Highlights

• Results in line with expectations
• Revenue up 3% to £6.41 million
• Recurring revenues up 27% to £1.86 million
• Operating profit up 33% to £1.15 million
• Operating margins improved to 18% up from 14% last year
• Net cash position improves to £0.99 million
• New customer win at National Savings
• Royalty earning contracts on 19 brands operational by year-end
• Development expenditure up 46% to £0.72 million
• Board strengthened with the appointment of Michael Jackson

Outlook

• Continued strong demand from the savings market in quarter 1 2009
• First customer for our next generation financial services platform, NetFinance V4 is live
• Two new customers secured in Quarter 1
• Growing and accelerating acceptance of on-line banking and savings
• Pipeline of potential new customers increasing

Clive Richards, Chairman, Commented:

'I am delighted to report that results are in line with expectations with steady progress achieved during the year under review. Recent contract wins with National Savings & Investments and 2 building societies now underpin the Group's position as the undisputed market leader in the UK retail savings software sector.

Current trading has started well with the Group's underlying solid balance sheet and cash generative profile enabling it to capitalise on the significant market opportunities that exist.

As a result, the Board is confident of future prospects and I look forward to updating shareholders with further progress in due course.'

Chairman's statement and CEO review

Introduction

Your company has delivered further progress in 2008, both in financial achievement and in delivering on strategic execution. After the extraordinary growth in revenues in 2007, ues in 2007, it has been a major achieviev achievement to be able to report further growth in 2008. Although overall revenues were only up 3%, the pleasing aspect was the 306% increase in transactional income (2008: £587,070, 2007: £144,571) driven by the Barclaycard and LaSer contracts. These are long-term contracts with momentum and should deliver consistent and sustained profitability. The increase in operating profit has been more impressive at 33% which has been due to the better quality of revenues and a reduction in overheads. We are pleased to confirm our 4th consecutive year of cash generation and we remain debt free.

Strategy

Our vision for the future is a banking platform that puts customers first, allowing them to engage across all distribution channels at a time that suits them and from any location. In addition the customer must be able to personalise the banking experience using charts, calculators, data manipulation and single view of all accounts. This is what V4 our new banking platform will deliver.

We have completed the first phase of our product redevelopment programme that involves rewriting our core banking platform. This has been a great success both in terms of the software that has been developed and also the excellent team that has been assembled. Our new banking platform incorporates a world-class content management system, a groundbreaking product factory and extensive analytics. This clearly differentiates us from our competitors and this is reflected in the 4 customers already contracted to the new version. The R&D team has grown from 6 people at the end of 2007 to 20 at the end of 2008. They are split between Kingston and Pune in India and are providing a very creative and cost effective service to the business. This is a real asset as we continue to extend our Intellectual Property.

The new version of our NetFinance platform also assists in expanding the markets we address beyond our core consumer finance and savings verticals into prepaid cards and current accounts. Armed with the confidence generated by the new platform we have increased our marketing activity targeting savings institutions directly and European customers through an extended partner network.

Given the success of the royalty contracts and the continued demand from our savings customers the Board has sufficient confidence in our ability to generate cash that it sought permission from shareholders in March to eliminate the share premium account and seek approval from the courts to be in a position to allow the Board to consider the payment of dividends going forward.

Operations

2008 has been a solid year of progress with the Barclaycard platform achieving good volumes and significant progress in the savings market. The contract wins at National Savings & Investments and 2 building societies has projected the company to the undisputed market leader in the UK retail savings software sector. This is a market with solid growth prospects given the requirement of financial institutions to generate new funds. The uncertain economic environment has increased this opportunity as the wholesale funding markets have contracted and financial institutions attempt to replace this funding with deposits from UK consumers. We have closed a further customer in quarter 1 of 2009 taking our total savings customers to 6 and we have a good pipeline of potential customers making this our engine for growth in 2009.

The consumer finance market is much tougher with a number of high profile banks withdrawing from the market including the decision by Royal Bank of Scotland to close their consumer finance initiative in Germany which resulted in terminating the contract with us. However we remain optimistic with HBOS agreeing to upgrade their consumer finance platform to our V4 software and other customers considering a similar move. This is driven by the customer objectives of retaining existing customers and reducing costs. Consumers continue to migrate to the Internet and expect a rich user experience including personalisation.

Banks need to reduce costs and our software automates manual processes and improves application completion rates, both of which reduce operating costs substantively.

Our partner programme continues to increase our visibility in the European market and brings us close to new orders. In addition to First Data International, Unisys and FNIS, we have nurtured relationships with other financial services software providers, which has lead to a number of exciting opportunities. In 2009 we will look to expand our partner network and increase our sales activity to support this important element of our strategy.

People

Overall headcount increased from 48 to 50 during the year and we have 9 people under our management in India. This is a much better blend of staff than a year ago and we are proud of their achievements in 2008 and we extend the Board's thanks to all our staff for their continued dedication and contribution to our success. In September, David Plucinsky a long term non executive director resigned to return to the USA. David's strong experience of the financial services sector and of companies that are in recovery situations, has been invaluable during the transformation of IE from a loss making company into the market leading, profitable entity it is today and we thank him for his contribution. In December, Michael Jackson joined the Board as a non executive director; we look forward to utilising his acknowledged expertise in growing software businesses over the coming years.

Outlook

Despite the well published difficulties in the banking market and the world wide recession in consumer products the year has started positively as a result of our market leading V4 software offering and the buoyant market conditions in the retail savings market. With a strong balance sheet and positive cash flow the company is well placed to capitalise on market opportunities as well as navigate any market turbulence. The Board remains confident about the future prospects of the business as it continues to benefit from its strategy, its products, its market position and the growth of the online market itself.

Clive Richards Phillip Blundell

Chairman Chief Executive

Financial Review

2008 has seen a solid financial performance and a transition from a consultancy based revenue base to a software revenue base. This is in line with the key financial objectives of the business and will lead to a more predictable profit stream. As outlined last year the Board considers the growth in recurring revenues, the number of brands generating transactional revenue, and operating margins as key determinants of our future success, besides the standard measures of profit growth and cash flow.

Revenue

In 2008, revenue growth was modest at 3%, taking the total to £6.41 million (2007: £6.24 million). This was attributable to a 123% increase in licence revenue driven by two new major customers and repeat licences from a number of existing customers. Recurring revenue increased by 27% to £1.86 million due to an increase in projects going live and a full years contribution from the transactional revenue model. These two revenue streams offset a 27% decrease in consultancy revenues, as a result of the Barclaycard project being completed in 2007. An analysis of total revenues highlights that upfront licences accounted for 25% (2007 : 11%), customer consultancy services 46% (2007: 65%) and recurring revenues were 29% (2007: 24%). This demonstrates the progress on moving to a software business model and away from a consultancy led business.

Cost of sales

Expenses included in cost of sales have decreased by 25% between 2007 and 2008.

This is due to a significant reduction in the use of third party contractor costs to assist in delivering customer projects in the year. All of the above costs were recharged to customers.

Staff costs

Total staff costs, which represent 85% of operating expenses, increased by 13% in the year to £3.55 million. The increase is directly related to the rise in average headcount from 45 to 50 in the year.

Research and development expenditure

Our expenditure on R&D in the year rose to £0.7 million compared to £0.5 million in 2007. The increase in expenditure reflects the company's confidence in the future and the requirement to provide a market leading solution. This expenditure relates to the discrete investment to build our next generation financial services platform, incorporating the latest Microsoft technology and providing a richer personalisation suite, and has been capitalised in accordance with International Financial Reporting Standards (IFRS). Given the historic life of our previous NetFinance platforms that had average lives of 3 years, we are amortising this investment which primarily represents staff costs of developing the product to the Income Statement over 3 years. The charge to the Income Statement in 2008 is £0.1 million.

Operating profit

Operating profit represents the gross profit less the net operating expenses.

The company increased operating profit by 33% to £1.15 million in the year. Our operating margins increased from 14% to 18% in the year, driven by the revenue mix and the increased amount of development expenditure meeting the criteria for capitalisation.

Taxation

Following on from the policy adopted in 2006, the company has increased the deferred tax asset to recognise the short-term recoverability of the Group's trading losses. This increase of £36,000 means that the deferred tax asset now totals £336,000. The Group still has accumulated trading losses in excess of £7 million available to offset future trading profits.

Cash flow and net funds

The cash position improved slightly in 2008 to £0.99 million. The improvement would have been greater, but for the fact that 2 major customers deferred payment of their November invoices until January. This had a £0.4 million negative impact on the year end cash position. The working capital position of the company increased by £0.3 million or 25%, as a result of the higher cash balance and the 30% uplift in receivables.

Phillip Blundell
Chief Executive and Finance Director