RNS Number : 0336J
i-design Group Plc
27 November 2008
IDG
27 November 2008
I-DESIGN GROUP PLC
("i-design" or "the Company" or "the Group")
Preliminary Results
for the year ended 30 September 2008
i-design, which provides a market leading ATM advertising solution (called atmAd) enabling ATM network owners to run both third party
advertising and their own internal marketing campaigns on their ATM screens and receipts, is pleased to announce its preliminary results for
the year ended 30 September 2008.
Corporate Highlights
* ATMs available for third party advertising increased more than fourfold to 4,500 at 30 September (2007: 1,000)
- full benefits yet to come through
* New contracts secured with ATM owners during year brings total number of ATMs licensed with atmAd to 12,000 cash point machines at
30 September 2008 (2007: 8,100)
* First overseas win for atmAd - secured in May 2008 via reseller
* Media sales income growing strongly - 50% increase in number of brands booking campaigns on ATMs
- highly accountable and engaged nature of adverting interaction remains very attractive
to advertisers
- average value of booking increased by 16% year-on-year
- first ever multi-network ATM advertising campaign in June
Financial Highlights
* Revenue more than doubled to £2.07m (2007: £1.03m)
* Gross profits increased more than sixfold to £796,000 (2007: £125,000)
* Operating loss reduced by 5% to £623,000 (2007: £656,000)
* Loss before tax reduced by 14% to £536,000 (2007: £622,000)
* Loss per share reduced by 33% to 0.04p (2007: 0.06p)
* Bonds (disclosed as Loans and receivables) totalling £0.5m (2007: £nil) plus net cash of £1.6m at 30 September 2008 (2007:
£2.65m).
* Board views outlook for the current financial year and beyond with optimism
Commenting on results, Chairman, Jim Faulds, said,
"Since the launch of atmAd in 2004, we have seen the business develop rapidly and I am pleased to report on further substantial progress
over the year.
Our offering, both in terms of our technology and the scope of our services, is highly differentiated. Uniquely, our product, atmAd, can
be integrated into existing software networks and installed on any type of ATM. We are also able to deliver third party advertisers and
manage ATM advertising campaigns and so enable ATM owners to generate new revenues from their ATM estates. This integrated approach is
unparalleled in our industry to date and a major attraction for ATM owners.
We now have third party ATM advertising agreements in place with three major UK retail banks, which is proving highly attractive to
advertisers. Since the start of the new financial year, demand for our specialist digital advertising medium remains healthy despite
advertising lead times shortening and the substantial increase in the number of ATMs available for advertisers leaves us well placed to grow
media sales revenues significantly.
We continue to invest in enhancing our product, atmAd, and to expand our staff resource and view the outlook for the current financial
year and beyond with optimism."
Enquiries:
i-design group plc Ana Stewart, Chief Executive T: 01382 541 041
Ian Sunter, Finance Director
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 second set of preliminary results as an AIM listed company. Since the launch of atmAd in 2004, we
have seen the business develop rapidly and I am pleased to report on further substantial progress over the year.
The high point in the twelve months under review came in January 2008, when we signed a major enterprise level contract for atmAd with
The Royal Bank of Scotland ("RBS"). RBS operates the largest number of ATMs in the UK and the enterprise contract covers RBS's entire
estate, making this is a landmark agreement for the Group. We have initially installed our solution across all RBS Cashline ATMs at Tesco
stores in the UK, comprising some 2,500 machines in total.
Including RBS, i-design's unique ATM advertising solution has now been deployed by three major retail banks. Their ATM estates together
total some 12,000 machines and represent approximately 34% of all ATMs operated by financial institutions in the UK. As a result of our new
wins during the year, the total number of ATMs we can now offer for third party advertising has risen more than fourfold to 4,500 ATMs at 30
September 2008, from 1,000 at 30 September 2007.
In June 2008, we ran the world's first cross-network ATM advertising campaign, utilising our unparalleled capacity to manage the entire
process via our atmAd technology. We are also seeing increasing interest from advertisers as the attraction of using the ATM transaction as
a channel to the consumer gains momentum, and as the number of available ATM sites in our portfolio grows. Whilst advertising budgets are
generally being reduced, the focused nature of advertising on a cash point machine, combined with the rapid turn-around time and
accountability of our solution, has allowed us to continue to grow advertising revenues.
Results
Revenue for the year ended 30 September 2008 more than doubled to £2.07m from £1.03m in 2007 and gross profit increased by over sixfold
to £796,000 from £125,000 in 2007. Whilst this principally reflected the significant increase in software licence sales of atmAd, income
from both media sales and creative sales also 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. Nonetheless, we also reduced the operating loss by 5% from £656,000 in 2007 to £623,000 this year. The loss before tax
decreased by 14% from £622,000 in 2007 to £536,000 this year. The basic loss per share reduced by 33% from 0.06p in 2007 to 0.04p this
year.
The net cash outflow from operating activities was £538,000 (2007: outflow of £628,000) plus other investing and financing outflows of
£533,000 (2007: inflow £2,750,000, reflecting the monies raised at the time of the Company's flotation) resulted in a cash outflow of
£1,071,000 in the year (2007: inflow of £2,121,000). Investing activities included the purchase of bonds totalling £496,000 (2007:
£nil).These bonds are disclosed as Loans and receivables in the Company's financial statements. Outstanding borrowings at 30 September 2008
have reduced to £54,000 (2007: £107,000) and the Group's net cash and cash equivalents position at the year end was £1.6m (2007: £2.65m).
Dividends
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 dividends.
Business Progress
As I highlighted above, the signing of our largest contract to date, with RBS, in the first half of the financial year has considerably
increased the number of ATMs in our estate available for third party advertising. Moreover, the ATMs we have added are ATMs at Tesco stores,
which see particularly high consumer usage. While there was a delay in the implementation of our advertising solution on these 2,500
machines, it was successfully completed in the second half of the year and, as expected, we are seeing strong interest from advertisers for
these ATMs. Tesco's agreed takeover of its joint venture with RBS (Tesco Personal Finance) means that Tesco becomes a new customer as well
as RBS remaining a customer.
We completed the installation of atmAd across Alliance & Leicester's entire ATM estate, including branch sites, by the end of the first
half of the year. This contract, which was secured in September 2007, also gives us the exclusive rights to sell advertising space to third
parties. The full benefit of our enlarged estate of ATMs which are available for third party advertising should come through in the current
financial year to 30 September 2009 when we expect to see a significant increase in revenue from media sales.
i-design also made a notable step forward in its ambitions to develop overseas markets with its first international contract win in May
2008. The contract was won through the Group's channel partner, Mellon Financial Products SA, and is for the provision of atmAd to a major
banking ATM network owner in Greece. The contract covers the use of our advertising solution to run the bank's marketing campaigns across
its ATM estate. This, in due course, may lead to an additional agreement for third party advertising, reflecting our initial experience in
the UK.
The success of our advertising solution as a means for retail banks to generate new revenues from their ATM estates is demonstrated in
our relationship with Nationwide. After using our solution initially for internal marketing purposes only, Nationwide made a certain number
of non-branch ATMs available to us for third party advertising. The positive results of this initiative led to Nationwide giving us
exclusive rights to third party advertising across all its non-branch ATMs. In the first half of this year, after a successful advertising
campaign for mobile phone top ups on certain branch-based ATMs, Nationwide has made a number of branch-based ATMs available to us for third
party advertising in addition to all non-branch ATMs.
The developments outlined above have helped to cement our position in the ATM marketplace as the only provider of a proven multi-network
third party advertising solution. I am pleased to report that our discussions with other potential customers are ongoing. We continue to
maintain excellent relationships with all the key retail banks in the UK and are also developing relationships with ATM network owners and
channel partners overseas.
i-design's ability to run multi-network ATM campaigns has proved attractive to advertisers and, during the year, we saw a 50% increase
in the number of brands booking ATM space across our estate. Encouragingly, we are also seeing bookings from new industry sectors. Brands
and organisations booking repeat campaigns have increased, with repeat advertisers, including British Airways and the Central Office of
Information. Furthermore, it is especially encouraging that the average value of bookings has increased by over 16% year-on-year,
demonstrating the increasing interest in our offering. Key to our ATM advertising proposition is the highly engaged nature of the
advertising interaction and the fact that we can provide fully audited feedback following any campaign.
We estimate that, through our enlarged estate of 4,500 ATMs, we now offer third party advertisers access to a potential 540 million
consumer ATM transactions per annum. This is a significant increase on last year when our estate of approximately 1,000 third party ATMs
provided access to a potential 90 million consumer transactions.
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
We are very pleased with the significant progress we have made over the past year which has continued into the current financial year.Our offering, both in terms of our technology and the scope of our services, is highly differentiated. Uniquely, our product, atmAd, is
platform independent and can be integrated into existing software networks and installed on any type of ATM. We have also developed our
technology so that it is easy to use and offers sophisticated features. Additionally, we are able to deliver third party advertisers and
manage ATM advertising campaigns and so enable ATM owners to generate new revenues from their ATM estates. This integrated approach is
unparalleled in our industry and a major attraction for ATM owners.
We now have third party ATM advertising agreements in place with three major UK retail banks, which is proving highly attractive to
advertisers. Since the start of the new financial year, demand for our specialist digital advertising medium remains healthy despite
advertising lead times shortening and the substantial increase in the number of ATMs available for advertisers leaves us well placed to grow
media sales revenues significantly.
In addition, while the problems in the retail banking sector are well documented, we have good relationships with all the key UK banks
and other network owners. Our ongoing discussions with potential new customers remain positive and we continue to find ATM owners highly
receptive to our advertising solution, which provides the potential for them to derive new revenues from their ATM estates. We continue to
invest in enhancing our product, atmAd, and to expand our staff resource and view the outlook for the current financial year and beyond with
optimism.
James Faulds
Chairman
INCOME STATEMENT
For the year ended 30 September 2008
2008 2007
Note £ £
Revenue 3 2,070,986 1,029,328
Cost of sales (1,275,060) (904,427)
_______ _________
Gross profit 795,926 124,901
Other income 44,500 32,923
Administrative expenses (1,463,371) (813,676)
_______ _______
Operating loss before interest and tax 4 (622,945) (655,852)
Finance income 94,686 47,074
Finance costs (8,080) (12,795)
_______ _______
Loss before taxation (536,339) (621,573)
Taxation - 30,494
________ _______
Loss for the financial year (536,339) (591,079)
======= ======
Earnings per share (pence)
Basic and diluted 5 (0.04) (0.06)
===== =====
GROUP BALANCE SHEET
at 30 September 2008
2008 2007
£ £
Assets
Non-current assets
Property, plant and equipment 100,646 48,751
_______ _______
100,646 48,751
_______ _______
Current assets
Trade and other receivables 854,822 345,619
Loans and receivables 499,177 -
Corporation tax - 30,494
Cash and cash equivalents 1,582,423 2,653,585
________ ________
Total current assets 2,936,422 3,029,698
________ ________
Total assets 3,037,068 3,078,449
======= =======
Liabilities
Current liabilities
Trade and other payables 916,055 438,529
Current borrowings 26,667 53,010
_______ _______
Total current liabilities 942,722 491,539
_______ _______
Non-current liabilities
Non-current borrowings 27,500 54,167
_______ _______
Total liabilities 970,222 545,706
_______ _______
Equity
Share capital 533,052 533,052
Share premium account 3,433,399 3,433,399
Retained earnings (1,899,605) (1,433,708)
________ ________
Total equity 2,066,846 2,532,743
________ ________
Total equity and liabilities 3,037,068 3,078,449
======= =======
.
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2008
Share Share Retained
capital premium Earnings Total
£ £ £ £
Balance at 30 September 2006 16,733 1,176,687 (869,982) 323,438
Arising on share issue in
i-design multimedia limited 1,175 24,750 - 25,925
Arising on share issue in
i-design group plc 515,144 2,936,321 - 3,451,465
Issue costs - (704,359) - (704,359)
Loss for the period - - (591,079) (591,079)
________ _________ ________ ________
Total recognised income and (1,461,061) 2,505,390
expense
Share based payments - - 27,353 27,353
________ ________ ________ ________
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 (1,970,047) 1,996,404
expense
Share based payments - - 70,442 70,442
________ ________ ________ ________
Balance at 30 September 2008 533,052 3,433,399 (1,899,605) 2,066,846
======= ======= ======= =======
CASH FLOW STATEMENT
For the year ended 30 September 2008
2008 2007
£ £
Cash flows from operating activities
Operating loss (622,945) (655,852)
Depreciation 15,387 5,745
Increase in trade and other receivables (509,203) (34,424)
Increase in trade and other payables 477,527 5,485
Taxation receipts 30,494 44,819
Release of SEF grant - (21,293)
Share based payment expense 70,442 27,353
_______ _______
Net cash outflow from operating activities (538,298) (628,167)
_______ _______
Cash flows from investing activities
Purchases of property, plant and equipment (67,282) (1,371)
Purchase of bonds (495,750) -
Interest received 91,259 47,074
_______ _______
Net cash used from investing activities (471,773) 45,703
_______ _______
Cash flows from financing activities
Net proceeds from issue of share capital - 2,773,031
Repayment of borrowings (50,000) (50,000)
Capital element of finance leases (3,011) (6,325)
Interest paid (8,080) (12,795)
________ ________
Net cash outflow/inflow from financing activities (61,091) 2,703,911
________ ________
Net (decrease)/increase in cash and cash (1,071,162) 2,121,447
equivalents
Cash and cash equivalents at beginning of year 2,653,585 532,138
________ ________
Cash and cash equivalents at the end of the year 1,582,423 2,653,585
======= =======
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 240
Companies Act 1985. The figures for the years ended 30 September 2007 and 2008 have been extracted from the audited financial statements.The financial statements for 2008 will be delivered to the Registrar of Companies following the Annual General Meeting and will be sent to
shareholders on or around 19th December 2008. 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-design.co.uk.
The financial statements for the years ended 30 September 2007 and 2008 received an unqualified auditors' report which did not contain a
statement under section 237 (2) or (3) Companies Act 1985.
2. Accounting policies
The significant accounting policies that have been used in the preparation of the financial statements are summarised below.
Basis of preparation
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 1985 applicable to companies reporting under
IFRS.
New standards implemented this year are:
IFRS 7, 'Financial instruments: Disclosures', and the complementary amendment to IAS 1, 'Presentation of financial statements - Capital
disclosures', introduces new disclosures relating to financial instruments and does not have any impact on the classification and valuation
of the Group's financial instruments, but does bring in further disclosures around trade, loans and other receivables and payables.
IFRIC 8, 'Scope of IFRS 2', requires consideration of transactions involving the issuance of equity instruments, where the identifiable
consideration received is less than the fair value of the equity instruments issued in order to establish whether or not they fall within
the scope of
IFRS 2. This interpretation does not have any impact on the Group's financial statements.
IFRIC 10, 'Interim financial reporting and impairment', prohibits the impairment losses recognised in an interim period on goodwill and
investments in equity instruments and in financial assets carried at cost to be reversed at a subsequent balance sheet date. This
interpretation does not have any impact on the Group's financial statements.
IFRIC 11, 'Group and Treasury Share Transactions', this interpretation has had no impact on the Group's financial statements.
New standards and interpretations currently in issue but not effective for accounting periods commencing on 1 October 2007 are:
IAS 1 Presentation of Financial Statements (revised 2007) (effective 1 January 2009)
IAS 23 Borrowing Costs (revised 2007) (effective 1 January 2009) Amendment to IAS 32 Financial Instruments: Presentation and IAS 1
Presentation of Financial Statements - Puttable Financial Instruments and Obligations Arising on Liquidation (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)
Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards and IAS 27 Consolidated and Separate Financial
Statements - Costs of Investment in a Subsidiary, Jointly Controlled Entity or Associate (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)
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)
IFRIC 15 Agreements for the Construction of Real Estate (effective 1 January 2009)
IFRIC 16 Hedges of a Net Investment in a Foreign Operation (effective 1 October 2008)
The adoption of IAS 1 will impact disclosure within the financial statements, the adoption of IFRS 3 will impact the basis of accounting
for future acquisitions. The adoption of IFRS 8 could have a significant impact on the disclosure of segments.
The full effects of the remaining standards and interpretations on the Group accounts are not known at this time.
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 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%
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 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 will offset existing tax losses is not yet
probable.
Key sources of estimation 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
2008 2007
£ £
UK 1,824,508 1,029,328
Europe 234,593 -
Rest of the World 11,885 -
________ ________
2,070,986 1,029,328
======= =======
4. Operating loss 2008 2007
£ £
The operating loss
is stated after
charging/(crediting)
:
Directors' 287,222 205,670
remuneration
Depreciation
- owned assets 15,387 2,369
- leased assets - 3,376
Auditors'
remuneration
- audit 21,250 25,000
- non audit - 5,250 5,000
subsidiary company
audit
Share options 70,442 27,353
Research and 294,840 233,205
development costs
Government grants - (21,293)
Exchange gains 65 -
Operating leases 107,034 33,215
====== ======
Auditors' remuneration for non-audit work set off against share
premium during the previous year was £63,917 for corporate
finance work and £5,000 for taxation.
Included in share options is £41,803 (2007 - £10,451) relating
to directors.
5. Earnings per share and dividends
No dividends have been paid during the year ended 30 September 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
in
2007 have been in issue for the entire prior period and for the period up to the date of the actual transition.
2008
2007
No.
No.
Weighted average number of shares in issue 14,105,437
9,970,174
========
=======
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 2008
(536,339)
Year ended 30 September 2007
(591,079)
=======
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.
2008 2008 2007 2007
Number of options 853,500 20,000 977,500 20,000
Exercise period 2010 to 2017 2010 to 2017 2010 to 2017 2010 to 2017
Option exercise
price: £0.67 £0.34 £0.67 £0.34
The fair value of options granted was calculated using the Black Scholes
option pricing model incorporating the following assumptions:
Number of options 853,500 20,000 977,500 20,000
Volatility 30% 30% 30% 30%
Spot price £0.67 £0.67 £0.67 £0.67
Interest rate 5.5% 5.5% 5.5% 5.5%
Dividend yield Nil Nil Nil Nil
Vesting period 3 years 3 years 3 years 3 years
Option value weighted average exercise
price £0.28 £0.47 £0.28 £0.47
The volatility assumption is based upon historic share price volatility in
the media sector.
As disclosed in note 4 the share option charge for the year was £70,442 (2007
- £27,353).
Options granted to certain employees are subject to additional exercise
conditions based on the satisfaction of certain performance criteria and
business objectives, which are set by the remuneration committee. These
criteria are the attainment of certain team and individual revenue targets.
During the year 124,000 options lapsed as performance criteria were not met.
Summary of options
Weighted
average
exercise
Exercise Exercise Expiry 30 Sept 2007 30 Sept 2007 price
Price Date Date
Lapsed Exercised
Enterprise management incentive scheme
£0.67 2010 2017 581,500 (124,000) - 457,500 £0.28
£0.34 2010 2017 20,000 - - 20,000 £0.47
Unapproved scheme
£0.67 2010 2017 396,000 - - 396,000 £0.28
______ _______ _____ _______
997,500 (124,000) - 873,500
====== ====== ===== ======
This preliminary announcement was approved by the Board of Directors on 26th November 2008.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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