TIDMIGP
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 GBP3,528,000 (2010: GBP3,506,000);
- Underlying revenues have increased by 25%, excluding the
Boeing contract which was worth more than GBP1m in H1 2010;
- Operating profit of GBP617,000 (2010: GBP1,204,000);
- 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 GBP6,563,000 at 30 September 2011 (30 September 2010: GBP4,470,000);
- 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. +44 (0)1455
558 111
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. +44 (0)20 7861
3112
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
GBP3.53m compared to GBP3.51m in the previous year. However, it
should be noted that the previous period included a single contract
of more than GBP1m 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 GBP0.7m compared to GBP1.2m 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
GBP6.56m compared to GBP6.05m at the end of March 2011 and GBP4.47m
at the end of September 2010; a year on year increase of over
GBP2m.
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 GBP0.6m;
-- 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 GBP1 of new customer license revenue in a
period typically generates a further GBP2 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 6 months
ended ended Year ended
30 September 30 September 31 March
2011 2010 2011
GBP'000 GBP'000 GBP'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
GBP'000 GBP'000 GBP'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
GBP'000 GBP'000 GBP'000 GBP'000 GBP'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
GBP'000 GBP'000 GBP'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
GBP'000 GBP'000 GBP'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
GBP'000 GBP'000 GBP'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 GBP20,000 (2010: GBPnil).
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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