(3,441)	(2,232)	(2,945)
		______	______	______
Total equity		525 =====	1,734 =====	1,021 =====

I-DESIGN GROUP PLC

 

Interim statement of changes in equity for the six months ended 31 March 2010

 

 

 

 

	Share	Share	Retained
	capital	premium	earnings	Total
	£000	£000	£000	£000
Balance at 1 October 2008	533	3,433	(1,899)	2,067
Loss for the period	-	-	(368)	(368)
Shared based payments	-	-	35	35
	_____	_____	______	______
Balance at 31 March 2009 (unaudited)	533	3,433	(2,232)	1,734
	====	====	=====	=====
Balance at 1 October 2008 Loss for the period Share based payments	533 - -	3,433 - -	(1,899) (1,112) 66	2,067 (1,112) 66
	_____	_____	______	______
Balance at 30 September 2009 (audited)	533	3,433	(2,945)	1,021
	====	====	=====	=====
Balance at 1 October 2009	533	3,433	(2945)	1,021
Loss for the period	-	-	(507)	(507)
Share based payments	-	-	11	11
	_____	_____	______	______
Balance at 31 March 2010 (unaudited)	533	3,433	(3,441)	525
	====	====	=====	=====

 

I-DESIGN GROUP PLC

 

Interim statement of cash flows for the six months ended 31 March 2010

 

 

 

	Unaudited 6 months to	Unaudited 6 months to	Audited Year to
	31 Mar	31 Mar	30 Sept
	2010	2009	2009
	£000	£000	£000
Cash flows from operating activities
Operating loss	(664)	(382)	(1,143)
Depreciation	9	9	18
(Increase)/decrease in trade and other receivables	(99)	(40)	320
Increase in trade and other payables	117	226	337
Share based payment expense	11	35	66
	____	____	____
Net cash outflow from operating activities	(626)	(152)	(402)
	____	____	____
Cash flows from investing activities
Purchases of property, plant and equipment	(6)	(4)	(4)
Encashment of bonds	-	496	500
Interest received	4	21	35
	_____	_____	_____
Net cash used from investing activities	(2)	513	531
	_____	_____	_____
Cash flows from financing activities
Repayment of borrowings	(8)	(16)	(27)
Payment of finance lease liabilities	-	(3)	(0)
Interest paid	-	(4)	(4)
	_____	_____	_____
Net cash outflow from financing activities	(8)	(23)	(31)
	_____	_____	_____
Net (decrease)/increase in cash and
cash equivalents	(636)	338	98
Cash and cash equivalents at beginning
of period	1,680	1,582	1,582
	_____	_____	_____
Cash and cash equivalents at end of the period	1,044	1,920	1,680
	====	====	====

 

I-DESIGN GROUP PLC

 

Notes to the interim financial statements

 

 

 

1       This statement for the six months ended 31 March 2010 is unaudited and was approved by the Directors on 29 June 2010.  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 2009 which were prepared in accordance with International Financial reporting Standards as adopted by the EU (IFRSs) and with those parts of the Companies Act 2006 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 498 (2) or (3) of the Companies Act 2006.  Copies of the financial statements for 2009 are 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.

 

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 applied in the Group financial statements for the year ended 30 September 2009 and as will be adopted in the Group financial statements for the year ending 30 September 2010.The Group financial statements for the year ended 30 September 2009 were prepared under International Financial Reporting Standards.  These 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. 

New standards, interpretations and amendments effective from 1 October 2009

The following new standards, interpretations and amendments, applied for the first time from 1 January 2009, have had an effect on the interim financial statements:

IAS 1 (revised 2007) - Presentation of Financial Statements

The revised standard has introduced a number of presentational changes to the financial statements. There has been no effect on the reported results or previous financial position of the Group. The Group has elected to present a single statement of comprehensive income. In addition, a statement of changes in equity is now presented as a primary statement

 

IFRS 8 - Operating Segments

IFRS 8 is a disclosure standard only, requiring disclosure based on information presented to the Directors on the financial performance of the Group's operating segments.  The adoption of this standard has had no material impact on the financial statements or disclosure given that the business is regarded as, and financial performance is reported to the Directors, in respect of one segment due to the nature of services provided.

 

4        Loss per share and dividends

 

         No dividends have been paid during the period ended 31 March 2010.

 

         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 to	Unaudited 6 months to	Audited Year to
	31 Mar	31 Mar	30 Sept
	2010	2009	2009
	£000	£000	£000
Loss for financial period	(630)	(368)	(1,112)
	====	====	=====
	No.	No.	No.
Weighted average no of shares	14,105,437	14,105,437	14,105,437
	========	========	========
Basic and diluted loss per share	(0.04)	(0.03)	(0.08)

 

 

5        Taxation

 

         The Company has recognised a taxation credit in relation to R&D taxation credits relating to 2008 and 2009 which was received in May 2010.

 

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	Share capital
		31 March 2010		31 March 2009		30 September 2009
		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 2010 are fully paid.

 

7        Subsequent events

      

There were no significant events after the balance sheet date.

 

8        Availability of interim statement

 

         Copies of this interim statement 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.