Interim Results

RNS Number : 7446R

Intercede Group PLC

22 November 2012

 



INTERCEDE GROUP plc

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

Interim Results for the Six Months Ended 30 September 2012

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 £3,508,000 (H1 2011: £3,528,000);

•        Loss before tax of £185,000 (H1 2011: Profit before tax of £653,000);

•        Basic and fully diluted loss per share of 0.2p (H1 2011: Earnings per share of 1.4p);

•        Continued programme of investment to expand market presence and sales infrastructure, develop
         products and create additional revenue streams;

•        Cash balances of £7,183,000 at 30 September 2012 (30 September 2011: £6,563,000) demonstrating
         financial strength of business;

•        Launch of management solution for Microsoft Windows 8 Virtual Smart Cards.

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

"We have continued to make good commercial progress in challenging markets while resolutely laying the ground for our future strategic development.

As governments and corporations become increasingly aware that identity assurance is a critical cornerstone of cyber security, the need for Intercede's MyID software platform is becoming more widely recognised. To exploit this opportunity we have made excellent progress in developing a number of new solutions and partnerships that we expect to announce in the coming months.

We are confident and committed to our investment plan in support of Intercede's 2020 vision for high growth in the medium to long term. In the short term shareholders should be comforted that, in spite of a period of increased investment, our cash position is stronger than ever."

ENQUIRIES

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

About Intercede

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

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

Corporations such as Boeing, Booz Allen Hamilton and Lockheed Martin, and governments including the USA, UK and Kuwait, trust Intercede's deep expertise to deliver effective solutions. The company's technology achievements reflect an investment of 300 plus man years of development, exemplary speed of deployment and adherence to international standards including FIPS 201, where MyID was the first electronic personalization product to obtain GSA approval. This trust is reflected in Intercede's rate of repeat business with its customers, which typically runs at 70-80% of annual revenues. 

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

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

INTERCEDE GROUP plc

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

Interim Results for the Six Months Ended 30 September 2012

Chairman's Statement

Introduction

I am pleased to announce Intercede's interim results for the six month period ended 30 September 2012.  We have continued to make good commercial progress, whilst also laying the ground for our longer term strategic development.  We remain convinced that as governments and corporations become increasingly concerned about cyber security issues, our proprietary MyID technology will be recognised as a vital asset in this area.

Financial Results

Revenues in the period totaled £3,508,000 compared to £3,528,000 in the previous year. This is a creditable performance in markets which continue to be challenging. An £84,000 loss for the period compares to a £700,000 profit in the prior year which reflects the strategic investment programme we have put in place to accelerate the growth of the business.

The Company continues to be cash generative. Through careful cash management, the cash balance at the end of September was £7,183,000 compared to £6,968,000 at the end of March 2012 and £6,563,000 at the end of September 2011, representing a year on year increase of £620,000. Shareholders should be comforted that, in spite of a period of increased investment, our financial position is stronger than ever.

Review of Operations

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 integration with the newly released Microsoft Windows 8. I am pleased to report that we are making good progress on both fronts.

The average number of employees and contractors increased from 67 to 74 year on year in support of these goals.  Staff costs continue to represent the main area of expense totalling 72% of the total operating costs during the period (2011: 79%).

Much of this expansion has been in the US, our largest market.  Our product has been known at the highest levels of government for a number of years and that brand recognition has extended into the commercial sector.  We were delighted that nearly 100 US government and business leaders attended our reception in Washington DC last month, "The Future of Identity Assurance." Attendees included senior executives from the US federal and state governments, federal contractors as well as Intercede customers and technology partners.

We have also launched our MyID management solution for Microsoft Windows 8 Virtual Smart Cards (VSCs), including desktop, laptop and tablet devices. Delivering a smart card level of security without the smart card, the solution ensures only known people on known devices can access company information.

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

•	MyID installations in support of managed service providers;
•	Delivery of services to support major MyID system upgrades; and
•	Ground breaking R&D to support the use of mobile devices as identity devices.

As we reported in our trading update in October, we have secured a number of new customers in the European and US markets, who are expected to contribute to revenues in the second half of the year. We are also making good progress on a number of large bid opportunities with major corporates and governments, several of which are expected to yield revenues before the end of the financial period.

We continue to invest in developing additional routes to market. These include supporting managed service providers who will offer MyID as a Cloud service in support of their entry into the newly emerging Identity Provider market place. This will provide a new source of annuity revenue with greater visibility, which we expect to commence towards the end of the current financial year, and to increase thereafter.

The mobile market is clearly an area of significant opportunity for us, as consumers and workers spend increasing amounts of time using smart phones and other devices. Protecting identities, and thus the data contained in the devices, is more important than ever. We are working with industry majors with a view to our market leading technology being used in mobile applications. We expect these initiatives to start producing revenues in the next financial year.

Outlook

As noted above, we have made good commercial and operational progress in the first half of the year.  First half trading was in line with expectations and we anticipate several new contracts will begin generating revenue in the second half of the year.

Our planned investment in expanding our technology leadership into the managed service, Cloud and mobile device sectors is starting to bear fruit with increasing partnership engagements with a number of major industry players. This underpins our focus on building a business and technology platform to deliver our previously declared high growth 2020 vision. We remain confident that this strategy will maximise long term shareholder value.

Richard Parris

Chairman & Chief Executive

22 November 2012

Consolidated Statement of Comprehensive Income

For the period ended 30 September 2012

		6 months ended	6 months ended	Year ended
		30 September	30 September	31 March
		2012	2011	2012
		£'000	£'000	£'000
Continuing operations
Revenue		3,508	3,528	6,964
Cost of sales		(20)	(94)	(112)
Gross profit		3,488	3,434	6,852
Administrative expenses		(3,717)	(2,817)	(6,023)
Operating (loss)/profit		(229)	617	829
Finance income		44	36	81
(Loss)/profit before tax		(185)	653	910
Taxation		101	47	(233)
(Loss)/profit for the period		(84)	700	677
Total comprehensive income attributable to owners of the company		(84)	700	677
Earnings per share (pence)
	- basic	(0.2)p	1.4p	1.4p
	- diluted	(0.2)p	1.4p	1.4p

Consolidated Balance Sheet

As at 30 September 2012

	As at	As at	As at
	30 September	30 September	31 March
	2012	2011	2012
	£'000	£'000	£'000
Non-current assets
Property, plant and equipment	624	162	183
Deferred tax	-	280	-
	624	442	183
Current assets
Trade and other receivables	1,104	1,460	1,311
Cash and cash equivalents	7,183	6,563	6,968
	8,287	8,023	8,279
Total assets	8,911	8,465	8,462
Equity
Share capital	487	484	484
Share premium account	232	86	110
Other reserves	1,508	1,508	1,508
Retained earnings	3,946	3,833	3,930
	__________
Total equity	6,173	5,911	6,032
Current liabilities
Trade and other payables	890	772	910
Deferred revenue	1,848	1,782	1,520
	2,738	2,554	2,430
Total equity and liabilities	8,911	8,465	8,462

Consolidated Statement of Changes in Equity

As at 30 September 2012

	Share	Share	Other	Retained	Total
	capital	premium	reserves	earnings
	£'000	£'000	£'000	£'000	£'000
At 31 March 2012	484	110	1,508	3,930	6,032
Issue of shares, net of costs	3	122	-	-	125
Employee share option scheme charge	-	-	-	100	100
Total comprehensive income	-	-	-	(84)	(84)
At 30 September 2012	487	232	1,508	3,946	6,173

At 31 March 2011	484	86	1,508	3,113	5,191
Employee share option scheme charge	-	-	-	20	20
Total comprehensive income	-	-	-	700	700
At 30 September 2011	484	86	1,508	3,833	5,911

At 31 March 2011	484	86	1,508	3,113	5,191
Issue of shares, net of costs	-	24	-	-	24
Employee share option scheme charge	-	-	-	140	140
Total comprehensive income	-	-	-	677	677
At 31 March 2012	484	110	1,508	3,930	6,032

Consolidated Cash Flow Statement

For the period ended 30 September 2012

	6 months ended	6 months ended	Year ended
	30 September	30 September	31 March
	2012	2011	2012
	£'000	£'000	£'000
Cash flows from operating activities
Operating (loss)/profit	(229)	617	829
Depreciation	45	33	67
Employee share option scheme charge	100	20	140
Decrease/(increase) in trade and other receivables	306	(615)	(461)
Increase in trade and other payables	308	410	287
Cash generated from operations	530	465	862
Taxation	4	47	47
Net cash generated from operating activities	534	512	909
Investing activities
Interest received	42	33	73
Purchases of property, plant and equipment	(486)	(28)	(84)
Net cash (used by)/generated from investing activities	(444)	5	(11)
Financing activities
Proceeds on issue of shares	125	-	24
Net cash from financing activities	125	-	24
Net increase in cash and cash equivalents	215	517	922
Cash and cash equivalents at the beginning of the period	6,968	6,046	6,046
Cash and cash equivalents at the end of the period	7,183	6,563	6,968

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 2012.

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 2012 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 2012 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
	2012	2011	2012
	£'000	£'000	£'000
UK	331	399	779
Rest of Europe	403	377	814
North America	2,555	2,368	4,450
Rest of World	219	384	921
	3,508	3,528	6,964

 

3   Taxation

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

 

4  (Loss)/Earnings per share

The calculations of the (loss)/earnings 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. The basic and diluted loss per share are the same as potential dilution cannot be applied to a loss making period.

		6 months ended	6 months ended	Year ended
		30 September	30 September	31 March
		2012	2011	2012
		£'000	£'000	£'000
(Loss)/profit for the period		(84)	700	677
		Number	Number	Number
Weighted average number of shares	- basic	48,613,486	48,365,005	48,367,939
	- diluted	50,228,664	49,120,843	49,662,277
		Pence	Pence	Pence
(Loss)/Earnings per share	- basic	(0.2)p	1.4p	1.4p
	- diluted	(0.2)p	1.4p	1.4p

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, August and December 2011.

 

5   Dividend

The Directors do not recommend the payment of a dividend.

6  Changes in equity

Between 14 March and 14 June 2012, certain employees and a Director of the Company exercised options over a total of 370,000 ordinary shares at an exercise price of 40.5p per share.

 

END

 

 

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