RNS Number:3288O
Intercede Group PLC
7 December 2001
INTERCEDE GROUP plc
("Intercede" or "the Group")
Interim Results for the Six Months Ended 30 September 2001
Intercede (AIM: IGP), a leading developer of security management software,
today announces its interim results for the six months ended 30 September
2001.
KEY POINTS
- Turnover of #471,000 (H1 2000: #1,140,000 which included #664,000 from a
single major contract with Lloyds TSB)
- Loss before tax of #1,190,000 (H1 2000: #313,000)
- Technical resource focused exclusively on development of proprietary
edefice(TM) product for the smart card and PKI market
- Edefice(TM) version 6.0 successfully developed and launched on time and
within budget
- OEM agreement signed with Oberthur Card Systems in September 2001
- New OEM agreement with another major smart card industry player announced
today which includes a commitment to purchase an initial number of licences
worth US$800,000
- Edefice(TM) successfully installed with a major European bank
- Considerable scope to grow revenue streams through enlarged edefice(TM)
sales channel
Richard Parris, Chairman & CEO of Intercede, said today:
"Our transformation from a third party systems integrator into a proprietary
software developer is complete. Although this has had an inevitable impact on
revenues in the short term, we are now more strongly placed to enter the next
phase of our growth. The establishment of OEM agreements with market leaders,
in addition to our other sales channels, provides us with every reason to be
confident."
7 December 2001
ENQUIRIES:
Intercede Group plc Tel. 01455 558111
Richard Parris, Chairman & Chief Executive
Andrew Walker, Finance Director
College Hill Tel. 020 7457 2020
Archie Berens
Clare Warren
INTERCEDE GROUP plc
Interim Results for Six Months Ended 30 September 2001
CHAIRMAN'S STATEMENT
Introduction
Following our listing on the Alternative Investment Market at the start of
2001, Intercede has taken a number of significant steps towards achieving its
ambition of becoming a significant player in the global IT security management
market.
During the course of our development, we have made no secret of our intention
to transform ourselves from being a supplier and integrator of third party
security products to becoming a supplier and licensor of proprietary software.
I am pleased to report that, following the launch of the two latest versions
of our proprietary edefice(TM) product, this transformation is now complete.
Moreover, the development of our own product has been underpinned by important
agreements with two major smart card industry players, through which edefice(TM)
will be incorporated into those companies' core product lines thereby offering
considerable scope for the generation of significant future revenues.
Results
The overriding need to develop and release further versions of edefice(TM) and
to link up with key OEM's in the smart card management market has seen Intercede
focusing its technical resources almost entirely to this end. The Group has
neither sought nor undertaken new project work during the six months ended 30
September 2001. Revenues for the period therefore related primarily to the
servicing of existing customers through the resale of additional software
licences and associated third party hardware and maintenance services.
Revenues for the period were #471,000, compared with #1,140,000 for the six
months ended 30 September 2000. It should be noted that the previous period
benefited from a single large project with Lloyds TSB. Excluding this project,
revenue for the comparable period would have been #476,000. The loss before
tax for the period was #1,190,000 (2000: #313,000) resulting in a loss per
share of 7.3p (2000: 2.9p).
Business and Product Development
In the period following listing, the Group has taken steps to position itself
as a global business, able to earn long term revenues from its proprietary
product, edefice(TM). A great deal of time and resource has been devoted to this
purpose, culminating in the release of edefice(TM) 6.0, as announced on 16
October 2001.
Edefice(TM) 6.0 is a smart card and Public Key Infrastructure ("PKI") security
management solution for corporate enterprises and government customers. It is
designed to enable business managers to administer the life cycle of smart
cards and associated PKI credentials through a distributed web based
management system. Its competitive advantage lies in its product independence.
It can simultaneously support multiple smart card manufacturers and PKI
products within a single fully distributed network environment.
It was because of this technical superiority that edefice(TM) was selected by
Oberthur Card Systems, under a global OEM licence, as the smart card
management system for their AuthentIC family of security solutions. The
relationship with Oberthur provides the opportunity to earn license royalties
from the lucrative Identrus market. A further contract award, initially
resulting in a pilot installation, has also already been secured from a major
European bank.
Most recently, we have today announced the signing of an agreement with
another major industry player to embed elements of the edefice(TM) distributed
security management system across their range of products. As a global
provider of digital identity solutions, our new Partner has wide access to a
number of significant international channel partners including security
service companies, computer hardware manufacturers, operating systems
developers and systems integrators. Under the terms of the agreement, the
Partner has committed to purchase licences to the value of US$800,000 against
a series of development milestones which are scheduled for completion by March
2002.
In addition to the opportunities for growth afforded by the OEM agreements
outlined above, Intercede has a number of other important channel
relationships. This currently includes, amongst others, Compaq and ICL in the
UK and, more recently, the development of new channel opportunities overseas.
Each of these channels are already engaged on at least one major prospect
for edefice(TM), giving us good grounds to be optimistic of revenue generation
during the next six to nine months and beyond.
Finance
As at 30 September 2001, the Group had cash balances totalling #1,071,000
remaining out of the #2,185,000 raised at the time of the listing. The cash
position has been consistently higher than budgeted throughout the year to
date reflecting the Group's commitment to strong financial control.
On 6 December 2001, the Group obtained further funding totalling #981,629 in
the form of a 5% convertible unsecured loan, which is convertible at a price
of 60p per share (up to a maximum of 1,636,048 shares) on or prior to the
fifth anniversary of the drawdown of the funds. To the extent that the loan
has not been converted, it shall be repaid on such fifth anniversary.
The loan, which was arranged by Credo Corporate Finance Limited, the Group's
corporate finance advisers, will provide the Group with additional flexibility
to make the most of the opportunities provided by both current and potential
future channel partner relationships. Associated costs total #50,000. In
addition Credo Corporate Finance Limited have been granted a warrant, subject
to shareholder approval, to subscribe for 0.5% of the fully diluted share
capital at a subscription price of 60p per share. The warrant must be
exercised by 7 December 2004.
Current Trading and Outlook
Although the downturn in the world economy has created difficult trading
conditions for the IT sector, we nevertheless anticipate an acceleration in
smart card related business for the second half of the current financial year
and beyond. The unfortunate events of 11 September 2001 can only increase the
likelihood that growing volumes of smart cards will need to be deployed for
security purposes. Our business goal is to earn a license fee on each card
issued and managed. Given our success to date in bringing edeficeO to market
and the agreements we have entered into, we believe that we are in an
excellent position to capitalize on the undoubted opportunities that exist in
this area.
Richard Parris
Chairman & Chief Executive
7 December 2001
INTERCEDE GROUP plc
Consolidated Profit and Loss Account
6 months 6 months Year
ended ended ended
30 30 31
September September March
2001 2000 2001
#'000 #'000 #'000
Turnover 471 1,140 2,014
Cost of sales (260) (542) (945)
Gross profit 211 598 1,069
Other operating expenses (1,419) (894) (2,188)
Operating loss (1,208) (296) (1,119)
Interest receivable and similar income 41 7 48
Interest payable and similar charges (23) (24) (54)
Loss on ordinary activities before taxation, (1,190) (313) (1,125)
being retained loss on ordinary activities
after taxation and for the period
Basic and diluted loss per ordinary share (7.3)p (2.9)p (8.8)p
INTERCEDE GROUP plc
Consolidated Balance Sheet
As at As at As at
30 30 31
September September March
2001 2000 2001
#'000 #'000 #'000
Fixed assets
Tangible assets 128 110 119
Current Assets
Stocks 5 17 8
Debtors 184 1,427 663
Cash at bank and in hand 1,071 688 2,042
1,260 2,132 2,713
Creditors: Amounts falling due within one (1,110) (1,658) (1,341)
year
Net current assets 150 474 1,372
Total assets less current liabilities 278 584 1,491
Creditors: Amounts falling due after more (36) (525) (59)
than one year
Net Assets 242 59 1,432
Capital and reserves
Called-up share capital 4,090 2,916 4,090
Share premium account 1,011 - 1,011
Other reserves 1,508 1,508 1,508
Profit and loss account (6,367) (4,365) (5,177)
Shareholders' funds - all equity 242 59 1,432
INTERCEDE GROUP plc
Consolidated Cash Flow Statement
6 months 6 months Year
ended ended ended
30 30 31
September September March
2001 2000 2001
#'000 #'000 #'000
Net cash outflow from operating activities (940) (715) (1,093)
Returns on investments and servicing of finance
Interest received 44 7 42
Interest paid (18) (4) (27)
Interest element of finance lease rentals (5) (5) (12)
Net cash inflow/(outflow) from returns on 21 (2) 3
investments and servicing of finance
Capital expenditure
Purchase of tangible fixed assets (32) (60) (80)
Sale of tangible fixed assets - 1 1
Net cash outflow on capital expenditure (32) (59) (79)
Cash outflow before financing (951) (776) (1,169)
Financing
Issue of ordinary share capital
- By Intercede Limited - 750 990
- By Intercede Group plc in connection with - - 2,185
admission to AIM
Repayment of secured loan (5) (5) (10)
Repayment of directors' loans - (8) (8)
Capital element of finance lease rentals (15) (11) (24)
Receipts from sale and lease back of assets - 26 26
Income from invoice discounting - 660 -
Net cash (outflow)/inflow from financing (20) 1,412 3,159
(Decrease)/increase in cash in the period (971) 636 1,990
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 2001 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 2001 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. Copies will be available on
the website (www.intercedegroup.com) and at the registered office: Intercede
Group plc, Lutterworth Hall, St Mary's Road, Lutterworth, Leicestershire, LE17
4PS.
2. Basic and diluted loss per ordinary share
The calculations of loss per ordinary share are based on the loss for the
period and the weighted average number of ordinary shares in issue during each
period.
6 months 6 months Year
ended ended ended
30 30 31
September September March
2001 2000 2001
#'000 #'000 #'000
Loss for the period (1,190) (313) (1,125)
Number Number Number
Weighted average number of shares 16,360,485 10,868,550 12,771,716
Pence Pence Pence
Basic and diluted loss per ordinary (7.3) (2.9) (8.8)
share
3. Reconciliation of movement in 6 months 6 months Year
shareholders' funds ended ended ended
30 30 31 March
September September
2001 2000 2001
#'000 #'000 #'000
Opening shareholders' funds 1,432 372 372
Loss for the period (1,190) (313) (1,125)
Issue of shares - - 2,185
Closing shareholders' funds 242 59 1,432
4. Reconciliation of operating loss to 6 months 6 months Year
operating cash flow ended ended ended
30 30 31 March
September September
2001 2000 2001
#'000 #'000 #'000
Operating loss (1,208) (296) (1,119)
Depreciation charge 23 14 34
Profit on sale of tangible fixed assets - 1 -
Decrease/(increase) in stock 3 (9) -
Decrease/(increase) in debtors 477 (1,079) (549)
(Decrease)/increase in creditors (235) 654 541
Net cash outflow from operating activities (940) (715) (1,093)
As at As at
5. Analysis and reconciliation of net debt
31 March 30
September
2001 Cash Flow 2001
#'000 #'000 #'000
Cash at bank and in hand 2,042 (971) 1,071
Debt due within one year (460) - (460)
Debt due after one year (22) 5 (17)
Finance leases (68) 15 (53)
(550) 20 (530)
Net cash 1,492 (951) 541
The reconciliation of net cash flow to the movement in
net debt is as follows:
6 months 6 months Year
ended ended ended
30 30 31
September September March
2001 2000 2001
#'000 #'000 #'000
(Decrease)/increase in cash in the period (971) 636 1,990
Cash outflow/(inflow) from decrease/ 20 (668) 17
(increase) in debt and lease financing
Change in net debt resulting from cash flows (951) (32) 2,007
New finance leases - - (14)
Movement in net debt in the period (951) (32) 1,993
Net cash/(debt) at the beginning of the 1,492 (501) (501)
period
Net cash/(debt) at the end of the period 541 (533) 1,492
6. Creditors: Amounts falling due within one year
Creditors falling due within one year includes 7% convertible unsecured loan
stock totalling #450,000. This loan stock is convertible at the option of the
holder into fully paid ordinary shares of the Company at 41.4p per ordinary
share (up to 1,086,800) at any time prior to 31 March 2002. Unless previously
redeemed or converted, the debt will be redeemed at par on 31 March 2002.
7. Dividend
The Directors do not recommend the payment of a dividend.
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