I-Design Group Plc (LON:IDG) (IDG, 25.5p, £3.60m), the developer and supplier of the market-leading ATM advertising solution, atmAd, reports prelims to 30 September 2010 are in line with market expectations. A weak first half was somewhat offset by a stronger H2. Nevertheless total sales declined to £2.2m (2009: £2.4m). An increase in software sales marginally improved gross margins and lower overheads reduced pre-tax losses to £0.96m (2009: £1.11m). Net cash fell to £0.75m (2009: £1.7m). We believe the current financial year will be challenging. We are concerned customers may reduce and delay their advertising budgets. The positive momentum in H2 2010 has continued into the current financial year.  We believe if the group add a few thousand ATM’s this year (9400 ATM at the end of September 2010), there is scope to break-even on £3.5m revenues, assuming a third of software sales and two-thirds of advertising sales. We believe the latter is challenging.  The weaker balance sheet with tangible net asset value of £0.3m (2009: £1.0m) and net cash of £0.75m may encourage the group to come to the market to raise new funds for working capital. There are no forecasts in the market for the current financial year. The share price has recently rallied on the back of the new multi-year contract with YourCash. The scope for a share dilution encourages us to adjust our recommendation to a SELL.  

MBL Group (LON:MUBL) (MUBL, 93p, £16.1m) Interims to September 2010 saw revenues decline to £71.1m (£78.2m) with gross profits of £7.18m (£8.18m), gross margins of 10.1% (10.5%) with distribution costs higher at £0.87m (£0.82m) and admin costs at £5.65m (£4.19m) leaving op profits and PBT down at £0.67m (£3.17m).   The group ended the period with net cash of £2.60m (£5.73m at the yearend), reflecting an adverse working cap movement of £0.83m and a £2.09m acquisition spend offsetting underlying cash generation – though the group has still to pay the 7.5p final dividend which will cost a further £1.3m – one does question the sense in such a high payment. The group has revised its expectations for the year – no doubt down markedly!  However there are positive signs for the future, not least the eCommerce contract win with Sainsbury’s with negotiations underway with Morrison's ahead of its end of contractual relationship…

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