Interim Results

RNS Number : 0632T

Intercede Group PLC

01 December 2011

 



1 DECEMBER 2011

INTERCEDE GROUP plc

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

Interim Results for the Six Months Ended 30 September 2011

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 of £3,528,000 (2010: £3,506,000);

-     Underlying revenues have increased by 25%, excluding the Boeing contract which was worth more than £1m in H1 2010;

-     Operating profit of £617,000 (2010: £1,204,000);

-     23% increase in cost base reflects planned investment in business expansion, principally sales and product development;

-     Basic and fully diluted earnings per share of 1.4p (2010: 2.5p);

-     Cash balances of £6,563,000 at 30 September 2011 (30 September 2010: £4,470,000);

-     Significant endorsement of Intercede's proprietary MyID Identity and Credential Management System as an industry standard;

-     Increasing collaboration with Microsoft in the US;

-     New partnership agreement with Hewlett Packard in support of the HP Assured Identity Product Suite;

-     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:

"There have been a number of notable commercial successes during the period demonstrating the fundamental strength and growth trajectory of the business. Our financial position remains strong, with no debt and cash balances up almost 50% year on year.

"We have also invested heavily in sales and product development in order to pursue a greater number of opportunities.  Our own sales efforts are complemented by partnerships with some of the largest IT industry players in the world, enabling us to punch above our weight.

"We believe that this period's results provide further evidence of our ability to execute to plan. The Board remains confident in its long term growth strategy to create significant shareholder value through continuing global market penetration and technology excellence in the burgeoning cyber security industry."

ENQUIRIES

Intercede Group plc	Tel. [phone]
Richard Parris, Chairman & Chief Executive
Andrew Walker, Finance Director
FinnCap	Tel. [phone]
Charles Cunningham, Corporate Finance
Rose Herbert, Corporate Finance
Joanna Weaving, Corporate Broking
Pelham Bell Pottinger	Tel. [phone]
Archie Berens
Clare Gilbey

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

Intercede MyID is the only IDCMS software product that enables organizations 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 personalization, issuance and management.

Intercede MyID was the first electronic personalization 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 IDs 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.

For more information visit www.intercede.com

INTERCEDE GROUP plc

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

Interim Results for the Six Months Ended 30 September 2011

Chairman's Statement

In the period ended 30 September 2011, revenues totalled £3.53m compared to £3.51m in the previous year. However, it should be noted that the previous period included a single contract of more than £1m from Boeing, whereas there was no equivalent contract in the first half of the current financial year. If revenues from the Boeing contract are excluded from both periods, there has been a 25% underlying increase in revenues year on year, demonstrating the fundamental strength of the business and its ongoing growth trajectory.

Profit for the period is £0.7m compared to £1.2m in the prior year. This reduction reflects planned investment to accelerate the growth of the business. As previously reported, the goals for the current financial period are to increase sales and marketing efforts in promoting MyID and to extend product development in areas such as mobile devices and further collaboration with Microsoft. The average number of employees and contractors increased from 56 to 67 year on year in support of these goals.  Staff costs continue to represent the main area of expense totalling 79% of the total operating costs during the period (2010: 81%).

The Company continues to be cash generative. Through careful cash management, the cash balance at the end of September was £6.56m compared to £6.05m at the end of March 2011 and £4.47m at the end of September 2010; a year on year increase of over £2m.

There have been a number of commercial successes and industry milestones achieved in the period, including the following:

·	Continuing implementation of large scale corporate identity card projects in ANZ Bank, Booz Allen Hamilton, BASF, Boeing, HealthSmart Australia, Lockheed Martin and Swedbank;
·	Delivery of services to support major MyID system upgrades in US Federal Aviation Authority, Kuwait Public Authority for Civil Information, Road Safety Authority Ireland;
·	Deployment of MyID to issue ID cards to members of the newly elected Portuguese Parliament;
·	The securing of a large scale border security project with an initial value in excess of £0.6m;
·	Increasing collaboration with Microsoft in the US and the first confirmed sale to a corporate customer of the Intercede MyID connector for Forefront Identity Manager;
·	Teaming with Atos, Verisec, the Post Office and Thales to win the London Identity Provider framework contract;
·	Collaboration with major systems integrators on multiple tender responses for large scale US Federal identity programs requiring PIV and PIV-I solutions;
·	The development of a new technology to enable the over-the-air (OTA) provisioning of digital certificates to mobile devices;
·	The development of a new technology to support the use of mobile devices containing Near Field Communications (NFC) for personal identity verification purposed;
·	The continuous improvement of the core MyID platform including the release of MyID v8 Enterprise SP2 and MyID v9 PIV Service Pack 1; and
·	The award of ISO9001 and TickIT certification to Intercede, as announced on 14 September 2011.

We were also delighted to announce on 14 November 2011 that an agreement has been entered into with Hewlett Packard ("HP"), whereby the HP Global Identity Practice can now deliver MyID as a component of their Assured Identity Plus solutions. Under the agreement, Intercede and HP will target large scale Federal, state and local government agencies and major enterprise customers.

The progress outlined above demonstrates the effectiveness of Intercede's sales strategy. By focusing on major industry players as channel partners, Intercede has continued to punch above its weight in a way that would not be possible with a more conventional direct sales structure. Intercede has significantly multiplied its future revenue potential by accessing the sales teams and sales infrastructure of partners such as Microsoft, HP, multiple US systems integrators, Atos, Gemalto, Oberthur, Swisscom, Symantec and Thales. Each channel will need continuing sales and technical account management to maximise the return on investment.

This channel strategy has enabled Intercede to compete in new territories during the period in a way we could not have reached with a direct team.

Our commercial model continues to be market tested through competition with industry rivals. To date, the evidence is that we win most opportunities on technical merit, even though we are not usually the lowest cost bidder. Customer feedback is that we consistently represent the 'best value' supplier.

I am pleased that we continue to grow underlying new software license revenues at a healthy rate. Annuity revenue from existing customers as a percentage of total sales is also increasing towards the long term goal of being able to support the cost of our operations from recurring income. It is a characteristic of the business that every £1 of new customer license revenue in a period typically generates a further £2 from associated maintenance plus additional fees from professional services and development activities over future periods. This means that Intercede has already locked in significant future value beyond that disclosed in the current period's accounts.

Our research activities in the mobile communications sector have spawned product line extensions that open new markets in the telecommunications market with potential uses for identity verification in the citizen and consumer spaces. This also serves to protect our existing market position should mobile devices overtake smart cards as the principal means of asserting strong identity.

We believe that this period's results are evidence of our ability to execute to plan. The Board remains confident in its long term growth strategy to create significant shareholder value through continuing global market penetration and technology excellence in the burgeoning cyber security industry.

Richard Parris

Chairman & Chief Executive

1 December 2011

Consolidated Statement of Comprehensive Income

For the period ended 30 September 2011

	6 months ended	6 months ended	Year ended
	30 September	30 September	31 March
	2011	2010	2011
	£'000	£'000	£'000
Continuing operations
Revenue	3,528	3,506	6,872
Cost of sales	(94)	(8)	(22)
	__________	__________	__________
Gross profit	3,434	3,498	6,850
Administrative expenses	(2,817)	(2,294)	(4,898)
	__________	__________	__________
Operating profit	617	1,204	1,952
Finance income	36	21	53
	__________	__________	__________
Profit before tax	653	1,225	2,005
Taxation	47	-	(7)
	__________	__________	__________
Profit for the period	700	1,225	1,998
	__________	__________	__________
Total comprehensive income attributable to owners of the company	700	1,225	1,998
	__________	__________	__________
Earnings per share (pence)
- basic	1.4p	2.5p	4.1p
- diluted	1.4p	2.5p	4.1p
	__________	__________	__________

Consolidated Balance Sheet

As at 30 September 2011

	As at	As at	As at
	30 September	30 September	31 March
	2011	2010	2011
	£'000	£'000	£'000
Non-current assets
Property, plant and equipment	162	152	167
Deferred tax	280	280	280
	__________	__________	__________
	442	432	447
	__________	__________	__________
Current assets
Trade and other receivables	1,460	1,867	841
Cash and cash equivalents	6,563	4,470	6,046
	__________	__________	__________
	8,023	6,337	6,887
	__________	__________	__________
Total assets	8,465	6,769	7,334
	__________	__________	__________
Equity
Share capital	484	4,413	484
Share premium account	86	4,718	86
Other reserves	1,508	1,508	1,508
Retained earnings	3,833	(6,272)	3,113
	__________	__________	__________
Total equity	5,911	4,367	5,191
	__________	__________	__________
Current liabilities
Trade and other payables	772	773	790
Deferred revenue	1,782	1,629	1,353
	__________	__________	__________
	2,554	2,402	2,143
	__________	__________	__________
Total equity and liabilities	8,465	6,769	7,334
	__________	__________	__________

 

Consolidated Statement of Changes in Equity

As at 30 September 2011

	Share	Share	Other	Retained	Total
	capital	premium	reserves	earnings
	£'000	£'000	£'000	£'000	£'000
At 31 March 2011	484	86	1,508	3,113	5,191
Total comprehensive income	-	-	-	700	700
Credit in respect of share based payments	-	-	-	20	20
	________	________	________	________	_______
At 30 September 2011	484	86	1,508	3,833	5,911
	________	________	________	________	________

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 2010	4,413	4,718	1,508	(7,497)	3,142
Capital reduction	(3,931)	(4,718)	-	8,649	-
Issue of shares, net of costs	2	86	-	-	88
Purchase of treasury shares	-	-	-	(37)	(37)
Total comprehensive income	-	-	-	1,998	1,998
	________	________	________	________	_______
At 31 March 2011	484	86	1,508	3,113	5,191
	________	________	________	________	________

Consolidated Cash Flow Statement

For the period ended 30 September 2011

	6 months ended	6 months ended	Year ended
	30 September	30 September	31 March
	2011	2010	2011
	£'000	£'000	£'000
Cash flows from operating activities
Operating profit	617	1,204	1,952
Depreciation	33	21	51
Credit in respect of share based payments	20	-	-
(Increase)/decrease in trade and other receivables	(615)	(904)	116
Increase/(decrease) in trade and other payables	410	309	50
	__________	__________	__________
Cash generated from operations before exceptional item	465	630	2,169
Exceptional item	-	(747)	(747)
Taxation	47	-	(7)
	__________	__________	__________
Net cash generated from/(used by) operating activities	512	(117)	1,415
	__________	__________	__________
Investing activities
Interest received	33	12	50
Purchases of property, plant and equipment	(28)	(89)	(134)
	__________	__________	__________
Net cash generated from/(used by) investing activities	5	(77)	(84)
	__________	__________	__________
Financing activities
Proceeds on issue of shares	-	-	88
Purchase of treasury shares	-	-	(37)
	__________	__________	__________
Net cash from financing activities	-	-	51
	__________	__________	__________
Net increase/(decrease) in cash and cash equivalents	517	(194)	1,382
Cash and cash equivalents at the beginning of the period	6,046	4,664	4,664
	__________	__________	__________
Cash and cash equivalents at the end of the period	6,563	4,470	6,046
	__________	__________	__________

 

Notes to the Accounts

For the period ended 30 September 2011

 

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 2011.

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 2011 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 2011 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
	2011	2010	2011
	£'000	£'000	£'000
UK	399	838	1,369
Rest of Europe	377	351	928
USA	1,801	2,032	3,965
Rest of World	951	285	610
	__________	__________	__________
	3,528	3,506	6,872
	__________	__________	__________

3   Taxation

Taxation represents the net effect of amounts received 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 per share

The calculations of earnings per ordinary share are based on the 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
			2011	2010	2011
			£'000	£'000	£'000
Profit for the period			700	1,225	1,998
			__________	__________	__________
			Number	Number	Number
Weighted average number of shares		- basic	48,365,005	48,178,005	48,239,997
		- diluted	49,120,843	48,735,005	48,735,005
			__________	__________	__________
			Pence	Pence	Pence
Earnings per share	- basic		1.4p	2.5p	4.1p
	- diluted		1.4p	2.5p	4.1p
			__________	__________	__________

The increase in the weighted average number of shares used for the calculation of diluted earnings per share reflects the grant of share options to directors and senior managers during July and August 2011. The total charge for the period relating to employee share-based payments was £20,000 (2010: £nil).

 

5   Dividend

The Directors do not recommend the payment of a dividend.

6   Changes in equity

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.

 

END

 

 

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