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Market Cap
£2.61m
Change Today
0.000p ()
Share Price
18.50p
Preliminary Results
i-design Group Plc
29 November 2007
IDG.L
I-DESIGN GROUP PLC
("i-design" or "the Group" or "the Company")
Announces
Maiden Preliminary Results
for the year to 30 September 2007
i-design provides a market leading ATM advertising solution (called ATM:ad)
which enables ATM network owners to run both third party advertising and their
own internal marketing campaigns on their ATMs.
Highlights
•Admission to AIM in July 2007
•Transformational year in establishing ATM:ad in UK
•HSBC and Alliance & Leicester become, respectively, second and third
customers of ATM:ad
•Major contract extension agreed with Nationwide Building Society
•Continuing investment in ATM:ad software to enhance market appeal
•Business scaled for growth - both media sales and software sales teams
expanded
- head of media sales and head of software sales appointed
•Significant advertising bookings, including:
- 12 month agreement with British Airways and gender specific campaign
for Nivea
•Results exceed market expectations:
- turnover rose by 52% to £1,029,000 (2006: £679,000)
- operating loss of £656,000 (2006: loss of £626,000)
- loss before tax of £622,000 (2006: loss of £615,000)
- basic loss per share of 0.06p (2006: loss of 0.06p)
•Board continues to view prospects very positively
- confident of signing further ATM network owners
- advertising sales expected to increase significantly
James Faulds, Chairman, commented,
"It has been an exciting year for i-design. The business has made excellent
progress, both technically, with our ATM advertising technology, and
commercially, with new contracts. I am also pleased to report that post the year
end, the Group is continuing to make good progress.
Our admission to AIM on 20 July 2007 marked a key step in the business'
development. Our status as a publicly quoted company has brought us significant
advantages, raising i-design's profile in the banking ATM marketplace and
enhancing our position as we negotiate with potential customers. Additionally,
the funds we raised at admission to AIM underpin the next phase of growth.
The market for ATM advertising is still emerging and we believe the opportunity
for us to establish i-design as the leading ATM advertising solution provider in
the UK is within our reach. We are greatly encouraged by our progress to date
and therefore continue to view prospects for the business very positively."
Enquiries:
i-design group plc Ana Stewart, Chief Executive T: 020 7448 1000
Ian Sunter, Finance Director Thereafter: 01382 541 041
Biddicks Katie Tzouliadis T: 020 7448 1000
Sophie Lane
Arbuthnot Tom Griffiths T: 020 7012 2000
Securities
Alasdair Younie
CHAIRMAN'S STATEMENT
Introduction
I am delighted to present i-design's trading results for the year, which are the
Company's first as a publicly quoted company.
It has been an exciting year for i-design. The business has made excellent
progress, both technically, with our ATM advertising technology, and
commercially, with new contracts. I am also pleased to report that post the year
end, the Group is continuing to make good progress.
Our admission to AIM on 20 July 2007 marked a key step in the business'
development. Our status as a publicly quoted company has brought us significant
advantages, raising i-design's profile in the banking ATM marketplace and
enhancing our position as we negotiate with potential customers. Additionally,
the funds we raised at admission to AIM underpin the next phase of growth.
Since the launch of our advertising solution, ATM:ad, in 2004, the business has
made rapid progress. However, the three contracts we signed this financial year
firmly establish i-design's ATM advertising technology as market leading. The
opportunity to build on this position is significant since the market is still
emerging and we are well-advanced in certain negotiations with potential banking
customers. With the adoption of our technology by ATM owners comes the
opportunity of developing third party advertising sales. We believe we are
equally well-positioned here, having a well-developed dedicated media sales
operation, and the scope to increase our media sales revenues over time is
considerable.
As we look forward, we are greatly encouraged by our progress to date and
continue to view prospects for the business very positively.
Results
Results for the year to 30 September 2007 exceeded market expectations. Turnover
rose by 52% to £1,029,000 (2006: £679,000) and the business generated a gross
profit of £125,000 (2006: gross loss £206,000). The operating loss increased
slightly by 5% to £656,000 (2006: £626,000). Research & development expenditure
was £233,000 (2006: £187,000).
The loss before tax was £622,000 (2006: £615,000). After a tax credit of £30,500
(2006: £45,000), the loss for the year was £591,000 (2006: £570,000). The basic
loss per share was 0.06p (2006: loss of 0.06p).
There was a cash inflow of £2.1m following the £3.45m (before expenses) raised
on admission to AIM. The net cash outflow from operating activities was £628,000
(2006: outflow of £573,000). Outstanding borrowings at 30 September 2007 were
£107,000 (2006: £163,000).
Dividends
The Directors currently intend to devote the Company's cash resources to growing
its operations however they will reconsider the Company's dividend policy as and
when the Company is in a position to pay dividends.
Business Progress
We launched our ATM advertising solution, ATM:ad, which enables network owners,
such as banks, to run their own and third party advertising on their ATMs, in
2004. The response we have received to date has been excellent and we believe a
key component is the fact that ATM:ad enables banks and other ATM owners to
generate new revenue streams from advertising.
While there are some competing products in the marketplace, both our approach
and technology are highly differentiated. Importantly and uniquely, our
technology is platform independent, integrating into existing software networks
and running on any type of ATM. We have also developed the technology so that it
is easy to use and offers sophisticated features. Our approach is also to offer
an integrated solution so that ATM owners wishing to generate revenue from third
party advertising can use our highly experienced media sales and creative teams
to manage all third party campaign activities. Our media sales team sources
advertisers while our creative team assists in the smooth execution of a
campaign.
I am delighted to report that during the period, in April 2007, we extended our
exclusive contract with Nationwide Building Society to May 2010 and in the same
month, secured HSBC as a second customer for ATM:ad. HSBC will be initially
using ATM:ad to run its own advertising campaigns. Our third major contract came
in September 2007, when we signed a five year contract with Alliance & Leicester
plc. The contract includes the exclusive rights for i-design to sell third party
advertising space across Alliance & Leicester's ATM network, which incorporates
ATMs on high streets, university campuses, supermarket and at petrol stations.
Team Effort
On behalf of your Board, I would like to thank all our talented 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 period
and in the current financial year. We continue to invest in enhancing our
product, ATM:ad, and in expanding our sales resource and believe that prospects
for continuing growth remain excellent.
James Faulds
Chairman
CHIEF EXECUTIVE'S REPORT
Introduction
The year ended 30 September 2007 has been one of significant progress for the
Company. We have invested further in enhancing our ATM advertising solution,
ATM:ad, which enables banks to run third party advertising and internal
marketing campaigns across their ATM networks, strengthening the product with
the addition of a range of new features. These include the ability to target ATM
users by gender. We have also made significant investment in our operations in
order to support the continuing expansion of the business.
In July 2007, i-design was admitted to AIM and at the same time, we successfully
completed a placing of shares to raise £3.45 million (before expenses). As a
result, the Company is now well positioned to capitalise on growth opportunities
both in the UK and abroad.
Business Model
i-design has developed an ATM advertising solution called ATM:ad which enables
retail banks to generate a new source of revenue, from one-to-one advertising on
ATM screens and receipts.
ATM:ad provides a comprehensive solution, handling all aspects of campaign
management from booking, scheduling, distribution, playback and reporting.
Importantly, any advertising is displayed during the 'dead space' in an ATM
transaction, when customers are waiting for their cash, card or receipt and it
therefore does not extend customers' time at the cash machine. ATM:ad is also
unique in being platform independent, running on any type of Windows based ATM
environment.
In selling ATM:ad, we are able to generate three main sources of revenue, as set
out below. However, software sales and media sales represent our key revenue
generators.
•Software sales
These are generated through the sale of software licences to ATM network owners
for the use ATM:ad. There are also associated maintenance fees and integration
services.
•Media sales
Advertising commission is generated from selling advertising space on behalf of
ATM network owners. The revenues generated from advertising commission are split
between the network owner and i-design.
•Creative sales
These derive from fees generated from ATM screen design services to banks and
for the creation of advertisements or the conversion of existing advertisements
into the appropriate ATM format for advertisers.
Currently, i-design's offering is unrivalled in being the only dedicated ATM
advertising solution in the UK which combines the software and media sales
capability necessary to enable network owners to generate revenue from third
party advertising.
Business Review
Software Sales
Over the last year, the Company has made considerable progress with its software
sales to ATM network owners. This was, in part, driven by the addition of new
software features which enhance ATM:ad's appeal. These enhanced features include
ATM:ad Insight, which enables advertisers to target users, e.g. by gender or by
institutional profile, and provides them with even greater flexibility when
planning advertising campaigns. These new features assisted us in securing
further software licence sales with our existing ATM:ad customer, Nationwide
Building Society.
In the second half of the year, we made substantial headway in new software
sales, securing our second and third banking networks. In April, we signed a
licence agreement with HSBC plc and in September, we secured a five year
contract with Alliance & Leicester plc. Our contract with Alliance & Leicester
included the exclusive right to sell third party advertising on their non-branch
ATMs.
I am pleased to report that we are seeing strong levels of interest in our
software from overseas. In March 2007, we signed a reseller agreement with
Mellon Financial Products Support S.A., a European financial software provider.
Under the terms of this agreement, Mellon is acting as the Group's software
reseller in Greece.
As a result of these developments, i-design has increased year on year software
licence sales from 2,100 software licences in 2006 to 8,100 at the year end,
nearly a four-fold increase.
The Company has now established itself as the UK market leader in ATM
advertising and we intend to build on this position both in the UK and overseas.
To this end, we have appointed a Business Development Director for Software
Sales who will be focused on driving sales in the UK and overseas.
Media Sales
The attraction for advertisers in using ATMs is that they can communicate with
consumers on a one-to-one basis and that their messages are highly likely to be
noticed and remembered. We can also provide advertisers with targeted campaigns
and can provide fully audited feedback after the completion of a campaign.
Advertisers who have used ATM:ad span a broad range of sectors and include local
government authorities, police forces, as well blue chips companies such as
British Airways, Orange, Vodafone and Nivea.
During the past 12 months, we have focused on deepening our existing
relationships with blue chip advertisers, media planning agencies and outdoor
specialists as well as increasing our advertiser client base. It is encouraging
to see that we have added new advertisers from previously untapped industry
sectors including fast moving consumer goods.
I am also pleased to report that our repeat business is increasing. In June, we
signed our second 12 month agreement with British Airways for advertising
campaigns on selected ATMs. We are also seeing individual campaign values rise.
With the introduction of the new software features this year, we are now able to
run new types of campaigns for our advertising clients. This included the
world's first gender targeted ATM campaign, which was for Nivea for Men in
April. Further to this Nivea booked a second campaign in August 2007.
As part of our investment in expanding our media sales capability, our media
sales team moved into larger serviced offices in central London in May 2007.
After the year end, in October 2007, we appointed a Head of Media Sales, who
will be responsible going forward for developing media sales strategy.
The new contracts we have secured with Nationwide Building Society, HSBC, and
Alliance & Leicester mean that the number of ATMs over which we have exclusive
rights to sell third party advertising has increased significantly. The full
benefits of these contracts, in terms of potential media sales revenues, will
take time to flow through but we will be working hard to extract the maximum
advantage from potential advertising revenue as ATMs come 'on stream' over the
coming months.
Outlook
The Company has made significant progress over the year, establishing strong
foundations for future growth. We have strengthened the operational structure of
the business and our admission to AIM in July has enhanced our market profile
and directly assisted us in securing new contracts with retail banks.
With the two new contracts we have secured in the second half of the year to 30
September 2007, the number of ATMs which potentially become available to us to
generate third party advertising sales has increased significantly. This is
highly encouraging and as a result, the Board believes that i-design is well
positioned to increase its media sales revenues, in particular. We continue to
target those ATM network owners with large, high transaction volume ATM estates
and are in active negotiations which, if successful, could lead to the signing
of our fourth major banking customer.
As we look forward, we see ongoing opportunities in the UK and overseas, and
continue to view prospects for the current year and beyond with confidence.
Ana Stewart
Chief Executive
i-design group plc
Income Statement
For the Year ended 30 September 2007
2007 2006
Note £ £
Revenue 1,029,328 678,808
Cost of sales (904,427) (884,375)
-----------------------
Gross profit/(loss) 124,901 (205,567)
Other income 32,923 54,052
Administrative expenses (813,676) (474,553)
-----------------------
Operating loss 3 (655,852) (626,068)
Finance income 47,074 25,828
Finance costs (12,795) (14,820)
-----------------------
Loss before taxation (621,573) (615,060)
Taxation 30,494 44,819
-----------------------
Loss for the financial period (591,079) (570,241)
=======================
Earnings per share
Basic and diluted 4 (0.06) (0.06)
=======================
i-design group plc
Balance Sheet
At 30 September 2007
2007 2006
£ £
Assets
Non-current assets
Property, plant and equipment 48,751 53,125
-----------------------
48,751 53,125
-----------------------
Current assets
Trade and other receivables 345,619 311,195
Corporation tax 30,494 44,819
Cash and cash equivalents 2,653,585 532,138
-----------------------
Total current assets 3,029,698 888,152
-----------------------
Total assets 3,078,449 941,277
-----------------------
Liabilities
Current liabilities
Trade and other payables 438,529 454,337
Current borrowings 53,010 45,031
-----------------------
Total current liabilities 491,539 499,368
-----------------------
Non-current liabilities
Non-current borrowings 54,167 118,471
-----------------------
Total liabilities 545,706 617,839
-----------------------
Equity
Share capital 533,052 16,733
Share premium account 3,433,399 1,176,687
Retained earnings (1,433,708) (869,982)
-----------------------
Total equity 2,532,743 323,438
-----------------------
Total equity and liabilities 3,078,449 941,277
-----------------------
i-design group plc
Statement of Changes in Equity
For the year ended 30 September 2007
Share Share Retained
capital premium Earnings Total
£ £ £ £
Balance at 30 September 2005 10,767 226,653 (300,588) (63,168)
Arising on share issue in
i-design multimedia limited 5,966 994,034 - 1,000,000
Issue costs - (44,000) - (44,000)
Total recognised income and
expense - - (570,241) (570,241)
Share based payments - - 847 847
------------------------------------------
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)
Total recognised income and
expense - - (591,079) (591,079)
Share based payments - - 27,353 27,353
------------------------------------------
Balance at 30 September 2007 533,052 3,433,399 (1,433,708) 2,532,743
------------------------------------------
i-design group plc
Cash Flow Statement
For the Year ended 30 September 2007
2007 2006
£ £
Cash flow from operating activities
Operating loss (655,852) (626,068)
Depreciation 5,745 14,700
Loss on sale of plant and equipment - 301
Decrease in inventories - 4,500
Increase in trade and other receivables (34,424) (95,437)
Increase in trade and other payables 5,485 129,325
Taxation receipts 44,819 28,005
Release of SEF grant (21,293) (29,000)
Share based payment 27,353 847
--------------------
Net cash outflow from operating activities (628,167) (572,827)
--------------------
Cash flows from investing activities
Purchase of property, plant and equipment (1,371) (4,309)
Disposals of property, plant and equipment - 3,500
--------------------
Net cash outflow from investing activities (1,371) (809)
--------------------
Cash flows from financing activities
Net proceeds from issue of share capital 2,773,031 956,000
Repayment of borrowings (50,000) (37,500)
Capital element of finance leases (6,325) (6,325)
Interest received 47,074 25,828
Interest paid (12,795) (14,820)
--------------------
Net cash inflow from financing activities 2,750,985 923,183
--------------------
Net increase in cash and cash equivalents 2,121,447 349,547
Cash and cash equivalents at beginning of the period 532,138 182,591
--------------------
Cash and cash equivalents at the end of the period 2,653,585 532,138
--------------------
The accompanying accounting policies and notes form part of this financial
information
NOTES
1 Publication of Non Statutory Accounts
The financial information contained in this document does not
constitute statutory accounts within the meaning of section 240 Companies Act
1985. The figures for the years ended 30 September 2006 and 2007 have been
extracted from the audited financial statements. The financial statements
for 2007 will be delivered to the Registrar of Companies following the Annual
General Meeting and will be sent to shareholders on or around 14th December 2007
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 2006 and 2007 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 information are summarised below.
Basis of accounting
The financial information is prepared under the historical cost convention in
accordance with applicable International Financial Reporting Standards as
adopted by the International Accounting Standards Board (IFRS). IFRS includes
all IFRS, IAS, ISCs and IFRICs and the financial information have been prepared
in accordance with those parts of the Companies Act 1985 applicable to companies
under IFRS. The measurement basis and principal accounting policies are set out
below.
The policies have changed from the previous year when the financial information
was prepared under applicable United Kingdom Generally Accepted Accounting
Principles (UK GAAP). The comparative information has been restated in
accordance with IFRS. The changes to accounting policies are explained in note
6, together with the reconciliation of opening balances. The date of transition
to IFRS was 1 October 2005 (transition date).
Application of IFRS1
Under the first time adoption procedures set out in IFRS1, the company is
required to establish IFRS accounting policies as at 30 September 2007 and to
apply these retrospectively in the determination of prior period comparatives
from 1 October 2005, the date of transition. The accounting policies set out
below have been applied consistently to all of the periods covered in the
financial information.
Standards not yet effective
The directors do not expect any of the standards detailed below which are issued
but not yet effective to have a material impact on the financial information.
Amendment to IAS 1 Presentation of accounts: Capital Disclosures (effective
1 January 2007)
IAS 23 Borrowing Costs (revised 2007) (effective 1 January 2009)
IFRIC 10 Interim Financial Reporting and Impairment (effective 1 November 2006)
IFRIC 11 IFRS 2 - Group and Treasury Share Transactions (effective 1 March 2007)
IFRIC 12 Service Concession Arrangements (effective 1 January 2008)
IFRIC 13 Customer Loyalty Programmes (effective 1 July 2008)
IFRIC 14, IAS19 The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction (effective 1 January 2008)
Although the following standards will not have a material effect on the results
they will have a material effect on the disclosures:
IAS 1 revised (effective 1 January 2007)
IFRS 7 Financial Instruments: Disclosures (effective 1 January 2007, replaces
disclosure aspects of IAS 32)
IFRS 8 Operating Segments (effective 1 January 2009)
Business combinations
The financial information incorporates the financial information 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 a 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 accordance with IFRS3, the directors have treated the consolidated financial
information as being a continuation of i-design multimedia limited. Accordingly
the figures presented are for the year ended 30 September 2007 with comparatives
for the year ended 30 September 2006.
In a reverse acquisition, the cost of the business combination is deemed to have
been incurred by the legal subsidiary (eg the acquirer for accounting purposes)
in the form of equity instruments to the owners of the legal parent (eg the
acquiree for accounting purposes). Because such consolidated financial
information represent a continuation of the financial information of the legal
subsidiary, the assets and liabilities of i-design multimedia limited have been
recognised and measured in the consolidated financial information at their
pre-combination carrying amounts. The retained earnings and other equity
balances recognised in the consolidated financial information 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 information 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 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
Invoiced and recognised on the performance of the service. Invoiced once service
has been completed based on agreed charge out terms agreed with 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 ATM:ad
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 is 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 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%
Vehicles - 25%
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 as incurred.
Financial assets
Trade 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.
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
information.
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. No asset has been recognised as the probability that future taxable
income will offset existing tax losses is not yet certain.
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.
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 information.
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.
Revenue recognition
Software revenue of £100,000 has been recognised in the year as there was a
transfer of risk to the customer and economic benefit flowed to the group. The
directors believe that no further software revenue requires to be recognised as
on a contract by contract basis there has not been a transfer of risk to the
customer.
Deferred taxation
No deferred taxation asset has been recognised as the probability that future
taxable income will offset existing tax losses is not yet certain.
Segmental analysis
The company's principal activity consists of the provision and operation of
integrated advertising and brokerage software for banking and independent
networks including associated support, screen design and media sales services.
The directors believe that these activities comprise one business unit and
consequently segmental analysis is not considered necessary.
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 Operating loss 2007 2006
£ £
(a) The operating loss is stated after charging/
(crediting):
Directors' remuneration 205,670 102,720
Depreciation
- owned assets 2,368 9,636
- leased assets 3,376 5,064
Auditors' remuneration
- audit 25,000 3,545
- non audit - taxation - 1,482
- subsidiary company audit 5,000 -
Share options 27,353 847
Research and development costs 233,205 186,747
Government grants (21,293) (54,052)
Movement in inventories - 4,500
Operating leases 33,215 10,500
======== ========
Auditors remuneration for non-audit work set off against share premium
during the year was £63,917 for corporate finance work and £5,000 for
taxation.
4 Earnings per share and dividends
No dividends have been paid during the year ended 30 September 2007.
The earnings per share have been calculated on a weighted average basis.
This assumes the 8,954,000 shares issued at the reverse takeover have been
in issue for the entire prior period and for the period up to the date of
the actual transition.
2007 2006
No. No.
Weighted average number of shares in issue 9,970,174 8,954,000
========= =========
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 2007 (591,079)
Year ended 30 September 2006 (570,241)
=========
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.
5 Share based payments
The following options remain exercisable under certain conditions by
employees under share based payment schemes.
2007 2006
Number of options 977,500 20,000 941
Exercise period 2010 to 2017 2010 to 2017 2003 to 2013
Option exercise
price: £0.67 £0.34 £1
The fair value of options granted was calculated using the Black Scholes
option pricing model incorporating the following assumptions:
Number of options 977,500 20,000 941
Volatility 30% 30% 20%
Spot price £0.67 £0.67 £10
Interest rate 5.5% 5.5% 4.5%
Dividend yield Nil Nil Nil
Vesting period 3 years 3 years 10 years
Option value weighted average
exercise price £0.28 £0.47 £9
As disclosed in note 3 the share option charge for the year was £27,353
(2006 - £847).
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.
Summary of options
Weighted
average
30 30 exercise
September September price
Exercise Exercise Expiry 2006 2007
Price Date Date
Issued Exercised
Enterprise management incentive scheme
£1 2003 2013 941 - 941 - £9
£0.67 2010 2017 - 581,500 - 581,500 £0.28
£0.34 2010 2017 - 20,000 - 20,000 £0.47
Unapproved scheme
£0.67 2010 2017 - 396,000 - 396,000 £0.28
----------------------------------------
941 997,500 941 997,500
========================================
6 Restatement of financial information under International Financial Reporting
Standards (IFRS)
This is the first year that the group has presented its financial information
under IFRS. The company reported under UK GAAP in its previously published
financial information for the year ended 30 September 2006. The following
reconciliations, after the application of its IFRS accounting policies as
detailed in note 1 to the financial information have been prepared and are set
out below together with explanatory notes on the impact of the transition to
IFRS.
Reconciliation summary of profit under UK GAAP and IFRS for the
year ended
30 September 2006
£
Loss before tax as reported under UK GAAP (614,213)
Share based payments expensed (847)
---------
Loss before tax as reported under IFRS (615,060)
=========
Explanatory notes on the impact of the transition to IFRS share based payments
IFRS 2 "Share based payments" requires that an expense is recognised over the
vesting period in respect of all equity instruments that have been granted,
based on their fair value at the date of grant, in order to reflect the cost of
issuing these share options. The group has applied the Black Scholes method of
valuing the fair value of the relevant share options.
This preliminary announcement was approved by the Board of directors on 28th
November 2007.
This information is provided by RNS
The company news service from the London Stock Exchange