Final Results

RNS Number : 8810I

Intercede Group PLC

05 June 2014

 



5 June 2014        

INTERCEDE GROUP plc

Preliminary Results for the Year Ended 31 March 2014

Intercede, a leading provider of identity and credential management software, today announces its preliminary results for the year ended 31 March 2014.

Against the backdrop of an aggressive investment plan, and a target of remaining EBITDA positive for the year, Intercede has returned to profit at all levels and reported a record year end cash balance:

·      Sales revenues up 45% to £9.8m (2013: £6.7m).

·      Operating expenses increased to £9.4m (2013: £7.5m) reflecting planned investment in infrastructure, technology development and sales capacity.

·      Headcount increased to 105 at 31 March 2014 (2013: 80).

·      Profit for the year of £0.8m (2013: loss of £0.6m).

·      Earnings per share 1.6p (2013: loss per share 1.2p).

·      Cash balances of £7.2m remain strong at 31 March 2014 (2013: £6.8m).

·      The Group has no debt.

·      Significant contract wins include a large-scale US government security programme, major US & European aerospace & defence contractors and major North American & German telcos.

·      Technology developments include the MyID Identity Agent which enables the delivery of digital identities to the secure element of mobile devices and the MyID Mobile Identity Software Development Kit which enables developers to make use of credentials within apps.

Richard Parris, Chairman  & Chief Executive of Intercede, said today:

"Intercede has achieved many key milestones during the past year, with record sales ahead of expectations and a return to profitability. More importantly, we have continued to strengthen our market position, with significant contract wins in the key government, aerospace & defence and telecoms sectors. Our customer base now includes four of the top six worldwide aerospace & defence companies and we are also working on a large scale US government security programme.  These will provide a stable base of revenue, with additional scope to grow as we win similar such contracts."

"And, as we report a record year for the Company, it is the newer cyber security market that is increasingly providing larger opportunities for growth.  The trends we are seeing here suggest the market is on the edge of potentially explosive growth: the traditional password becoming obsolete, the proliferation of mobile devices to conduct more and more daily lifestyle functions and the increasing number of business services being conducted online.  All require highly sophisticated forms of trusted identity, the cornerstone of cyber security, and this is an area in which Intercede is a leading provider"

"With this in mind, we will continue to invest in the necessary corporate infrastructure to provide us with the scale and critical mass to take advantage of these trends.  We are confident that a considered programme of investment is the correct direction for the Company to take.  It is against a backdrop of strong revenue growth and a market with the potential to grow exponentially that the Board executes its long-term growth strategy and has continued confidence it will create significant shareholder value."

About Intercede

Intercede is a software company specialising in identity and credential management with a global team of experts located in the US and UK.

Intercede's MyID identity and credential management software enables organisations to create and use trusted digital identities for employees, citizens and machines. This allows secure access to services, facilities, information and networks.

MyID meets the highest government standards yet is simple enough to be deployed onto consumer devices such as smart phones and tablets. Critically, MyID provides an easy, convenient and secure alternative to passwords.

Millions of identities are managed using MyID and Intercede has provided identity verification and management services to global customers for more than 20 years. MyID is a commercial off the shelf software product, designed and developed to be configurable so it can be embedded as the cornerstone of cyber security infrastructure for governments and corporations.

Customers trusting Intercede for secure digital identity include the US and UK governments and some of the world's largest corporations, telecommunications providers and information technology partners. 

For more information visit http://www.intercede.com

ENQUIRIES

Intercede Group plc	Tel.      [phone]
Richard Parris, Chairman & Chief Executive
Andrew Walker, Finance Director Lorraine Homer, Communications Director
FinnCap	Tel.      + 44 (0)20 7220 0500
Stuart Andrews, Corporate Finance
Joanna Weaving, Corporate Broking
Pelham Bell Pottinger	Tel.      [phone]
Archie Berens

Chairman's Statement

The Year Reviewed

Intercede has achieved many key milestones during the past year. Following a strong end to the year, sales reached a record level of almost £10m, staff levels reached 100 and the number of identities under management using MyID is now approaching 10 million. Against the backdrop of an aggressive investment plan to take full advantage of the future market opportunity and a target of remaining EBITDA positive for the year, Intercede returned to profit at all levels with a profit for the year of £0.8m and a record year end cash balance of £7.2m.

Intercede has continued to increase its penetration into the global market for its solutions. The customer base now includes four of the top six worldwide aerospace & defence companies and government contracts included the award of our largest PIV (Personal Identity Verification) project to date - a large-scale US government transportation security programme.

The strength of Intercede's core MyID software platform has given us a market leading position in government and aerospace & defence sectors and increasing penetration into other high-security sectors. The contract wins during the year further strengthen our position and are contributing to an increasingly buoyant and consistent revenue stream. Perhaps most importantly, the critical nature of these deployments provides a robust proving ground for MyID and points to future revenue opportunities.

The early adopting lead sectors for identity and credential management solutions require the highest levels of security but they also provide an excellent indicator of growing demand in the wider market. The global backdrop is one of increased recognition of the importance of cyber security strategies and the continued and well-publicised failures of traditional password-based authentication systems.

To meet this demand, Intercede has continued to invest heavily in research and development and, in particular, to position the Company to exploit the growing mobile digital identity market. We see the potential for explosive growth in this sector over the next five years - growth that will help us to meet our 2020 target of 100 million identities under management - and that investment is already producing results. During the year we signed flagship mobile identity contracts with two telecommunications companies including a project with TELUS, the Canadian telecommunications operator. The strength and potential of Intercede's technology and the value of our partner ecosystem was reinforced as we exhibited alongside the likes of Samsung and ARM at Mobile World Congress and Microsoft at RSA.

Performance

Sales revenues for the year ended 31 March 2014 were almost £10 million; ahead of expectations and substantially higher than the prior year. The Company has returned to profitability and has a record year end cash balance.

Results and Financial Headlines:

-     Sales revenues up 45% to £9.8m (2013: £6.7m).

-     Operating expenses increased to £9.4m (2013: £7.5m) reflecting planned investment in infrastructure, technology development and sales capacity.

-     Headcount increased to 105 at 31 March 2014 (2013: 80).

-     Profit for the year of £0.8m (2013: loss of £0.6m).

-     Earnings per share 1.6p (2013: loss per share 1.2p).

-     Cash balances of £7.2m remain strong at 31 March 2014 (2013: £6.8m).

-     The Group has no debt.

Customer and Partner Developments:

-       Large scale US government transportation security programme.

-       Exhibited MyID technology alongside Samsung, ARM, Trustonic, G&D and GSMA at Mobile World Congress.

-       Demonstrated virtual smart card technology at RSA alongside Microsoft.

-       Gained membership of The FIDO Alliance.

-       Signed flagship mobile identity contracts with two telecommunications companies, proving the use cases of MyID for mobile. This includes a joint Intercede/Gemalto/TELUS project, with TELUS employees accessing secure buildings and networks with NFC smartphones powered by MyID.

-       MyID virtual smart card solution for HP ElitePads delivered to a UK government customer.

Technology Developments:

-       Development of MyID Identity Agent which enables the delivery of digital identities to the secure element of mobile devices, for example the Trusted Execution Environment (TEE) or UICC (next-generation SIM) or Trusted Platform Module (TPM).

-       MyID Mobile Identity Software Development Kit (SDK), enabling developers to make use of credentials within apps.

-       Offering device identity through MyID machine certification solution; the first customer secured is a European aerospace & defence contractor.

-       MyID apps for secure email and web browser available on iTunes, providing proof of concepts for government and industrial customers.

Corporate Development:

-       Additional office space and staff recruitment in both the UK and US to support the Company's continued growth.

-       New corporate website plus investment in public relations and public affairs to raise the Company's profile among target audiences.

-       Increased investment in sales staff including training and increased headcount.

-       The implementation of a Share Incentive Plan for all UK staff through a share buyback programme.

-       The appointment of Ben Drury, Chief Executive of 7Digital, as a new Non-Executive Director with effect from 1 April 2014.

Looking Ahead

As we report a record year for the Company, it is the larger opportunities now available to us that we are focusing on against the backdrop of the following key market trends:

·      There is a growing recognition amongst organisations around the world, and the citizens, consumers and businesses they interact with, that traditional password-based authentication is fatally flawed. The trust relationship is being compromised on an almost daily basis; notable recent examples including the eBay data breach and the discovery of the 'Heartbleed' bug, both of which led to high profile, front-page calls for password changes globally.

·      Mobility is less of a choice today; more of a paradigm shift in the way we live and work. We increasingly expect to be able to interact with anyone and anything, from anywhere, at any time.

·      Global adoption of mobiles has grown at a staggering rate. eMarketer reports that just over 61% of the world's population owns a mobile, that's around 4.5 billion people. Significantly 1.75 billion of these have smartphones, which is up from 1 billion a couple of years ago. As costs continue to fall and networks get built out, smartphones will carry on increasing their share of the total. The projection for 2017 is for them to account for about half of all phones and be used by a third of the world's population. That's 2.5 billion people accessing the mobile internet.

·      Organisations are putting more services online in the drive for efficiency. eMarketer's latest forecasts suggest worldwide business-to-consumer (B2C) ecommerce sales alone will exceed $2.3 trillion by 2017.

·      The much-heralded Internet of Things is fast becoming a reality. Industry analyst Gartner is predicting that the installed base of connected devices will reach 26 billion units by 2020 with the potential growth beyond that almost incalculable.

·      The growing complexity of the market, and the tight resourcing position for many organisations, precludes the development of in-house solutions. The time, resources and expertise simply aren't available.

Failure of traditional authentication, combined with exponential growth in the requirement for reliable, trusted identity and credential management, for people and machines, opens up an almost unlimited range of opportunities for Intercede. When passwords are not enough, the market has to explore alternatives.

MyID allows organisations to move beyond passwords, creating secure trusted identities on mobile, smart cards and devices. Combining a securely stored credential (something I have) with a second factor of authentication such as a PIN (something I know) or a biometric (something I am) increases both security and user convenience. Organisations can be sure that only the right people and devices are connected to their networks, and users can replace multiple complex passwords with a single easy to remember PIN or fingerprint.

With MyID 'no more passwords' is becoming a reality for a growing number of organisations and major global technology partners.

We live in a world in which every connected device, fixed or mobile, and every individual will require at least one digital identity, and will need technology that can ensure that identity is protected wherever it is stored and whenever it is used. Even in a benign environment, the billions of identities in use every day dictate identity management that is simple and secure in equal measure to guard against confusion, conflict, error and accident. Without it our digital society and our digital economy is compromised. Citizens rightly expect their health and tax records to remain private, consumers need to trust that their credit card data is safe and companies need to protect intellectual property and data assets.

Of course, the environment is rarely benign and the complexity of digital relationships provides a myriad of opportunities for malicious and fraudulent activity. Billions of dollars are invested annually in the detection and prevention of that activity and in remedial action. The task has never been more complex but, whilst cyber security is huge in scope, at its core is efficient and reliable identity and credential management. Put simply, trusted identity is the cornerstone of cyber security and it is an area in which Intercede is a leading provider.

Strategy 2013-14

Goals	Progress
Corporate Development
Position MyID as the credential management system of choice for high assurance networks - both in the public and private sector.	Intercede now supplies four of the top six global aerospace & defence companies; continued growth in US federal and UK government customers.
Exploit global leadership in PIV solutions market.	Contract signed for major US government transportation security programme, comprising Intercede's largest ever PIV-based deployment (3m licences).
Capture new major corporate accounts in US and Europe.	Contracts signed with a major European aerospace & defence company and a leading UK law enforcement organisation.
Widen sales channel to cover major players in the mobile telecoms industry.	Contracts signed with major North American and German telcos.
Progress the Microsoft partnership to revenue generation.	Delivered a MyID Windows 8 virtual smart card solution for HP ElitePads to a UK government customer.
Partner with Cloud service providers to deliver Identity in the Cloud using MyID.	Pilot Cloud based deployment of MyID in partnership with a global industry major. Obtained listing on HMG G-Cloud with UK partner.
Product and Innovation
Continue to re-engineer the existing MyID platform to improve scalability and supportability in anticipation of a rapid expansion of market demand.	MyID v10 (market release May 2014) includes the ability to issue TPM-protected machine certificates for device authentication to networks, support for Windows 8 virtual smart cards as standard and soft certificate credentialing to iOS and Android devices.
Accelerate research and development in expanding the MyID platform to provision digital identities onto mobile devices.	Engineered MyID Mobile Identity Software Development Kit (SDK) which enables developers to make use of credentials within apps. Development of MyID Identity Agent.
Expand the MyID mobile identity product suite to include client applications for secure communications.	Secure email and web browser apps now available on iTunes and CardChecker app on both Google Play and iTunes.
Expand the scope of MyID to also manage the identities of networked components as part of the emergence of the Internet of Things.	Device identity (machine certificates) included within May 2014 MyID v10 release and first customer secured.

Strategy 2014-15

-     Continued traction in corporate and government sectors where core MyID platform is the credential management system of choice for high assurance networks.

-     Protect, defend and expand existing customer base by offering solutions for derived credentials in support of FIPS 201-2.

-     Progress revenue generation from Microsoft partnership through exploitation of TPM for virtual smart card deployments on Windows Phone and tablets.

-     Grow the MyID ecosystem by developing channel partners to both capture existing demand and create new demand for product.

-     Progress TEE to revenue generation by taking proof of concept to market.

-     Continued research and development in expanding the MyID platform to provision digital identities onto mobile, portable and wearable devices.

-     Revenue generation from Cloud services/MyID in the Cloud.

-     Continued investment in growing sales channel and support capacity in order to be able to fully exploit new market opportunities.

Summary

Intercede's MyID is the hallmark solution that sets the standard for identity protection anywhere and everywhere and satisfies the requirements of the Chief Technology Officer, the Security Manager and the Finance Director. MyID is not simply a security solution - it is a business enabler delivering competitive advantage and a tangible return on investment.

We believe that we are on the edge of another step change in market growth and we need to be able to exploit this opportunity to maximum effect.  With this in mind, and targeted revenue growth of 30%+ per annum, we will continue to invest in the necessary corporate infrastructure to provide us with the scale and critical mass to do so having due regard for the Board's objective of remaining EBITDA positive.  We are confident that a considered programme of investment is the correct direction for the Company to take.  It is against a backdrop of a market with the potential to grow exponentially that the Board executes its long-term growth strategy and has continued confidence it will create significant shareholder value.

Richard Parris

Chairman & Chief Executive

Strategic Report

Introduction

Intercede is a leading independent developer and supplier of identity and credential management software. The Group's vision can be outlined as follows:

·      Everybody and everything will need a digital identity.

·      Digital IDs will be used for authentication, content protection, entitlement, safety and convenience.

·      IDs need to be available on whatever platform a user chooses - ID anywhere.

·      IDs need to be trusted, non-repudiable, auditable and managed according to policy.

·      To establish Intercede's MyID as the market-leading platform to exploit this opportunity.

Strategic Investment

Intercede has embarked upon a period of substantial investment in order to take advantage of the opportunity outlined above. The costs associated with this strategy are being incurred now but the benefits, in terms of increased revenues and cash flow generation, are anticipated to arise in future periods. 

The main areas of selective investment are:

·      The development of mobile security applications involving interoperability with technologies such as iOS, Android, Windows and BlackBerry.

·      Increased collaboration with major industry players such as Microsoft and ARM.

·      The establishment of accredited PIV-I platforms with a number of new entrants to a market which is forecast to involve in excess of 50 million identities.

·      Re-engineering and expansion of the MyID platform to improve scalability and to ensure that all of the new areas of opportunity are supported.

·      Sales and marketing to promote and protect the MyID name and technology and to build industry relationships.

These activities have resulted in further growth in headcount and a commensurate need for office and IT infrastructure and equipment. The Company has taken on additional office space during the past year in both the UK and US.

Trading Results

The Group's financial targets were to deliver a 30%+ increase in sales revenues whilst accelerating investment in people and resources to take advantage of the opportunities provided by the impact of smartphones and global cyber security concerns, as described in the Chairman's Statement.

Following a strong end to the year, revenue for the year ended 31 March 2014 was £9,783,000, which was ahead of expectations and 45% higher than the prior year (2013: £6,727,000). This increase reflects high levels of demand for Intercede's proprietary MyID technology with notable contract wins secured in the telecommunications, aerospace & defence and public service sectors. No single project represented more than 28% of total revenue (2013: 25%). Over the last five years, exports have increased from 56% to 91% of total revenue.

The planned investment in additional resources outlined above has resulted in a 25% increase in operating expenses from £7,467,000 to £9,366,000 but, with revenues ahead of expectations and gross profit margins remaining high, Intercede has returned to profitability reporting a £318,000 operating profit (2013: £764,000 operating loss).

Staff costs continue to represent the main area of expense, representing 76% of total operating costs (2013: 74%). Intercede had 105 employees and contractors as at 31 March 2014 (2013: 80). The average number of employees and contractors increased from 77 to 90 year on year.

Expenditure on research and development (R&D) activities totalled £2,876,000 (2013: £2,328,000), approximately 52% of which related to the areas of strategic investment outlined above (2013: 54%). In accordance with the IFRS recognition criteria, the Board has continued to determine that all internal R&D costs incurred in the year are expensed. No development expenditure has been capitalised as at 31 March 2014 (2013: £nil).

Finance income for the year was £77,000 (2013: £91,000) as the Group maintained cash and interest bearing short term deposits in excess of £6 million throughout the period notwithstanding increased levels of investment.

A £385,000 taxation credit for the period (2013: £101,000 taxation credit) primarily reflects a higher level of cash received following the 2013 R&D claim as a result of the investment activities outlined above. The Group is a beneficiary of the UK Government's efforts to encourage innovation by allowing 125% of qualifying R&D expenditure to be offset against taxable profits.

As at 31 March 2014, the Group has £6,606,000 (2013: £6,843,000) of prior year tax losses available for carry forward.

A profit for the year of £780,000 (2013: loss of £572,000) resulted in a basic and fully diluted earnings per share of 1.6p (2013: loss per share 1.2p).

Financial Position

Cash performance also continues to be strong with an increase in net cash from £6,770,000 to £7,247,000 year on year, notwithstanding the increased investment outlined above and the £475,000 impact of a share buyback programme in support of the new Intercede Share Incentive Plan for UK employees.

The Group has no debt and is in a position to be able to commence the payment of dividends as and when the Board considers this to be appropriate.

Treasury

The Group manages its treasury function as part of the finance department. Whilst the Group's operations are primarily based in the UK it has successfully exported its technology throughout the world for many years. This results in invoices being raised in currencies other than sterling; the most notable being US dollars and euros. A number of suppliers also invoice the Group in US dollars and euros. The Group's current policy is not to hedge these exposures and the exchange differences are recognised in the statement of comprehensive income in the year in which they arise.

Key Performance Indicators (KPIs)

The following KPIs are some of the tools used by management to monitor performance in addition to the more traditional financial statement and sales pipeline information that is provided to the Board each month. 

	Target	2014	2013
Identities under MyID Management	100 million	9 million	7 million
Sales growth	30%+	45%	(3%)
Export sales	80%+	91%	88%
North American Sales	50%+	61%	72%
New deployments with revenues over £20,000	10+	10	9

All of the above KPIs support the overall target of 100 million identities under MyID management by 2020. 

Principal Risks and Uncertainties

The principal risks and uncertainties facing the Group are as follows:

·      The Group operates in multiple markets, both geographically and by sector, so there is a risk that territory and global macro-economic conditions may result in one or more of these markets being adversely affected and the revenues of the business impacted accordingly. This risk is mitigated to an extent, both through the long term nature of customer relationships and the diversification that results from operating in multiple markets.

·      The Group operates in a complex and competitive technological environment so the business will be negatively affected if the Group does not enhance its product offerings and/or respond effectively to technological change. This risk is mitigated by ongoing investment in research and development. 

·      Technology companies are exposed to intellectual property infringement and piracy. The Group rigorously defends its intellectual property in the primary jurisdictions within which it operates.

·      The Group's performance is largely dependent on the experience and expertise of its employees. The loss or lack of key personnel is likely to adversely impact the Group's results. To mitigate this risk, the Group aims to put in place appropriate management structures and to provide competitive remuneration packages to retain and attract key personnel.

Andrew Walker

Finance Director

INTERCEDE GROUP plc

Consolidated Statement of Comprehensive Income for the year ended 31 March 2014

		2014		2013
		£'000		£'000
Continuing operations
Revenue		9,783		6,727
Cost of sales		(99)		(24)
		___________		__________
Gross profit		9,684		6,703
Operating expenses		(9,366)		(7,467)
		___________		__________
Operating profit/(loss)		318		(764)
Finance income		77		91
		___________		__________
Profit/(loss) before tax		395		(673)
Taxation		385		101
		___________		__________
Profit/(loss) for the year		780		(572)
Total comprehensive income/(expense) attributable to owners of the parent company		780		(572)
Earnings/(loss) per share (pence)
- basic		1.6p		(1.2p)
- diluted		1.6p		(1.2p)

There is no other comprehensive income for the current or preceding year.

INTERCEDE GROUP plc

Consolidated Balance Sheet at 31 March 2014

 

		2014	2013
		£'000	£'000
Non-current assets
Property, plant and equipment		757	644
		__________	__________
Current assets
Trade and other receivables		1,785	991
Cash and cash equivalents		7,247	6,770
		__________	__________
		9,032	7,761
		__________	__________
Total assets		9,789	8,405
		__________	__________
Equity
Share capital		487	487
Share premium account		232	232
Other reserves		1,508	1,508
Retained earnings		3,972	3,530
		__________	__________
Total equity attributable to owners of the parent company		6,199	5,757
		__________	__________
Current liabilities
Trade and other payables		1,719	998
Deferred revenue		1,871	1,650
		__________	__________
		3,590	2,648
		__________	__________
Total equity and liabilities		9,789	8,405
		_________	_________

INTERCEDE GROUP plc

Consolidated Statement of Changes in Equity for the year ended 31 March 2014

	Share	Share	Other	Retained	Total
	capital	premium	reserves	earnings
	£'000	£'000	£'000	£'000	£'000
		'
At 1 April 2012	484	110	1,508	3,930	6,032
Issue of shares, net of costs	3	122	-	-	125
Employee share option plan charge	-	-	-	172	172
Total comprehensive expense	-	-	-	(572)	(572)
	________	________	________	_______	_______
At 31 March 2013	487	232	1,508	3,530	5,757
Purchase of own shares	-	-	-	(475)	(475)
Employee share option plan charge	-	-	-	136	136
Employee share incentive plan charge	-	-	-	1	1
Total comprehensive income	-	-	-	780	780
	________	________	________	_______	_______
At 31 March 2014	487	232	1,508	3,972	6,199
	_______	_______	_______	_______	______

All amounts included in the table above are attributable to owners of the parent company.

INTERCEDE GROUP plc

Consolidated Cash Flow Statement for the year ended 31 March 2014

		2014	2013
		£'000	£'000
Cash flows from operating activities
Operating profit/(loss)		318	(764)
Depreciation		116	92
Employee share option plan charge		136	172
Employee share incentive plan charge		1	-
(Increase)/decrease in trade and other receivables		(795)	317
Increase in trade and other payables Increase in deferred revenue Interest received		721 221 78	88 130 94
		__________	__________
Cash generated from operations		796	129
Taxation		385	101
		__________	__________
Cash generated from operating activities		1,181	230
		__________	__________
Investing activities
Purchases of property, plant and equipment		(229)	(553)
		__________	__________
Cash used in investing activities		(229)	(553)
		__________	__________
Financing activities
Purchase of own shares		(475)	-
Proceeds on issue of shares		-	125
		__________	__________
Net cash (used)/generated from financing activities		(475)	125
		__________	__________
Net increase/(decrease) in cash and cash equivalents		477	(198)
Cash and cash equivalents at the beginning of the year		6,770	6,968
		__________	__________
Cash and cash equivalents at the end of the year		7,247	6,770
		__________	__________

INTERCEDE GROUP plc

Preliminary Results for the Year Ended 31 March 2014

NOTES

1.       The financial information set out in this announcement does not constitute the Group's Statutory Accounts for the years ended 31 March 2013 or 2014, but is derived from those accounts. Statutory Accounts for 2013 have been delivered to the Registrar of Companies and those for 2014, which have been approved by the Board of Directors, will be delivered following the Group's Annual General Meeting. The Company's auditors have reported on those accounts; their reports were unqualified and did not contain statements under Section 498 of the Companies Act 2006.    

The Annual General Meeting of the Company will be held on Wednesday 17 September 2014. Copies of the full Statutory Accounts and the Notice of Annual General Meeting will be despatched to shareholders in due course. Copies will also be available on the website (www.intercede.com) and from the registered office of the Company: Lutterworth Hall, St. Mary's Road, Lutterworth, Leicestershire, LE17 4PS.

2.      SEGMENTAL REPORTING

All of the Group's revenue, operating profits and net assets originate from operations in the United Kingdom.  The Directors consider that the activities of the Group constitute a single business segment.

The split of revenue by geographical destination of the end customer can be analysed as follows:

	2014	2013
	£'000	£'000
UK	928	806
Rest of Europe	2,195	651
North America	5,990	4,823
Rest of World	670	447
	__________	__________
	9,783	6,727
	_________	_________

3.      TAXATION

         The tax credit comprises:

	2014	2013
	£'000	£'000
Current year - UK corporation tax	-	-
Current year - US corporation tax	(26)	(13)
Prior year - US corporation tax	-	6
Research and Development tax credits relating to prior years	411	108
	__________	__________
	385	101
	_________	_________

The Group has unused tax losses of £6,606,000 (2013: £6,843,000) and unrecognised deferred tax assets of £1,321,000 calculated at the UK corporation tax rate of 20% that came into effect from 1 April 2014 (2013: £1,574,000 calculated at the previous UK corporation tax rate of 23%).

4.      EARNINGS/(LOSS) PER SHARE

The calculations of earnings/(loss) per ordinary share are based on the profit/(loss) for the financial year and the weighted average number of ordinary shares in issue during each year.

	2014	2013
	£'000	£'000
Profit/(loss) for the year	780	(572)
	__________	__________
	Number	Number
Weighted average number of shares - basic	48,661,716	48,615,263
- diluted	50,228,664	50,228,664
	__________	__________
	Pence	Pence
Earnings/(loss) per share - basic	1.6p	(1.2p)
- diluted	1.6p	(1.2p)
	__________	__________

The weighted average number of shares used in the calculation of basic and diluted earnings per share for each year were calculated as follows:                                                                                        

	2014	2013
	Number	Number
Issued ordinary shares at start of year	48,735,005	48,428,005
Effect of exercise of share options	-	245,233
Effect of purchase of own shares	(73,289)	(57,975)
	__________	__________
Weighted average number of shares - basic	48,661,716	48,615,263
Add back effect of purchase of own shares	73,289	57,975
Effect of share options in issue	1,493,659	1,555,426
	__________	__________
Weighted average number of shares - diluted	50,228,664	50,228,664
	_________	_________

5.       DIVIDEND

The Directors do not recommend the payment of a dividend.

6.      SHARE CAPITAL

	2014	2013
	£'000	£'000
Authorised
481,861,616 ordinary shares of 1p each (2013: 481,861,616)	4,819	4,819
	__________	__________
Issued and fully paid
48,735,005 ordinary shares of 1p each (2013: 48,735,005)	487	487
	___________	__________

As at 31 March 2014 the Company had 164,000 ordinary shares held in treasury (2013: 57,975).  During the year the Company purchased 250,000 ordinary shares (2013: nil) for a consideration of £475,000 and transferred 143,975 ordinary shares from treasury to Capita IRG Trustee Limited as trustees of the new employee share incentive plan.

 

END

 

 

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