Intercede Group Interim Resul

RNS Number : 9267W

Intercede Group PLC

29 November 2010

 



29 NOVEMBER 2010

INTERCEDE GROUP plc

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

Interim Results for the 6 Months Ended 30 September 2010

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

-     25% increase in sales to £3,506,000 (2009: £2,811,000).

-     Operating profit before exceptional items of £1,204,000 (2009: £674,000).

-     Profit for the period of £1,225,000 (2009: £85,000).

-     Basic and fully diluted earnings per share of 2.5p (2009: 0.2p).

-     Cash generated from operations before exceptional items of £630,000 (2009: £762,000).

-     Cash balances of £4,470,000 at 30 September 2010 (30 September 2009: £3,913,000).

-     No external borrowings.

-     Increased investment in international sales and technical capabilities to support growing demand for and use of Intercede's proprietary MyID Identity and Credential Management System.

-     Continued expansion of Intercede's customer base in the US.

-     Winning new contracts to supply MyID to government ministries, banks and business corporations around the world.

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

"We have made excellent progress this year, both commercially and financially.  Intercede MyID is being used by an increasing base of new and existing customers and the pipeline of future orders is stronger than it has ever been.  The Company is increasingly profitable, cash generative and financially strong.

"This year represents a tipping point in the evolution of Intercede's business and is indicative of the strong commercial progress we continue to make. We look forward to a favourable outcome for the current financial year and to achieving further growth thereafter."

Further Information on Intercede MyID

Intercede MyID is the only IDCMS software product that enables organisations to easily and securely manage the identities of people and their associated identity credentials within a single, integrated, workflow driven platform. This includes enabling and managing: secure registration, biometric capture, application vetting and approval through to smart card personalisation, issuance and management.

MyID was the first electronic personalisation product to achieve compliance with the FIPS-201 standard and is widely deployed by Federal Agencies, government contractors and other commercial entities. In particular, it supports the latest standards applicable for all PIV, PIV-Interoperable and PIV-Compatible deployments.

It can issue and manage a wide variety of ID's and credentials, providing customers with a  platform that can meet their needs now and in the future. It is a fully supported commercial off-the-shelf product that can be quickly deployed for thousands or millions of users.

About Intercede

Intercede is the producer of the MyID Identity and Credential Management System (IDCMS).

Intercede MyID technology is being used around the world by large corporations, governments and banks to manage millions of identities for employees, citizens and customers. Notable deployments in the US include 14 Federal Agencies, 1.7m smart cards in support of the US Transportation Worker Identity Credential program, two major US financial institutions and 310,000 smart corporate identity badges for Lockheed Martin and another defense contractor. In Europe and the Middle East, Intercede MyID is being deployed in support of government identity, health and corporate employee ID security projects.

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

ENQUIRIES

Intercede Group plc                                                 Tel. [phone]
Richard Parris, Chairman & Chief Executive
Andrew Walker, Finance Director

FinnCap                                                                     Tel. [phone]
Clive Carver
Sarah Wharry

Pelham Bell Pottinger                                             Tel. [phone]
Archie Berens
Clare Gilbey

Chairman's Statement

Introduction

I am pleased to report that Intercede has made excellent progress in the six months ended 30 September 2010. Revenues have increased by 25% to £3,506,000 (2009: £2,811,000) and operating profits have increased from £95,000 to £1,204,000.

The cash balance as at 30 September 2010 was £4,470,000 compared to £3,913,000 at 30 September 2009 and £4,664,000 at 31 March 2010. As previously reported, the Group effectively entered the current financial year with a cash balance of £3,917,000 net of post year end exceptional payments relating to the previous financial year. As a result of strong orders received during the period, the cash balance has subsequently increased to in excess of £5,000,000 at 29 November 2010.

This year represents a tipping point in the evolution of Intercede's business and is indicative of the strong commercial progress we continue to make.

Commercial Progress

Major commercial progress made during the year to date includes:

•           Large new US Federal Agency selects MyID for a PIV-Compatible solution.

•          US manufacturing and defense systems company licenses MyID for the issuance of 160,000 PIV-Compatible cards.

•          Sale of an additional 400,000 MyID licenses to BT for the NHS Data Spine project bringing the total licenses sold to date to 1,200,000.

•          Securing additional orders totalling in excess of $1.0m for MyID software licenses, custom development and professional services in support of the internal identity badge programs at Lockheed Martin and the US Federal Aviation Authority.

•          Supporting Lockheed Martin on the US Transportation Worker Identity Credential (TWIC) program which has to date issued 1.7 million cards to US dock workers using MyID.

•          Supplying additional Intercede MyID licenses to Booz Allen Hamilton, a large US based global management consultancy group, in support of a PIV-Interoperable employee badging solution.

•          The addition of a major Intergovernmental Organisation (IGO) to Intercede's customer list.

•          Securing additional orders totalling more than € 250,000 from the Road Transportation and Vehicle Licensing Agencies in Ireland and the Netherlands.

•           The sale of Intercede MyID licenses to an Australian government customer.

•          The provision of additional services to the State of Kuwait in support of the National ID card project.

Financial Results

The financial results reflect the continued momentum from the Group's involvement in an increasing number of projects around the world. Sales increased by 25% to £3,506,000 (2009: £2,811,000) which resulted in an increase in operating profit from £95,000 to £1,204,000. There was also a substantial increase in operating profit before exceptional items from £674,000 to £1,204,000.

Staff costs continue to represent the main area of expense totalling approximately 81% of the total operating costs during the period. The average number of employees and contractors increased from 54 to 56 year on year.

A profit for the period of £1,225,000 (2009: £85,000) resulted in a basic and fully diluted earnings per share of 2.5p (2009: 0.2p). The adjusted fully diluted earnings per share, based upon profit prior to tax and exceptional item of £1,225,000 (2009: £664,000) is 2.5p (2009: 1.4p).

The cash balance as at 30 September 2010 was £4,470,000 compared to £3,913,000 at 30 September 2009 and £4,664,000 at 31 March 2010. As previously reported, the Group effectively entered the current financial year with a cash balance of £3,917,000 net of post year end exceptional payments relating to the previous financial year. Therefore, the Group has generated £630,000 of cash from operations before exceptional items during the six month period (2009: £762,000).

Outlook

The first half of the year has been profitable and cash generative. As in previous years, the full year outcome will be dependent upon the timing of receipt of orders and our subsequent ability to deliver and recognise revenues in accordance with the Group's accounting policy. Nevertheless, the level and pace of customer and partner activity is greater than in previous periods and the sales pipeline is stronger than ever. We therefore remain confident that our operating performance will continue to meet expectations.

Richard Parris

Chairman & Chief Executive

29 November 2010

Consolidated Statement of Comprehensive Income

For the period ended 30 September 2010

	6 Months ended 30 September 2010 £'000	6 Months ended 30 September 2009 £'000	Year ended 31 March 2010 £'000
Continuing operations
Revenue	3,506	2,811	6,194
Cost of sales	(8)	(73)	(66)
	_________	_________	_________
Gross profit	3,498	2,738	6,128
Administrative expenses	(2,294)	(2,643)	(5,619)
	_________	_________	_________
Operating profit	1,204	95	509
Operating profit before exceptional item	1,204	674	2,026
Exceptional item	-	(579)	(1,517)
	_________	_________	_________
Operating profit	1,204	95	509
Finance income	21	16	27
Finance costs	-	(26)	(26)
	_________	_________	_________
Profit before tax	1,225	85	510
Taxation	-	-	(14)
	_________	_________	_________
Profit for the period	1,255	85	496
	_____	_____	_____
Total comprehensive income attributable to owners of the company	1,225	85	496
	_____	_____	_____
Earnings per share (pence) -     basic	2.5p	0.2p	1.1p
-     diluted	2.5p	0.2p	1.0p
	_____	_____	_____

Consolidated Balance Sheet

As at 30 September 2010

 

	As at 30 September 2010 £'000	As at 30 September 2009 £'000	As at 31 March 2010 £'000
Non-current assets
Property, plant and equipment	152	70	84
Deferred tax	280	280	280
	_________	_________	_________
	432	350	364
	_________	_________	_________
Current assets
Trade and other receivables	1,867	687	954
Cash and cash equivalents	4,470	3,913	4,664
	_________	_________	_________
	6,337	4,600	5,618
	_________	_________	_________
Total assets	6,769	4,950	5,982
	_____	_____	_____
Equity
Called up share capital	4,413	4,413	4,413
Share premium account	4,718	4,718	4,718
Other reserves	1,508	1,508	1,508
Retained earnings	(6,272)	(7,908)	(7,497)
	_________	_________	_________
Total equity	4,367	2,731	3,142
	_________	_________	_________
Current Liabilities
Trade and other payables	773	1,025	1,385
Deferred revenue	1,629	1,194	1,455
	_________	_________	_________
	2,402	2,219	2,840
	_________	_________	_________
Total equity and liabilities	6,769	4,950	5,982
	_____	_____	_____

Consolidated Statement of Changes in Equity

As at 30 September 2010

	Share capital £'000	Share premium £'000	Other reserves £'000	Equity reserve £'000	Retained earnings £'000	Total £'000
At 31 March 2010	4,413	4,718	1,508	-	(7,497)	3,142
Total comprehensive income	-	-	-	-	1,225	1,225
	______	______	______	______	______	______
At 30 September 2010	4,413	4,718	1,508	-	(6,272)	4,367
	___	___	___	___	___	___
At 31 March 2009	4,305	2,875	1,508	109	(8,102)	695
Issue of shares, net of costs	108	1,843	-	(109)	109	1,951
Total comprehensive income	-	-	-	-	85	85
	______	______	______	______	______	______
	4,413	4,718	1,508	-	(7,908)	2,731
	___	___	___	___	___	___
At 31 March 2009	4,305	2,875	1,508	109	(8,102)	695
Issue of shares, net of costs	108	1,843	-	(109)	109	1,951
Total comprehensive income	-	-	-	-	496	496
	______	______	______	______	______	______
At 31 March 2010	4,413	4,718	1,508	-	(7,497)	3,142
	___	___	___	___	___	___

Consolidated Cash Flow Statement

For the period ended 30 September 2010

	As at 30 September 2010 £'000	As at 30 September 2009 £'000			As at 31 March 2010 £'000
Cash flows from operating activities
Operating profit	1,204	95			509
Exceptional item	-	579			1,517
	_________	_________			_________
Operating profit before exceptional item	1,204	674			2,026
Depreciation	21	15			31
(Increase) / decrease in trade and other receivables	(904)	214			(60)
Increase / (decrease) in trade and other payables	309	(141)			88
	_________	_________			_________
Cash generated from operations before exceptional item	630	762			2,085
Exceptional item	(747)	(549)			(1,085)
Taxation	-	-			(14)
	_________	_________			_________
Net cash (used by) / generated from operating activities	(117)	213			986
	_________	_________			_________
Investing activities
Interest received	12	18			25
Purchases of property, plant and equipment	(89)	(19)			(48)
	_________	_________			_________
Net cash used by investing activites	(77)	(1)			(23)
	_________	_________			_________
Financing activities
Costs on issue of shares	-	(10)			(10)
	_________	_________			_________
Net (decrease) / increase in cash and cash equivalents	(194)	202			953
Cash and cash equivalents at the beginning of the period	4,664	3,711			3,711
	_________	_________			_________
Cash and cash equivalents at the end of the period	4,470	3,913			4,664
	_____	_____			_____

 

Notes to the Accounts

For the period ended 30 September 2010

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 2010.

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 2010 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 2010 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 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:

	6 months ended	6 months ended	Year ended
	30 September 2010	30 September 2009	31 March 2010
	£'000	£'000	£'000
United Kingdom	838	795	1,601
Rest of Europe	351	806	1,389
USA	2,032	1,085	2,795
Rest of World	285	125	409
	__________	__________	__________
	3,506	2,811	6,194
	__________	__________	__________

 

3  Exceptional item

The exceptional item represents the costs associated with defending a patent infringement lawsuit which was filed by ActivIdentity in the United States District Court for the Northern District of California on 1 October 2008. No further legal costs are expected to arise following the settlement of this claim on 23 March 2010.

4  Taxation

There is no charge for corporation tax due to the availability of losses brought forward from prior years.

 

 

5  Earnings per share

The calculations of earnings per ordinary share are based on the profit and the weighted average number of ordinary shares in issue during each period.

	6 months ended	6 months ended	Year ended
	30 September 2010	30 September 2009	31 March 2010
Profit for the period	1,225	85	496
Adjusted profit before tax and exceptional item	1,225	664	2,027
	__________	__________	__________
	Number	Number	Number
Weighted average number of shares - basic	48,178,005	44,704,340	46,304,420
- diluted	48,735,005	48,735,005	48,735,005
	__________	__________	__________
	Pence	Pence	Pence
Earnings per share - basic	2.5p	0.2p	1.1p
- diluted	2.5p	0.2p	1.0p
- adjusted*	2.5p	1.4p	4.2p
	__________	__________	__________

* Adjusted fully diluted earnings per share based on profit before tax and exceptional item.

 

6   Dividend

The Directors do not recommend the payment of a dividend.

7  Capital Reduction

On 2 November 2010, the Registrar of Companies issued the certificate of registration of a court order for the reduction of share capital of the Company and the cancellation of its share premium account. The reduction of capital was approved by shareholders at the Company's AGM held on 24 September 2010.

The effect of the capital reduction is to eliminate the deficit showing as profit and loss account reserves, thereby facilitating the payment of a dividend as and when the Board considers this to be appropriate.

 

END

 

 

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