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i-design

  • BY: Andrew Hore |
  • POSTED: 05/07/2012 |

Cash machine advertising technology developer i-design has added more new customers in the second half and this underpins expectations of further growth in revenues for the full year. 

The overhead cost base should not need to be increased significantly with advertising costs moving in line with advertising revenues.

i-design made its first ever profit in the second half of its financial year to September 2011 and it continued to be profitable in the six months to March 2012. Revenue increased from £1.43m to £1.61m even though the advertising market was tough. The number of machines taking third party advertising was broadly unchanged in the period with the growth in cash machine numbers coming from clients which only advertise their own products. High margin software sales were strong in the period rising from £310,000 to £553,000. A pre-tax profit of £45,000 was made in the first half compared with a £105,000 loss in the comparative period.

Since March, Barclays and Cardtronics have each acquired licences for 1,500 cash machines, with the latter using them in the US and Canada.  The latest contract is with First Data Corp, which is acquiring licences for one of the UK banks it has as a client. This takes the number of licensed machines to around 28,000 with 8,000 taking third party advertising. Moving more cash machines to third party advertising would help to accelerate growth. Major consumer brands are already using the system.

Net cash was £802,000 at the end of March 2012 and i-design should be cash generative from now on so it will not need to come back to the market for more cash unless it has additional expansion plans.

Full year underlying profit is expected to edge up from £136,000 to £178,000. The shares are trading on around 40 times Edison Investment Research forecast earnings. This rating should decline rapidly as profit grows over the next couple of years.

At 49p a share, i-design is valued at £6.91m.

Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFJune2012_33.pdf

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