Interim Results
20 Dezember 2004 - 8:00AM
UK Regulatory
RNS Number:5874G
Intercede Group PLC
20 December 2004
INTERCEDE GROUP PLC
INTERIM RESULTS
FOR THE 6 MONTHS ENDED 30 SEPTEMBER 2004
CHAIRMAN'S STATEMENT
Business and Product Development
I am pleased to report that the Company has continued to make excellent progress
towards our strategic goal of becoming a major global developer of software for
the smart card and identity management market.
Business activity with customers and partners in the last six months has been
building rapidly and the number of invitations to tender for projects worldwide
has exceeded expectations. Intercede has welcomed major new channel partners in
the US, France, Japan and Austria and additional key contracts have been secured
with customers in the UK, Ireland, Israel, Russia and Austria.
Against this background of measurable commercial progress, it is disappointing
to report that sales revenues in the first half are, nevertheless, depressed
compared to the prior year. This is because a number of anticipated orders
slipped into the second half of the year. The majority of these orders have now
been received and the Company is on track to show revenue growth for the year as
a whole.
Important milestones achieved during the period include:
1. MyID(TM) has been selected by the Irish Department of Transport, to power
the issuance and management of digital tachograph smart cards to all
commercial vehicle drivers in Ireland.
2. MyID has been deployed in support of a major health care provider.
Medical staff throughout one of the main European countries are now
receiving smart cards issued and managed by MyID.
3. Intercede has continued to work with a major global bank to commission a
high volume smart card personalisation service driven by MyID. Change
orders for this contract are generating incremental revenues during the
current year.
4. MyID has been installed to control physical and logical access in an
Israeli telecommunications company. This project was delivered in
partnership with a major systems integrator and a leading smart card
company.
5. Thales e-Security has completed the integration of MyID into their SafeSign
product range. Thales e-Security addresses the business, government and
finance industries' need for cryptographic security products and solutions.
Over half of the world's banks, together with the majority of the busiest
exchanges, currently use Thales technology.
6. Intercede's sales channels have been extended into Asia with Athena Smart
Card Systems, Japan, signing an OEM contract to adopt MyID as the Athena
Smart Card Manager. Two major customers have already been secured under
this contract.
7. Intercede has deepened its penetration into the top five smart card
manufacturers with an announcement that Axalto's new smart card management
system will be based on MyID. Co-marketing to new and existing Axalto
customers has already begun and sales are expected within the current
financial year. Axalto, formerly trading as Schlumberger, has supplied more
than 3 billion smart cards to customers worldwide.
8. Intercede has also entered into a reseller agreement with Atos Origin who
are looking to bid MyID on a number of identity solution projects. Atos
Origin is an international IT services company employing 47,000 people in
50 countries.
9. Intercede launched MyID version 6.8. This is an advanced release of our
MyID smart card management system featuring enhanced interoperability,
extended scalability and greater deployment flexibility.
Results
As outlined above, the Group continues to make good progress with its evolution
from being a UK distributor and integrator of third party security products to
being a global business developing its own technology for long term profitable
growth. However, whilst the Group's technology has achieved widespread industry
acceptance and endorsement, this will not be reflected in the numbers until
sufficient projects have been won and started to roll out to a substantial
number of users.
As a result, sales have fallen from #878,000 to #535,000, the rate of growth in
own technology sales as yet not compensating for the fall off in sales of third
party products. Gross profit margins have increased from 82% to 87% as the
proportion of own technology sales has increased from 65% to 76%.
Costs have been maintained at a similar level to last year's reduced level, with
#36,000 of the #39,000 year on year increase reflecting the exceptional cost of
engaging Ernst & Young to assist with the Group's outstanding Research &
Development tax claims. This was successful as it resulted in the receipt of
payments from the Inland Revenue totalling #182,000 for the 2002/03 and 2003/04
financial years.
As at 30 September 2004, the Group had net cash balances totalling #615,000.
During the six months ended 30 September 2004, the cash outflow before financing
was #451,000 compared with #274,000 during the comparative period.
Outlook
After an extended period of depressed expenditure in the IT sector, there is
clear evidence that an increasing number of organisations are allocating budgets
to identity management and smart card projects. I believe that Intercede has the
contracts and the channels to market, to deliver a strong finish to the 2004/05
financial year and to continue the trend towards profitability and rapid revenue
growth.
Richard Parris
Chairman
20 December 2004
ENQUIRIES:
Intercede Group plc Tel. 01455 558111
Richard Parris, Chairman & Chief Executive
Andrew Walker, Finance Director
Consolidated Profit and Loss Account
6 months ended 6 months ended Year ended
30 September 30 September 31 March
2004 2003 2004
#'000 #'000 #'000
Turnover 535 878 1,605
Cost of sales (71) (161) (266)
----------- ----------- -----------
Gross profit 464 717 1,339
Other operating expenses (1,002) (963) (1,960)
----------- ----------- -----------
Operating loss (538) (246) (621)
Interest receivable and similar
income 16 14 34
Interest payable and similar
charges (36) (37) (74)
----------- ----------- -----------
Loss on ordinary activities
before taxation (558) (269) (661)
Tax on loss on ordinary
activities 182 78 (202)
----------- ----------- -----------
Loss on ordinary activities after
taxation and
retained loss for the period (376) (191) (863)
=========== =========== ===========
Basic and diluted loss per
ordinary share (1.1)p (0.8)p (2.9)p
=========== =========== ===========
Consolidated Balance Sheet
As at As at As at
30 September 30 September 31 March
2004 2003 2004
#'000 #'000 #'000
Fixed assets
Tangible assets 30 53 42
----------- ----------- -----------
Current Assets
Debtors 138 415 119
Cash at bank and in hand 615 1,303 1,068
----------- ----------- -----------
753 1,718 1,187
Creditors: Amounts falling due within
one year (708) (648) (778)
----------- ----------- -----------
Net current assets 45 1,070 409
----------- ----------- -----------
Total assets less current liabilities 75 1,123 451
----------- ----------- -----------
Creditors: Amounts falling due after
more than one year
Convertible debt (1,432) (1,432) (1,432)
----------- ----------- -----------
Net liabilities (1,357) (309) (981)
=========== =========== ===========
Capital and reserves
Called-up share capital 4,271 4,271 4,271
Share premium account 2,107 2,107 2,107
Other reserves 1,508 1,508 1,508
Profit and loss account (9,243) (8,195) (8,867)
----------- ----------- -----------
Shareholders' deficit - all equity (1,357) (309) (981)
=========== =========== ===========
Consolidated Cash Flow Statement
6 months ended 6 months ended Year ended
30 September 30 September 31 March
2004 2003 2004
#'000 #'000 #'000
Net cash outflow from operating
activities (649) (284) (525)
----------- ----------- -----------
Returns on investments and
servicing of finance
Interest received 18 13 31
Interest paid - - (1)
Interest element of finance
lease rentals - (1) (2)
----------- ----------- -----------
Net cash inflow from returns on
investments and servicing of
finance 18 12 28
----------- ----------- -----------
Taxation received 182 - -
----------- ----------- -----------
Capital expenditure (2) (2) (6)
----------- ----------- -----------
Cash outflow before financing (451) (274) (503)
Financing
Issue of ordinary share capital - 1,270 1,270
Repayment of secured loan (2) (5) (10)
Capital element of finance
lease rentals - (5) (6)
----------- ----------- -----------
Net cash (outflow)/inflow from
financing (2) 1,260 1,254
----------- ----------- -----------
(Decrease)/increase in cash in
the period (453) 986 751
=========== =========== ===========
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 2004 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 2004 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 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. 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 ended 6 months ended Year ended
30 September 30 September 31 March
2004 2003 2004
#'000 #'000 #'000
Loss for the period (376) (191) (863)
Number Number Number
Weighted average number of
shares 33,963,438 25,220,142 29,672,863
Pence Pence Pence
Basic and diluted loss per
ordinary share (1.1) (0.8) (2.9)
======================= =========== =========== ===========
The increase in the weighted average number of shares reflects the Placing of
17,582,672 ordinary shares which took place on 1 July 2003.
3. Reconciliation of movement in shareholders' deficit
6 months ended 6 months ended Year ended
30 September 30 September 31 March
2004 2003 2004
#'000 #'000 #'000
Opening shareholders' deficit (981) (1,388) (1,388)
Loss for the period (376) (191) (863)
Issue of shares - 1,270 1,270
----------- ----------- -----------
Closing shareholders' deficit (1,357) (309) (981)
=========== =========== ===========
4. Reconciliation of operating loss to operating cash flow
6 months ended 6 months ended Year ended
30 September 30 September 31 March
2004 2003 2004
#'000 #'000 #'000
Operating loss (538) (246) (621)
Depreciation charge 13 18 34
Decrease in stock - 2 2
(Increase)/decrease in debtors (20) 208 226
Decrease in creditors (104) (266) (166)
----------- ----------- -----------
Net cash outflow from operating
activities (649) (284) (525)
=========== =========== ===========
5. Analysis and reconciliation of net debt
As at As at
31 March 30 September
2004 Cash Flow 2004
#'000 #'000 #'000
Cash at bank and in hand 1,068 (453) 615
----------- ----------- -----------
Debt due within one year (2) 2 -
Debt due after one year (1,432) - (1,432)
----------- ----------- -----------
(1,434) 2 (1,432)
----------- ----------- -----------
Net debt (366) (451) (817)
=========== =========== ===========
The reconciliation of net cash flow to the movement in net debt is as follows:
6 months ended 6 months ended Year ended
30 September 30 September 31 March
2004 2003 2004
#'000 #'000 #'000
(Decrease)/increase in cash in
the period (453) 986 751
Cash outflow from decrease in
debt and lease financing 2 10 16
----------- ----------- -----------
Change in net debt resulting
from cash flows (451) 996 767
Net debt at the beginning of
the period (366) (1,133) (1,133)
----------- ----------- -----------
Net debt at the end of the
period (817) (137) (366)
=========== =========== ===========
6. Creditors: Amounts falling due after more than one year
The convertible debt totalling #1,432,000 represents two issues of convertible
loan stock, both carrying an interest coupon of 5%. The first issue totalling
#982,000 is convertible at the option of the holder into fully paid ordinary
shares of the Company at 60.0p per ordinary share (up to a maximum of 1,636,048
shares) at any time prior to 11 December 2006. The second issue totalling
#450,000 is convertible at the option of the holder into fully paid ordinary
shares of the Company at 41.4p per ordinary share (up to a maximum of 1,086,800
shares) at any time prior to 31 March 2007. Unless previously redeemed or
converted, the debt will be redeemed at par on 11 December 2006 and 31 March
2007 respectively.
In recognition of the dilution to be faced by the loan stockholders following
the Placing on 1 July 2003, they were granted warrants to subscribe for up to
2,982,919 ordinary shares at the Placing Price of 7.8p at any time up to the
existing conversion dates referred to above.
7. Dividend
The Directors do not recommend the payment of a dividend.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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