Shares in Dundee-based cash machine software solutions firm i-design fell back 10% yesterday despite the firm’s pre-tax profits more than doubling.
The company made £217,000 in the year to September 30 up from £101,000 in 2011, when the City Quay based developer registered its maiden profit.
The increase came despite a drop in overall turnover in the period from £3.52m in 2011 to £3.28m, a decrease attributable to lower advertising revenues.
Robert Sanders, an analyst at i-design’s in-house broker Westhouse, said that trading conditions were likely to remain challenging for the foreseeable future, and reduced his revenue forecast for the company for the next two years.
He said: “As a consequence of the reduced profit forecasts we are lowering our target price to 70p from 90p.
“As we believe that there is the potential for significant upside to these forecasts in due course, we retain our buy recommendation.”
Chairman James Faulds said the company had made progress during the year through the continuing development of its next-generation joono ATM customer engagement software.
The firm secured two new major ATM clients in the period e-commerce firm FDR Ltd and a major Canadian bank and also signed an exclusive multi-year advertising agreement with Asda Money, entitling it to sell advertising space on more than 1,000 high-volume cash machines at the supermarket’s sites across the UK.
Last month the company, which is headed by chief executive and major shareholder Ana Stewart, also announced a new ‘favourite transaction’ feature for joono which has been rolled out across the Nationwide Building Society estate.
The company now has its software operating on approximately 30,000 cash machines a 40% increase on last year with 9,500 of those available for advertising.
Mr Faulds said that i-design’s offer remained market leading and the company could see significant opportunities for growth.
He said: “The advertising market will remain very challenging in the short term but we believe our longer-term growth potential remains encouraging, with scope to continue building our ATM customer base as well as third-party advertising revenues.
“We believe that the business is well placed, and the board remains positive about the group’s longer-term growth prospects.”
Shares in i-design, which has a market capitalisation of £4.5m, ended the day at 28.75, 3.25 below the previous day’s close price.
business@thecourier.co.uk