Interim Results

Intercede Group PLC
14 December 2006



14 DECEMBER 2006


                              INTERCEDE GROUP plc
                  ('Intercede', 'the Company' or 'the Group')


            Interim Results for the 6 Months Ended 30 September 2006


Intercede (AIM: IGP.L) is a leading developer of identity management software
which manages the secure registration, issuance and life cycle of digital
identities for a wide range of uses.


SUMMARY


- Order book and pipeline substantially increased year on year.


- Sales of £1.21m broadly in line with corresponding period in previous year
  (2005: £1.24 million).


- Gross margin rose to 98% (2005: 96%).


- Operating loss of £0.27m (2005: Operating profit of £2k), reflecting further
  investment in sales initiatives, especially in the US.


- Cash balances of £0.41m (2005: £1.03m) at 30 September 2006.


- MyID technology has achieved significant traction in key US Federal Government
  ID card program.


- Strategy of partnering with major global security players leading to increased
  adoption of MyID technology on a global basis.


- Additional 200,000 MyID licenses sold to Gemalto in support of large European
  Public Sector employer.


- On track to achieve growth in full year sales compared to previous financial
  year.


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


'This has been an important period of development for Intercede. Our MyID
technology is becoming increasingly recognised as the best of breed smart card
and identity management system and our partner strategy is producing tangible
results around the world. This is demonstrated by our recent significant
successes within the US Federal Government market. We are therefore confident of
further progress.'


ENQUIRIES

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

Pelham Public Relations
Archie Berens                                             Tel.     [phone]
Kate Catchpole                                            Tel.     [phone]

KBC Peel Hunt
Julian Blunt                                              Tel.     [phone]

About Intercede

Intercede Group plc is a leading developer and supplier of smart card and
identity management software listed on the London Stock Exchange (IGP LN)
(IGP.L). Intercede's MyID software manages the secure registration, issuance and
lifecycle of digital identities for a wide range of uses. This requires the
integration of multiple technologies and products from many different vendors,
including smart cards, biometrics, digital certificates and Open Platform
applets.

Intercede works with a number of market leading OEM, re-seller and technology
partners that supply MyID technology including: Athena Smartcard Solutions,
Gemalto, Oberthur Card Systems, RSA Security, SafeNet, Thales, VeriSign and a
variety of systems integrators and other security product and service providers.

Intercede and MyID are registered trademarks or trademarks in the UK, US and/or
other countries. For more information visit http://www.intercede.com


                              INTERCEDE GROUP plc


           Interim Results for the Six Months Ended 30 September 2006

Chairman's Statement


Business and Product Development


I am pleased to report that Intercede has continued to make excellent progress
in the first half of the current financial year. As of the date of this
statement, we have secured orders equaling the revenues achieved in the whole of
the previous year and additional business is expected to close prior to the end
of the full year. We are therefore confident of being able to report solid year
on year growth for the full year to 31 March 2007, notwithstanding the potential
for implementation delays and revenue recognition issues.


Most significantly, during the period we have solidified our operations in the
US market and, since the period end, we have secured some impressive early wins
via our partners with US Government Agencies under the long anticipated Homeland
Security Presidential Directive-12 (HSPD-12) mandate. HSPD- 12 requires every US
Government employee and contractor to be issued with a new, state-of-the-art ID
card. Under this program, Intercede's MyID system is now established in
Washington DC as the market leader for issuing new generation secure identity
cards to federal employees.


This position has been achieved as the result of Intercede's strategic focus,
our world-class technology and overall knowledge and professionalism. As a
result of the efforts of our dedicated staff and partners, the following key
milestones have already been achieved during this financial year:


1.   Delivery of MyID v7.1 to channel partners including Athena, RSA, SafeNet,
     Thales and VeriSign.


2.   First end customer contracts secured by last year's new partners RSA and
     VeriSign.


3.   Additional order secured from one of the top four US banks - further and
     growing license sales are expected during the next 12-24 months.


4.   Additional contract wins secured by our partners in the Middle East.


5.   Additional 200,000 MyID licenses sold to Gemalto in support of a large
     European Public Sector employer, bringing the total number of MyID licenses
     deployed by this end customer to 500,000 - Intercede's largest single 
     deployment to date.


6.   Working in collaboration with Oberthur Card Systems and Fargo, MyID was
     used to manage the identities of 8,000 diplomats, conference delegation 
     members, Latvian and NATO supporting units, security personnel and 
     volunteers at the NATO Summit in Riga, 27-29 November 2006.


7.   First orders secured via partners from the US Federal Government under
     HSPD- 12 including:

     The highest ranking Department within the Executive Branch of Government

     Department of Education
  
     Environmental Protection Agency

     Federal Trade Commission

     Federal Housing Finance Board

     Housing and Urban Development


8.   The inclusion of MyID technology in a HSPD-12 managed service offering from
     a large scale provider targeting US Federal Government and civilian 
     agencies.  This managed service was used to enable 18 Federal Agencies to 
     meet their 27 October 2006 HSPD- 12 deadline for initial smart card 
     issuance.


9.   Following these deployments, we are now integrated with the PKI services
     delivered by the US Federal Government's top three approved Shared Service
     Providers (SSP), namely VeriSign, Cybertrust and ORC. This makes it 
     increasingly easier for new federal agencies to implement solutions based 
     on MyID technology.


10.  Certification of MyID v7.1 by the US General Services Agency for its use in
     Federal Government projects.


The above activity shows the remarkable penetration we continue to make in the
rapidly emerging identity sector. Initial indications are that Intercede is the
most successful smart card and identity management company in the HSPD-12
market. The challenge is to turn these contracts into long term revenues and to
exploit our lead position in related markets in the US and beyond.


Financial Results

Sales during the period totaled £1,212,000 which, at a gross margin of 98%,
resulted in an operating loss of £270,000. This compares to sales in the
corresponding period last year of £1,241,000 at a gross margin of 96% and an
operating profit of £2,000.



The sales during the period have arisen from servicing a wide variety of new and
existing accounts including but not limited to; Gemalto, RSA Security, Athena
Smart Card Solutions, Thales, Barclays Bank and Lloyds TSB. Geographically, over
40% of revenues related to business in the UK. No US Federal Governments
contracts were received prior to 30 September 2006.


On the cost side of the business, additional staff have been recruited to
support the substantial amount of time and effort involved in supporting an
increasing number of existing and new partners in multiple bids for US Federal
Agencies. That work has typically been non-chargeable, but is expected to make a
positive revenue contribution though additional license fees during the full
year.


It should be noted that, despite our success securing new contracts, US Federal
Agencies are being slower in deploying HSPD-12 solutions than had been
previously expected. It is therefore premature to forecast the number of
licenses that may be sold by 31 March 2007. However, we can confirm that
$500,000 of HSPD-12 related revenue has already been booked for the full year
(excluding $500,000 of advance licenses previously purchased by RSA Security)
and more orders are anticipated for the current year and beyond.


During the period we extended the Company's convertible loan agreements by three
years to May 2009. This demonstrates investor confidence and avoids the need to
repay £1,790,000 including interest that otherwise would have fallen due for
repayment within the current financial year.


As at 30 September 2006, the Group had net cash balances totaling £405,000.
During the six months ended 30 September 2006, the cash outflow before financing
was £707,000 which compares with a cash inflow of £358,000 during the
comparative period.


Outlook

According to the Stanford Group, the top ten US Government identity initiatives
will generate approximately $8 billion in business for identity solutions
companies over the next five years and overseas projects will contribute another
$14 billion. Intercede's technology is positioned to play a key role in a number
of these initiatives.


We believe that the US Government market will be the catalyst for the more
widespread adoption of smart cards across all walks of life in the US. This will
create one of the world's largest markets for Intercede's technology. In
parallel with our US activities we are continuing to grow our activities in
Europe and we are also building partnerships in anticipation of the UK
Government starting the contracting process for the UK National ID card.


While it is still too early to predict the size or timing of these
opportunities, our early successes provide good cause for confidence that the
upside for Intercede will be significant.


Richard Parris

Chairman & Chief Executive

14 December 2006




Intercede Group plc                                       6 months ended         6 months ended        Year ended
Consolidated Profit and Loss Account                        30 September           30 September          31 March
                                                                    2006                   2005              2006
                                                                   £'000                  £'000             £'000


Turnover                                                           1,212                  1,241             2,142

Cost of sales                                                       (25)                   (50)             (115)

Gross profit                                                       1,187                  1,191             2,027

Other operating expenses                                         (1,457)                (1,189)           (2,371)

Operating (loss)/profit                                            (270)                      2             (344)

Interest receivable and similar income                                13                     12                34

Interest payable and similar charges                                (43)                   (62)              (72)

Loss on ordinary activities before taxation                        (300)                   (48)             (382)

Tax on loss on ordinary activities                                    71                     76                76

(Loss)/profit on ordinary activities after
taxation and retained (loss)/profit for the period                 (229)                     28             (306)

Basic and diluted (loss)/profit per                               (0.7)p                   0.1p            (0.9)p
ordinary share




Intercede Group plc                                                  As at               As at               As at
Consolidated Balance Sheet                                    30 September        30 September            31 March
                                                                      2006                2005                2006
                                                                     £'000               £'000               £'000


Fixed assets
Tangible assets                                                         31                  22                  27

Current Assets
Debtors                                                                562                 280                 317
Cash at bank and in hand                                               405               1,030               1,112

                                                                       967               1,310               1,429

Creditors: Amounts falling due within one year
Convertible debt                                                         -                   -             (1,432)
Other creditors                                                      (982)             (1,097)             (1,555)

Net current (liabilities)/assets                                      (15)                 213             (1,558)

Total assets less current liabilities                                   16                 235             (1,531)

Creditors: Amounts falling due after more than one year
Convertible debt                                                   (1,432)             (1,432)                   -
Other creditors                                                      (344)                   -                   -

                                                                   (1,776)             (1,432)                   -


Net liabilities                                                    (1,760)             (1,197)             (1,531)

Capital and reserves
Called-up share capital                                              4,271               4,271               4,271
Share premium account                                                2,107               2,107               2,107
Other reserves                                                       1,508               1,508               1,508
Profit and loss account                                            (9,646)             (9,083)             (9,417)

Shareholders' deficit - all equity                                 (1,760)             (1,197)             (1,531)



Intercede Group plc                                         6 months ended        6 months ended         Year ended
Consolidated Cash Flow Statement                              30 September          30 September           31 March
                                                                      2006                  2005               2006
                                                                     £'000                 £'000              £'000


Net cash (outflow)/inflow from operating activities                  (710)                   274                347

Interest received                                                       14                    12                 33

Taxation received                                                        -                    76                 76

Capital expenditure                                                   (11)                   (4)               (16)

Cash (outflow)/inflow before financing                               (707)                   358                440

Financing                                                                -                     -                  -

(Decrease)/increase in cash in the period                            (707)                   358                440


Intercede Group plc

Notes to the Accounts


1. Preparation of the interim financial statements

The interim financial statements have been prepared on the basis of the
accounting policies set out in the Group's 2006 statutory accounts.



The interim financial statements are unaudited and do not constitute statutory
accounts as defined in Section 240 of the Companies Act 1985.  The figures for
the year ended 31 March 2006 are an abridged version of the Group's statutory
accounts for that year which have been filed with the Registrar of Companies.
The audit opinion on those statutory accounts was unqualified and did not
include a statement under Section 237(2) or (3) of the Companies Act 1985.



The Interim Report will be mailed to shareholders 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. Basic and diluted (loss)/profit per ordinary share

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

                                                           6 months ended        6 months ended          Year ended
                                                             30 September          30 September            31 March
                                                                     2006                  2005                2006
                                                                    £'000                 £'000               £'000

(Loss)/profit for the period                                        (229)                    28               (306)

                                                                   Number                Number              Number

Weighted average number of shares                              33,963,438            33,963,438          33,963,438

                                                                    Pence                 Pence               Pence

Basic and diluted (loss)/profit per ordinary share                  (0.7)                   0.1               (0.9)



3. Reconciliation of movement in shareholders' deficit
                                                          6 months ended         6 months ended         Year ended
                                                            30 September           30 September           31 March
                                                                    2006                   2005               2006
                                                                   £'000                  £'000              £'000

Opening shareholders' deficit                                    (1,531)                (1,225)            (1,225)

(Loss)/profit for the period                                       (229)                     28              (306)

Closing shareholders' deficit                                    (1,760)                (1,197)            (1,531)
4. Reconciliation of operating (loss)/profit to operating cash flow
                                                          6 months ended         6 months ended         Year ended
                                                            30 September           30 September           31 March
                                                                    2006                   2005               2006
                                                                   £'000                  £'000              £'000

Operating (loss)/profit                                            (270)                      2              (344)

Depreciation charge                                                    7                      7                 13

(Increase)/decrease in debtors                                     (175)                     99                 64

(Decrease)/increase in creditors                                   (272)                    166                614

Net cash (outflow)/inflow from operating activities                (710)                    274                347



5. Analysis and reconciliation of net debt                     As at                                         As at
                                                            31 March                                  30 September
                                                                2006              Cash Flow                   2006
                                                               £'000                  £'000                  £'000

Cash at bank and in hand                                       1,112                  (707)                    405

Debt due within one year                                     (1,432)                  1,432                      -
Debt due after one year                                            -                (1,432)                (1,432)

Net debt                                                       (320)                  (707)                (1,027)


The reconciliation of net cash flow to the            6 months ended         6 months ended             Year ended
movement in net debt is as follows:                     30 September           30 September               31 March
                                                                2006                   2005                   2006
                                                               £'000                  £'000                  £'000 
                                                               
(Decrease)/increase in cash in the period                      (707)                    358                    440

Net debt at the beginning of the period                        (320)                  (760)                  (760)

Net debt at the end of the period                            (1,027)                  (402)                  (320)



6. Creditors: Amounts falling due after more than one year

A variation of terms was agreed with the holders of both of the convertible loan
stock agreements totalling £1,432,000 on 31 May 2006. The loan periods have both
been extended through to 31 May 2009. Interest will be charged at 6% per annum
with effect from 1 April 2006 and the loan stockholders will now be able to
convert the loans and associated interest outstanding at a price of 20.0p per
ordinary share (for the £982,000 loan) and 15.0p per ordinary share (for the
£450,000 loan). The loans and associated interest totalling £2,005,000 will be
repayable as at 31 May 2009 if they choose not to convert.


7. Dividend

The Directors do not recommend the payment of a dividend.


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