Final Results

RNS Number : 9567H

Intercede Group PLC

07 June 2011

 



INTERCEDE GROUP plc

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

Preliminary Results for the Year Ended 31 March 2011

Intercede, one of the world's leading developers and suppliers of identity management software, today announces its preliminary results for the year ended 31 March 2011.

SUMMARY

-     Continued strong financial performance:

* Sales revenues increased from £6.2m to £6.9m

      * Profit before tax of £2.0m (2010: £0.5m)

      * Fully diluted EPS 4.1p (2010: 1.0p)

      * Cash balances of £6.0m at 31 March 2011 (2010: £4.7m)

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

-     Continued investment in product development with the launch of MyID PIV v9.

-     Intercede is the first company in its sector to enable the issuance of US government certified PIV-I cards.

-     Further expansion of US customer base with the addition of a major new aerospace and defence contractor.

-     Increased global demand for MyID, demonstrated by new contracts with government ministries, banks and business corporations.

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

"Intercede has world class technology and a growing sales pipeline. It is now our responsibility to ensure that we have the product line flexibility to meet these new opportunities as they emerge.  We also need to secure the requisite levels of scalability within our organisational structure to meet the demands of a growing number of customers. The establishment of a strong market position has provided us with sufficient cash resources to fund this next stage of our growth plan and I look forward to reporting further success in due course."

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, 2 million smart cards in support of the US Transportation Worker Identity Credential program, 4 US financial institutions and 320,000 smart corporate identity badges for Boeing, Booz Allen Hamilton and Lockheed Martin. In Europe and the Middle East, Intercede MyID is being deployed in support of government identity, health and corporate employee ID security projects.

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.

Intercede MyID was the first electronic personalisation product to achieve compliance with the US FIPS-201 Personal Identity Verification (PIV) 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 credential's, 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.

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.      + 44 (0)20 7600 1658
Charles Cunningham, Corporate Finance
Rose Herbert, Corporate Finance
Joanna Weaving, Corporate Broking
Pelham Bell Pottinger	Tel.      [phone]
Archie Berens
Clare Gilbey

                                                                                                                                                                                          

INTERCEDE GROUP plc

Preliminary Results for the Year Ended 31 March 2011

Chairman's Statement

Intercede is one of the world's leading developers and suppliers of software for identity and credential management.  This software is branded as the Intercede MyID Identity and Credential Management System. MyID is used by governments, public authorities and companies around the world to protect and strengthen the identity assurance of their citizens and employees.

Financial and Operational Highlights

During the year significant progress has been made, both financially and operationally, across many areas. Highlights include:

1.   Continued strong financial performance:

o  Sales revenues increased from £6.2m to £6.9m

o  Profit before tax of £2.0m (2010: £0.5m)

o  Fully diluted EPS 4.1p (2010: 1.0p)

o  Cash balances of £6.0m at 31 March 2011 (2010: £4.7m)

2.   Kuwait National ID scheme issued 800,000 identity cards using Intercede MyID and ordered additional services to support future expansion to an additional 2 million residents.

3.   UK National Health Service purchased additional MyID licenses, bringing the total number of licenses sold to date to 1.2 million.

4.   Lockheed Martin purchased additional licenses for the US Transportation Worker Identity Credential (TWIC) programme bringing the total number of licenses sold to date to 2.1 million.

5.   A major new US aerospace and defence contractor ordered MyID licenses and services with a value in excess of $2 million.

6.   Intercede became the first company in its sector to enable the issuance of US government certified PIV-I cards. Booz Allen Hamilton was the first customer to take delivery.

7.   Intercede's MyID technology has been selected for the Victoria HealthSMART project in Australia.

8.   Intercede announced collaboration with Microsoft and the launch of the Intercede MyID Management Agent for Microsoft Forefront Identity Manager (FIM).

9.   The launch of Intercede MyID PIV v9 and its accreditation by the US General Service Administration for Federal Government use. MyID PIV v9 is Intercede's latest major product release focused on the US PIV and PIV-I market.

Results

	Year ended 31 March
£'000	2011	2010	2009
Revenue	6,872	6,194	5,701
Gross profit	6,850	6,128	5,660
Pre-exceptional operating profit	1,952	2,026	1,858
Exceptional item	-	(1,517)	(371)
Profit before tax	2,005	510	1,408

In the year ended 31 March 2011, revenue increased by 11% from £6,194,000 to £6,872,000 at a gross margin of 99.7%. This growth has been achieved in spite of the cancellation of the UK National Identity Scheme by the newly elected government, from which Intercede had previously expected to earn revenues. Intercede has nevertheless been able to secure new business from other areas - a testament to the strength of the business. As a result of the growth delivered from multiple projects, Intercede has a strong and diverse customer base from which to generate recurring revenues.

Good progress has been made growing our international sales and technical capabilities through a targeted programme of investment, which has been accelerated to take advantage of the growing market opportunity. This includes the opening of an office in Reston, Virginia, to support our US operations and recruiting additional sales and technical support resources in the region. Furthermore, Intercede is investing in strategic partnerships in Germany and Austria to complement our existing sales resources in France.

The pre exceptional operating profit for the period was £1,952,000 which compares to £2,026,000 in the previous year. As at 31 March 2011, the Group had cash balances of £6,046,000, an increase of £1,382,000 from 2010.  This is after the payment during the period of £747,000 of legal costs related to the patent litigation settled in the previous year, which further underlines the strongly cash generative nature of the business.

During the year Intercede delivered a profit before tax of £2,005,000 (2010: £510,000). This is the third consecutive full year of profitability, an outstanding achievement against a backdrop of challenging trading conditions.

Key Performance Indicators

I am pleased to report that the percentage of revenue for recurring customers has reduced compared to the previous period as we have been particularly successful in securing new customers. At the same time our support and maintenance revenues have increased. These are both strong indicators for future revenue growth.

The Group has continued to strengthen the proportion of revenue originating in the US. This is important because it both fuels and justifies our ongoing investment in this major market.

At a time when government spending around the world is coming under increasing scrutiny, it is reassuring to note that private sector customers now account for nearly half of our revenues compared to less than 40% last year. At a time of resurgence in global economic growth this is a positive trend.

Finally, the percentage of revenues from software license sales has increased, validating Intercede's business model as a product producer. This means the scalability of our business is continuing to increase which is critical to our ability to service what we believe will be a fast growing market over the next few years.

Product Development

This year has been marked by the continuing development of Intercede's core MyID product suite to service an increasingly global customer base. Intercede MyID version 9 was released in February 2011 at a major launch event in Washington DC.

In the US, the adoption by the private sector of smart card and identity products that either interoperate or are compatible with government standards is proving to be of particular interest. Customers include those organisations that wish to emulate the best practice of the US Government's Personal Identity Verification (PIV) initiative. Intercede has already delivered a number of these deployments outside of Federal Government, thereby achieving significant first mover advantage in this emerging sector. These include Boeing, Lockheed Martin and Booz Allen Hamilton.

In parallel, Intercede is continuing to develop MyID to service customers in other parts of the world who require compliance with alternative technical standards. This includes national identity card schemes, solutions to issue credentials onto mobile phones, closer coupling with Microsoft infrastructure security products and enhanced integration between logical and physical access systems.

The Board has recently decided to accelerate investment in existing and new product capability to maximise the potential of market leadership and to ensure Intercede is best placed for future exploitation.

Strategy

In last year's Chairman's statement, I highlighted that the Group's 2010/11 business plan was to:

á      Launch MyID 9 as a major product release, designed to deliver new levels of business productivity and cost improvements to customers;

á      Expand the number of large customers who generate long term recurring revenues;

á      Further develop a network of global partners and integrators to deliver complete solutions to customers around the world;

á      Increase the service revenues from Intercede expert professional services team at a time when one of the major barriers to market growth is a lack of skilled implementers;

á      Drive product innovation in the support of managed service partners including the delivery of "security in the cloud" and the use of mobile devices as a secure credential; and

á      Accelerate growth and compensate for any loss of revenue that may result from cuts in UK public sector spending by investing to drive new sales in international markets, particularly in the US.

After 12 months of further progress, Intercede's success in executing this strategy can be summarised as follows:

á      MyID PIV v9 was pre-released to test customers in November 2010 and formally launched in February 2011 with Booz Allen Hamilton taking first delivery;

á      Intercede announced contracts to supply Intercede MyID to the following strategic customers:

o  a leading US manufacturing and defense systems enterprise

o  a large US Federal Agency

o  a major Intergovernmental Organisation (IGO)

o  Giesecke & Devrient;

á      Intercede is working with the following partners to build a global ecosystem based on the MyID platform:

o  Cryptas has won new business for Intercede MyID in Germany and Austria

o  Diyar United Company has extended Intercede's involvement in the Kuwait National ID program

o  Microsoft has collaborated with Intercede to enable Intercede MyID to provision identity credentials for use within Microsoft FIM

o  Oberthur has bid Intercede MyID for national ID contracts in three continents

o  The US Federal PKI Policy Authority (FPKIPA) has certified Symantec as the first vendor authorized to issue PIV-Interoperable (PIV-I) smartcards. This service uses Intercede MyID.

o  Thales has secured new business using Intercede MyID technology in South Africa and Australia;

á      Intercede has grown its professional service team in the UK and US by 60%;

á      A research team has been set up to drive new innovation in the management of identities and credentials for mobile devices, physical/logical access convergence and security in the cloud; and

á      In spite of the cancellation of the UK National Identity Scheme, from which Intercede had previously expected to earn revenues, Intercede has nevertheless been able to increase overall sales by 11% by securing new business from other regions, notably a 42% increase in US revenues.

The Group's business plan in the coming year is to build on this year's success by executing the following strategy:

á      Invest in sales and marketing;

á      Grow UK revenues by participating in the UK Government's recently announced Identity Assurance program;

á      Exploit the growing PIV-I market in the US in partnership with major US systems integrators and aerospace and defense contractors;

á      Further collaboration with Microsoft;

á      Establish Intercede MyID as a platform for issuing trustworthy identities on mobile devices;

á      Expand our ecosystem through strategic partnerships including selective investments;

á      Secure participation in additional large scale national identity card projects; and

á      Develop the value of the Intercede MyID brand through participation in industry conferences, standards groups and the use of new media in order to extend the influence and reach of our sales channels.

Outlook

The theme of my presentation at the February 2011 launch of Intercede MyID PIV v9 in Washington DC was that assured identities are the foundation of defence against cyber attack. Even since I spoke those words, high profile breaches at HB Gary, Epsilon, Sony and RSA Security are evidence that weak identity management leaves the door open for malicious intrusion and subsequent assault on reputation and assets.

Many other organisations have also been breached but have either chosen to keep the fact secret or are not aware that the breach has occurred. The US Secret Service is now routinely involved in monitoring communications traffic between hackers and their sponsors so that they can warn targeted organisations that they are coming under Advanced Persistent Threat (APT). APTs can be perpetrated by criminals or can be state sponsored. Critical national infrastructure, financial networks and corporate intellectual property are all under increasing stress and the risk of cyber attack has never been higher.

In a different dimension, corporate networks are being devolved to the "Cloud" and Blackberries, iPads and iPhones are replacing laptops as preferred devices for roaming staff. The prevalence of new generation mobile devices is making it more difficult for Chief Information Security Officers (CISOs) to control end user terminal equipment or to control who can view the information held on a remote device.

Furthermore, the growth of social networking greatly increases the opportunities for social engineering to obtain personal information. This can lead to usernames and passwords being more easily compromised.

As a consequence, there is a shift in focus from communications security to information security. In other words, if a CISO cannot control the devices used by employees or where corporate information may be copied to, the only remaining response is to ensure that the information is encrypted. This requires the management of encryption keys as part of a user's credential with a resulting increase in demand for Intercede MyID technology from corporate customers.

Intercede is already seeing its main corporate customers, particularly in the aerospace and defence sectors, replacing username and password login with the use of digital certificates on smart cards. Likewise, we are receiving market demand from the same customers to use medium hardware certificates, particularly on mobile devices, for encrypting emails. This trend is likely to continue across the sector and will drive the adoption of the PIV-I standard into mainstream corporate America and most probably into the international market.

In order to respond to this potentially large market, Intercede is collaborating with Microsoft to ensure that Intercede MyID can add PIV-I capability to Microsoft Forefront Identity Manager (FIM) and other Microsoft platforms.

The opportunities for stronger identity management are not restricted to the corporate world. The consumer/citizen market is also dynamically evolving.

In the US, President Obama's National Strategy on Trusted Identities in Cyberspace (NSTIC) aims to make online transactions safer, faster and more private. The official website www.nist.gov/nstic summaries the problem thus;

"A recent Federal Bureau of Investigation report stated that "identity theft has emerged as a dominant and pervasive financial crime that exposes individuals and businesses to significant losses and undermines the credibility and operation of the entire U.S. financial system."

A contributing factor is the unmanageable number of passwords people must remember to access their online accounts. Many people don't even try; they just re-use the same ones for all of their accounts, making it that much easier for identity thieves.

The National Strategy for Trusted Identities in Cyberspace (NSTIC) envisions a cyber world - the Identity Ecosystem - that improves upon the passwords currently used to log-in online. It would include a vibrant marketplace that allows people to choose among multiple identity providers - both private and public - that would issue trusted credentials that prove identity."

In April 2011, the UK Cabinet Office launched an identity assurance initiative to enable UK citizens to securely access government services. This broadly follows the US NSTIC model and the Cabinet Office's published service description sets out the following objectives:

"It is proposed that the market develops identity assurance services for customers of public services such that those customers can easily and securely provide trustworthy identity and other personal information when using digital public services.

The Government will create the necessary commercial, legislative and regulatory environment such that an active market of identity assurance services is created and sustained servicing all segments of society.

It is envisaged that the public sector will act as a catalyst to the creation of this environment by mandating that central Government Departments accept assurances of identity from the market of appropriately accredited service suppliers.

An appropriate environment will be created to ensure that an open, standards based market place is created in which all types and sizes of service provider are able to collaborate and compete to provide a variety of different service offerings to customers as per their differing needs.

It is envisaged that the market will evolve to meet customer needs for privacy, security and convenience and should be structured around an agreed set of principles. These principles will be based on the development of an identity trust framework."

Intercede believes that the creation of Identity Service providers in both the US and UK will stimulate a large and growing market for the management of digital credentials in software, on smart cards, on USB tokens, in mobile phones and trusted platform modules (TPMs). Conceptually, the technical architecture of any Intercede MyID solution delivered to a US or UK IDP will be similar to that already delivered by Intercede to Swisscom in support of the Swiss eID program.

Finally, there are many new national ID projects currently being considered in Europe, Latin America, Africa, the Middle East and the Far East. Intercede MyID has been bid by multiple partners into multiple countries. We are already engaged in an expansion of the Kuwait National Identity scheme and anticipate additional license revenues over the next two years. While the timescales for contract awards can be slow and unpredictable, we would expect to secure a number of new government customers in the coming period.

Based on the outlook above, Intercede has a bright future and a growing sales pipeline. It is now our responsibility to ensure that we have the product line flexibility to meet these new opportunities as they emerge.  We also need to secure the requisite levels of scalability within our organisational structure to meet the demands of a growing number of customers. The establishment of a strong market position has provided us with sufficient cash resources to fund this next stage of our growth plan and I look forward to reporting further success in due course.

Richard Parris   

Chairman & Chief Executive

Business and Finance Review

Introduction

Intercede has delivered another strong trading performance, driven by an increasing demand for products and technologies that enable customers to achieve enhanced levels of cyber security. The further growth reflects the continued momentum from the Group's involvement in an increasing number of projects around the world with a consequential increase in revenues from software license sales, associated support & maintenance and the delivery of ongoing professional services assistance.

Business Development

The Group's overall objective is to put in place the platform and processes to accelerate revenue growth over the next 12-24 months, fuelled by increasing investment in new markets and new partners. A number of opportunities are opening up as a result of the progress made to date. The challenge is how to obtain the resources required for expansion into areas such as mobile, whilst continuing to develop the core IDCMS technology in conjunction with existing and potential new partners.

The Group had 64 employees and contractors as at 31 March 2011, which represents a substantial increase in experience and expertise over the past 2-3 years, a time during which we have established a major US and European presence. Selective investment has also increased across a variety of other areas during the same period, for example;

á      Sales and marketing including membership of industry bodies such as Intellect and the Transglobal Secure Collaboration Program;

á      Partner development and support;

á      Technical and product development;

á      Quality management processes; and

á      IT infrastructure and equipment.

The Group enters 2011/12 with a larger pipeline than ever before, both in terms of the number and value of individual opportunities. Whilst experience tells us that project delays can and will happen for a variety of reasons, we remain focused on the action we can take to ensure that we are best placed to deal with any changes to project timings.

Financial Results

The financial results outlined below reflect the continued momentum from the Group's involvement in an increasing number of projects around the world against a backdrop of increased investment to deliver accelerated future growth.

	Year ended 31 March 2011 £000	Year ended 31 March 2010 £000	Change %
Revenue	6,872	6,194	10.9
Gross profit (%)	6,850 (100%)	6,128 (99%)	11.8
Pre-exceptional operating costs	(4,898)	(4,102)	(19.4)
Pre-exceptional operating profit (%)	1,952 (28%)	2,026 (33%)	(3.7)
Exceptional item	-	(1,517)	100.0
Profit before tax	2,005	510	293.1
Basic earnings per share	4.1p	1.1p	272.7
Adjusted earnings per share	4.1p	4.2p	(2.4)

Sales revenues have grown by a further 11%, with no single project representing more than 22% of total revenue (2010: 15%). Whilst gross profit margins remain high, the increase in costs resulting from the selective investment in additional resources outlined above has resulted in a small reduction in pre-exceptional operating profit.  

Staff costs continue to represent the main area of expense, representing 81% of the total pre-exceptional operating costs (2010: 84%). Intercede had 64 employees and contractors as at 31 March 2011 (2010: 55). The average number of employees and contractors increased from 54 to 58 year on year.

The exceptional item represented 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 arose during the current financial year following the settlement of this claim on 23 March 2010.

The net finance income for the year was £53,000 (2010: £1,000) which reflects the benefit of the Group having no borrowings following the May 2009 convertible loan note conversion. There is no UK corporation tax charge for the current year as a result of the availability of prior year tax losses. Having regard for the tax relief available in respect of research and development expenditure, £3,168,000 of prior year tax losses remain available for utilisation against future year's profits (2010: £3,574,000).

A profit for the year of £1,998,000 (2010: £496,000) resulted in a basic earnings per share of 4.1p (2010: 1.1p) and a fully diluted earnings per share of 4.1p (2010: 1.0p). The adjusted fully diluted earnings per share, based upon profit prior to tax and exceptional item of £2,005,000 (2010: £2,027,000), is 4.1p (2010: 4.2p).  

Funding

As at 31 March 2011, the Group had cash balances totaling £6,046,000 (2010: £4,664,000). The increase in cash balances principally reflects a £2,169,000 inflow from pre-exceptional operating activities (2010: £2,085,000). Following the settlement of the ActivIdentity patent litigation, all outstanding legal costs have now been paid. This resulted in a further £747,000 being paid out during April and May 2010 to the Group's legal advisers. 

The Group has no debt following the May 2009 convertible loan note conversion. Action was also taken during the past year to further strengthen the Company's Balance Sheet by cancelling the Share Premium Account and cancelling and extinguishing the Deferred Shares. This Capital Reduction, which was registered by the Registrar of Companies on 30 October 2010, has eliminated 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.

Summary

The Group has delivered another strong trading and financial performance. As a result we enter the new financial year with over £6m of cash available to fuel our accelerated growth plans

Andrew Walker

Finance Director

INTERCEDE GROUP plc

Consolidated Statement of Comprehensive Income for the year ended 31 March 2011

	Notes	2011	2010
		£’000	£’000
Continuing operations
Revenue	2	6,872	6,194
Cost of sales		(22)	(66)
		__________	__________
Gross profit		6,850	6,128
Administrative expenses		(4,898)	(5,619)
		__________	__________
Operating profit		1,952	509
Operating profit before exceptional item		1,952	2,026
Exceptional item	3	-	(1,517)
		__________	__________
Operating profit		1,952	509
Finance income		53	27
Finance costs		-	(26)
		__________	__________
Profit before tax		2,005	510
Taxation	4	(7)	(14)
		__________	__________
Profit for the year		1,998	496
		__________	__________
Total comprehensive income attributable to owners of the company		1,998	496
		__________	__________
Earnings per share (pence)	5
- basic		4.1p	1.1p
- diluted		4.1p	1.0p
		__________	__________

There is no other comprehensive income for the year.

The accompanying notes are an integral part of these financial statements.

INTERCEDE GROUP plc

Consolidated Balance Sheet at 31 March 2011

 

	Notes	2011	2010
		£'000	£'000
Non-current assets
Property, plant and equipment		167	84
Deferred tax		280	280
		__________	__________
		447	364
		__________	__________
Current assets
Trade and other receivables		841	954
Cash and cash equivalents		6,046	4,664
		__________	__________
		6,887	5,618
		__________	__________
Total assets		7,334	5,982
		__________	__________
Equity
Share capital	7	484	4,413
Share premium account		86	4,718
Other reserves		1,508	1,508
Retained earnings		3,113	(7,497)
		__________	__________
Total equity		5,191	3,142
		__________	__________
Current liabilities
Trade and other payables		790	1,385
Deferred revenue		1,353	1,455
		__________	__________
		2,143	2,840
		__________	__________
Total equity and liabilities		7,334	5,982
		__________	__________

The accompanying notes are an integral part of these financial statements.

INTERCEDE GROUP plc

Consolidated Statement of Changes in Equity for the year ended 31 March 2011

	Share	Share	Other	Equity	Retained	Total
	capital	premium	reserves	reserve	earnings
	£'000	£'000	£'000	£'000	£'000	£'000
At 31 March 2009	4,305	2,875	1,508	109	(8,102)	695
Issue of shares, net of costs (see note 7)	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
Capital reduction (see note 7)	(3,931)	(4,718)	-	-	8,649	-
Issue of shares, net of costs (see note 7)	2	86	-	-	-	88
Purchase of treasury shares (see note 7)	-	-	-	-	(37)	(37)
Total comprehensive income	-	-	-	-	1,998	1,998
	________	________	________	_______	_______	________
At 31 March 2011	484	86	1,508	-	3,113	5,191
	________	________	________	_______	________	________

The accompanying notes are an integral part of these financial statements.

INTERCEDE GROUP plc

Consolidated Cash Flow Statement for the year ended 31 March 2011

	Notes	2011	2010
		£'000	£'000
Cash flows from operating activities
Operating profit		1,952	509
Exceptional item		-	1,517
		__________	__________
Operating profit before exceptional item		1,952	2,026
Depreciation		51	31
Decrease/(increase) in trade and other receivables		116	(60)
Increase in trade and other payables		50	88
		__________	__________
Cash generated from operations before exceptional item		2,169	2,085
Exceptional item	3	(747)	(1,085)
Taxation		(7)	(14)
		__________	__________
Net cash generated from operating activities		1,415	986
		__________	__________
Investing activities
Interest received		50	25
Purchases of property, plant and equipment		(134)	(48)
		__________	__________
Net cash from investing activities		(84)	(23)
		__________	__________
Financing activities
Proceeds/(costs) on issue of shares		88	(10)
Purchase of treasury shares		(37)	-
		__________	__________
Net cash from financing activities		51	(10)
		__________	__________
Net increase in cash and cash equivalents		1,382	953
Cash and cash equivalents at the beginning of the year		4,664	3,711
		__________	__________
Cash and cash equivalents at the end of the year		6,046	4,664
		__________	__________

The accompanying notes are an integral part of these financial statements.

INTERCEDE GROUP plc

Preliminary Results for the Year Ended 31 March 2011

NOTES

1.       The financial information set out in this announcement does not constitute the Group's Statutory Accounts for the years ended 31 March 2010 or 2011, but is derived from those accounts. Statutory Accounts for 2010 have been delivered to the Registrar of Companies and those for 2011, 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 at 11.00 am on Wednesday 21 September 2011 at Lutterworth Hall. Copies of the full Statutory Accounts 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:

		2011	2010
		£'000	£'000
UK		1,369	1,601
Rest of Europe		928	1,389
USA		3,965	2,795
Rest of World		610	409
		__________	_________
		6,872	6,194
		__________	_________

3.      EXCEPTIONAL ITEM

The exceptional item represented 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 and subsequently settled on 23 March 2010.

4.      TAXATION

         The tax charge comprises:

		2011	2010
		£'000	£'000
Current year - UK corporation tax		-	-
Current year - US corporation tax		(7)	-
Prior year - UK corporation tax		-	(14)
	__________		_________
		(7)	(14)
	__________		_________

The Group has unused tax losses of £3,168,000 (2010: £3,574,000) and unrecognised deferred tax assets of £544,000 (2010: £721,000).

5.      EARNINGS PER ORDINARY SHARE

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

		2011		2010
		£'000		£'000
	Profit for the year	1,998		496
	Adjusted profit before tax and exceptional item	2,005		2,027
			__________	_________
		Number		Number
	Weighted average number of shares - basic	48,239,997		46,304,420
	- diluted	48,735,005		48,735,005
			__________	__________
		Pence		Pence
	Earnings per share - basic	4.1		1.1
	- diluted	4.1		1.0
	- adjusted*	4.1		4.2
			__________	__________
	* 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.      CALLED UP SHARE CAPITAL

	2011	2010
	£'000	£'000
Authorised
481,861,616 ordinary shares of 1p each (2010: 481,861,616)	4,819	4,819
No deferred shares of 1p each (2010: 393,138,384)	-	3,931
	__________	__________
	4,819	8,750
	__________	__________
Issued and fully paid
48,365,005 ordinary shares of 1p each (2010: 48,178,005)	484	482
No deferred shares of 1p each (2010: 393,138,384)	-	3,931
	__________	__________
	484	4,413
	___________	__________

On 29 May 2009, the remaining holders of the convertible loan notes issued by the Company on 31 March 2000 and 6 December 2001 elected to convert their loan notes together with associated interest for the period to 31 May 2009 into ordinary shares of 1p each in the Company. This resulted in the issue of 3,877,166 ordinary shares at a price of 15p per share and 6,897,083 ordinary shares at a price of 20p per share.

On 24 September 2010, shareholder approval was obtained at a General Meeting of the Company to cancel the share premium account and to cancel and extinguish the deferred shares. This Capital Reduction was registered by the Registrar of Companies on 30 October 2010.

On 30 November 2010, certain employees and a Director of the Company exercised options over a total of 187,000 ordinary shares at an exercise price of 47p per share. On 3 December 2010, the Company subsequently purchased 57,975 of these shares at a price of 63.06p per share. The shares purchased, none of which relate to options exercised by a Director, are held as treasury shares.

 

END

 

 

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