Half Yearly Report

RNS Number : 5275T

Intercede Group PLC

21 November 2013

 



21 November 2013

INTERCEDE GROUP plc

('Intercede', 'the Company' or 'the Group')

Interim Results for the Six Months Ended 30 September 2013

Intercede (AIM: IGP.L) is a leading producer of Identity and Credential Management software, called MyID, which manages the secure registration, issuance and life cycle of digital identities for a wide range of uses.

SUMMARY

·      Sales increased by 32% to £4,614,000 (H1 2012: £3,508,000): the highest six month sales period to date.

·      Return to profitability: profit before tax of £256,000 (H1 2012: loss before tax of £185,000).

·      Basic and fully diluted earnings per share of 1.3p (H1 2012: loss per share of 0.2p).

·      Cash balances of £7,429,000 as at 30 September 2013 (30 September 2012: £7,183,000) demonstrating financial strength of business.

·      Six new contracts signed in the period with major international organisations in the telecoms, aerospace & defence and law enforcement sectors; one further contract signed since period end -  all expected to contribute to revenues in current financial year.

·      Increased investment in technology and sales & marketing validated by the securing of launch customers and partners for our MyID credentialing services, MyID Mail app and MyID machine-certificate solutions.

Richard Parris, Chairman and Chief Executive of Intercede, commented:

"We have experienced one of our strongest ever six month trading periods and remain optimistic that this pattern will continue through the second half. No fewer than six new revenue generating contracts were signed in the half year, with a seventh earlier this month.  In addition, we have advanced our technological proposition, enabling MyID to be applied in a growing range of devices and other environments. We have also continued to invest in our own sales capacity and expanded our indirect channels to market.

"The commercial outlook for the remainder of the year ending 31 March 2014 remains in line with expectations. Beyond that, I believe 2014 will be an inflexion year for the adoption of Intercede's technology by mainstream channel partners and large customers. This underpins our focus on building a business and technology platform to deliver our previously declared high growth 2020 vision. We remain confident that this strategy will maximise long term shareholder value."

ENQUIRIES

Intercede Group plc                                                             Tel. [phone]

Richard Parris, Chairman & Chief Executive

Andrew Walker, Finance Director

FinnCap                                                                                 Tel. [phone]

Stuart Andrews, Corporate Finance

Joanna Weaving, Corporate Broking

Bell Pottinger                                                                        Tel. [phone]

Archie Berens

About Intercede

Intercede™ is a security software provider whose MyID® identity management platform enables global organisations and governments to create trusted digital identities for employees and citizens on secure devices such as smartcards, smartphones and tablets. MyID® enables the protection of IP, assets, and digital content, delivering trusted digital identities as the cornerstone of cyber security strategies for government, defence, financial services and other industries.

The Company operates in global markets (including the US, Europe and Middle East) and works with large international partners to deliver flexible digital identity solutions that are interoperable with other existing technologies and which are tailored to customer needs.

The world's largest governments, major corporations and mobile network operators trust Intercede's deep expertise to deliver effective solutions. The Company's technology achievements reflect a significant investment in the development of intellectual property, exemplary speed of deployment and adherence to international standards including FIPS 201, where MyID® was the first electronic personalisation product to obtain GSA approval. This trust is reflected in Intercede's rate of repeat business with its customers, which typically runs at 70-80% of annual revenues.

Intercede has been developing ID management systems since 1992 and MyID® is currently deployed by end customers located in 24 countries. The company is headquartered in the UK, listed on the London Stock Exchange (AIM: IGP) and is ISO 9001 and TickIT certified.

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

INTERCEDE GROUP plc

('Intercede', 'the Company' or 'the Group')

Interim Results for the Six Months Ended 30 September 2013

Chairman's Statement

Introduction

I am pleased to announce Intercede's interim results for the six month period ended 30 September 2013.  We have experienced one of our strongest ever six month trading periods and remain optimistic that this pattern will continue through the second half.

Financial Results

Revenues in the period totaled £4,614,000 compared to £3,508,000 in the previous year, an increase of 32%. A net profit of £652,000 for the period compares to a £84,000 net loss in the prior year.

The Company has no debt and continues to be cash generative. The cash balance at the end of September was £7,429,000 compared to £6,770,000 at the end of March 2013 and £7,183,000 at the end of September 2012.

Operational Highlights

This has been a very busy period in terms of contract wins and customer deliveries. The following contract wins were added to the order book during the period, all of which will contribute to revenues in the current financial year:

·     9 April 2013: CertiPath announced its CIV-in-a-Box product, based on MyID, at ISC West in Las Vegas. CertiPath has subsequently secured its first customer for this solution.

·     25 April 2013: Large scale US transportation security programme - MyID licenses and development to support more than 2.5 million biometric identity smart cards. The contract value to Intercede is likely to exceed £1.5 million in the current financial year and £10 million over a five-year period.

·     29 July 2013: Canadiantelecommunications company - more than 25,000 MyID licences in support of digital identities on mobile devices for employees and to be expanded to external customers.

·     29 July 2013: German telecommunications company - more than 100,000 MyID licenses in support of digital identities on smart cards and mobile devices, initially for employees but with an intention to later expand to external customers.

·     25 September 2013: Major European aerospace & defence contractor - initial order for 50,000 MyID licenses to manage digital identities on employee smart badges. The total population after full deployment is anticipated to be more than 100,000 users.

·     25 September 2013: UK law enforcement organisation - order received to replace an incumbent competitor's product with MyID. The total population after full deployment is anticipated to be more than 30,000 users.

In addition, on 5 November 2013, we signed a contract with a major US aerospace & defence contractor, to replace an existing credential management system with MyID. The total population after full deployment is anticipated to be more than 60,000 users.

Business Development

During the period, Intercede advanced the use of MyID to manage digital credentials on Windows 7, Windows 8 and 8.1 mobile devices to enable customers to deploy virtual smartcards onto tablets, laptops and phones equipped with TPM technology. These solutions were demonstrated at an invitation-only CESG security event on 14 October 2013. Working with the Microsoft sales channel, a number of opportunities are in the late stages of contract negotiation.

On 6 September 2013, Intercede entered into a technology and marketing partnership with Trustonic to further develop our mobile device credential management capability. Trustonic is a joint venture between ARM, Gemalto and Giesecke & Devrient.

Extending from our work with both Microsoft and Trustonic, Intercede is developing a MyID solution for managing the secure identity of machines connected to trusted networks. Initial contracts are currently being negotiated for the deployment of at least 100,000 machine certificates managed by MyID licenses in 2014.

To demonstrate the use of digital identities on mobile devices, Intercede has developed MyID Mail, a secure email app that is available for purchase on iTunes. This works on any iPhone or iPad equipped with a smart card reader. A major oil and gas company is currently piloting the use of this solution for its senior executives, reinforcing the potential demand for such capability.

At government level, additional PIV and PIV-I licenses have been sold to US Federal government agencies and HP have purchased the first licenses under our previously announced reseller agreement to support a large UK government agency. This endorses MyID as a high-security trusted product.

 In the US, at state and local level, Intercede MyID is powering two managed service providers who have been contracted during the period to roll out citizen-facing identity card solutions within the Commonwealth of Virginia and the State of West Virginia. These programs have the potential to provide healthy revenues in future periods. Furthermore, another Intercede partner is poised to roll out PIV-I credentials to more than 300,000 contractors accessing US military bases.

We have previously highlighted our engagement with TSCP, an aerospace and governmental organisation focused on secure transglobal collaboration. On 18 September 2013, TSCP announced it had been awarded a pilot grant by the Department of Commerce's National Institute of Standards and Technology (NIST) to support the National Strategy for Trusted Identities in Cyberspace (NSTIC). The TSCP team brings together governments, leading system integrators, technology solution providers, small and medium-sized businesses and financial services sector participants to collaborate in achieving NSTIC's goals. Intercede is a member of this team. The TSCP pilots will use trusted credentials to conduct secure business-to-business, government-to-business and retail transactions for small and medium-sized businesses and financial services companies. One outcome of the TSCP pilots will be the development of an open source, technology-neutral Trust Framework Development Guidance document. This is a highly significant development, since it will create a standard for consistent and convenient online transactions to enable secure and privacy-enhancing online access for businesses and consumers.

Intercede is also a member of a pan-European consortium that has been awarded an EU-funded grant to research and propose solutions to support the concept of a situational awareness security operations centre investigating converged physical, logical and cyber security. The project, which has a value to Intercede in excess of €300k over three years, includes protecting critical national infrastructure, power utilities and major sports stadiums. Intercede is contracted to a multinational prime contractor and will be the identity management solutions provider to the consortium.

Strategy and Outlook

This wide range of new business opportunities is driving Intercede's growth trajectory in terms of revenue and headcount. Our ability to win new customers and to displace competitors from key accounts demonstrates our current leadership and the competitive strength of the MyID software platform.

The sales potential behind each of the opportunities described above is far greater than the revenue booked in the current period, meaning the business is well structured for further growth. We continue to invest in people and facilities to ensure we take advantage of the opportunities we have created.

The securing of launch customers and partners for our MyID mobile credentialing services, MyID Mail app and MyID machine-certificate solutions also validates our investment strategy and provides vital customer feedback.

Intercede's strapline for 2014 is 'ID Anywhere'. On smart cards, in phones, on tablets, in servers, for employees, citizens, consumers, in the office, on the move, Intercede delivers secure and trusted identities - Anywhere. This Internet of Things promises to be a very large market for Intercede to exploit in both the medium and long term.

The commercial outlook for the remainder of the year ending 31 March 2014 remains in line with expectations. Beyond that, I believe 2014 will be an inflexion year for the adoption of Intercede's technology by mainstream channel partners and large customers. This underpins our focus on building a business and technology platform to deliver our previously declared high growth 2020 vision. We remain confident that this strategy will maximise long term shareholder value.

Richard Parris

Chairman & Chief Executive

21 November 2013

Consolidated Statement of Comprehensive Income

For the period ended 30 September 2013

	6 months ended	6 months ended	Year ended
	30 September	30 September	31 March
	2013	2012	2013
	£'000	£'000	£'000
Continuing operations
Revenue	4,614	3,508	6,727
Cost of sales	(18)	(20)	(24)
	__________	__________	__________
Gross profit	4,596	3,488	6,703
Administrative expenses	(4,376)	(3,717)	(7,467)
	__________	__________	__________
Operating profit/(loss)	220	(229)	(764)
Finance income	36	44	91
	__________	__________	__________
Profit/(loss) before tax	256	(185)	(673)
Taxation	396	101	101
	__________	__________	__________
Profit/(loss) for the period	652	(84)	(572)
	__________	__________	__________
Total comprehensive income/(expense) attributable to owners of the parent company	652	(84)	(572)
	__________	__________	__________
Earnings/(loss) per share (pence)
- basic	1.3p	(0.2)p	(1.2p)
- diluted	1.3p	(0.2)p	(1.2p)
	__________	__________	__________

Consolidated Balance Sheet

As at 30 September 2013

	As at	As at	As at
	30 September	30 September	31 March
	2013	2012	2013
	£'000	£'000	£'000
Non-current assets
Property, plant and equipment	658	624	644
	__________	__________	__________
Current assets
Trade and other receivables	1,575	1,104	991
Cash and cash equivalents	7,429	7,183	6,770
	__________	__________	__________
	9,004	8,287	7,761
	__________	__________	__________
Total assets	9,662	8,911	8,405
	__________	__________	__________
Equity
Share capital	487	487	487
Share premium account	232	232	232
Other reserves	1,508	1,508	1,508
Retained earnings	4,250	3,946	3,530
	__________	__________	__________
Total equity	6,477	6,173	5,757
	__________	__________	__________
Current liabilities
Trade and other payables	1,225	890	998
Deferred revenue	1,960	1,848	1,650
	__________	__________	__________
	3,185	2,738	2,648
	__________	__________	__________
Total equity and liabilities	9,662	8,911	8,405
	__________	__________	__________

 

Consolidated Statement of Changes in Equity

As at 30 September 2013

 

	Share	Share	Other	Retained
	capital	premium	reserves	earnings	Total
	£'000	£'000	£'000	£'000	£'000
At 31 March 2013	487	232	1,508	3,530	5,757
Employee share option scheme charge	-	-	-	68	68
Total comprehensive income	-	-	-	652	652
	________	________	________	________	_______
At 30 September 2013	487	232	1,508	4,250	6,477
	________	________	________	_________________	________
At 31 March 2012	484	110	1,508	3,930	6,032
Issue of shares, net of costs	3	122	-	-	125
Employee share option scheme charge	-	-	-	100	100
Total comprehensive expense	-	-	-	(84)	(84)
	________	________	________	________	_______
At 30 September 2012	487	232	1,508	3,946	6,173
	________	________	________	___________	________
At 31 March 2012	484	110	1,508	3,930	6,032
Issue of shares, net of costs	3	122	-	-	125
Employee share option scheme charge	-	-	-	172	172
Total comprehensive expense	-	-	-	(572)	(572)
	________	________	________	________	_______
At 31 March 2013	487	232	1,508	3,530	5,757
	________	________	________	___________	________

Consolidated Cash Flow Statement

For the period ended 30 September 2013

	6 months ended	6 months ended	Year ended
	30 September	30 September	31 March
	2013	2012	2013
	£'000	£'000	£'000
Cash flows from operating activities
Operating profit/(loss)	220	(229)	(764)
Depreciation	55	45	92
Employee share option scheme charge	68	100	172
(Increase)/decrease in trade and other receivables	(584)	306	317
Increase in deferred income and trade and other payables	537	308	218
	__________	__________	__________
Cash generated from operations	296	530	35
Taxation	396	4	101
	__________	__________	__________
Net cash generated from operating activities	692	534	136
	__________	__________	__________
Investing activities
Interest received	36	42	94
Purchases of property, plant and equipment	(69)	(486)	(553)
	__________	__________	__________
Net cash used in investing activities	(33)	(444)	(459)
	__________	__________	__________
Financing activities
Proceeds on issue of shares	-	125	125
	__________	__________	__________
Net cash generated from financing activities	-	125	125
	__________	__________	__________
Net increase/(decrease) in cash and cash equivalents	659	215	(198)
Cash and cash equivalents at the beginning of the period	6,770	6,968	6,968
	__________	__________	__________
Cash and cash equivalents at the end of the period	7,429	7,183	6,770
	__________	__________	__________

 

Notes to the Consolidated Accounts

For the period ended 30 September 2013

 

 

1   Preparation of the interim financial statements

These interim financial statements have been prepared under IFRS as adopted by the European Union and on the basis of the accounting policies set out in the Group's Annual Report for the year ended 31 March 2013.

 The Group is not required to apply IAS 34 Interim Financial Reporting at this time.

     These interim financial statements have not been audited and do not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 March 2013 have been delivered to the Registrar of Companies. The Auditors' Report on those accounts was unqualified and did not contain any statement under Section 498 (2) or (3) of the Companies Act 2006.

The Interim Report will be mailed to shareholders prior to the end of December 2013 and copies will be available on the website (www.intercede.com) and at the registered office: Intercede Group plc, Lutterworth Hall, St Mary's Road, Lutterworth, Leicestershire, LE17 4PS.

2   Revenue

All of the Group's revenue, operating profits and net assets originate from operations in the UK.  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:

	6 months ended	6 months ended	Year ended
	30 September	30 September	31 March
	2013	2012	2013
	£'000	£'000	£'000
UK	353	331	806
Rest of Europe	1,319	403	651
North America	2,812	2,555	4,823
Rest of World	130	219	447
	__________	__________	__________
	4,614	3,508	6,727
	__________	__________	__________

3   Taxation

Taxation represents the net effect of amounts receivable from HMRC in respect of research and development claims and US corporation tax payable. There is no charge for UK corporation tax due to the availability of losses brought forward from prior years.

 

 

4  Earnings/(loss) per share

The calculations of the earnings/(loss) per ordinary share are based on the profit/(loss) for the period and the weighted average number of ordinary shares in issue during each period. The basic and diluted loss per share are the same as potential dilution cannot be applied to a loss making period.

	6 months ended	6 months ended	Year ended
	30 September	30 September	31 March
	2013	2012	2013
	£'000	£'000	£'000
Profit/(loss) for the period	652	(84)	(572)
	__________	__________	__________
	Number	Number	Number
Weighted average number of shares - basic	48,735,005	48,613,486	48,613,172
- diluted	50,228,664	50,228,664	50,228,664
	__________	__________	__________
	Pence	Pence	Pence
Earnings/(loss) per share - basic	1.3p	(0.2)p	(1.2p)
- diluted	1.3p	(0.2)p	(1.2p)
	__________	__________	__________

5   Dividend

The Directors do not recommend the payment of a dividend.

 

END

 

 

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