Intercede Regulatory News (IGP)

14 Dec 2006 07:01

Intercede Group PLC14 December 2006 14 DECEMBER 2006 INTERCEDE GROUP plc ('Intercede', 'the Company' or 'the Group') Interim Results for the 6 Months Ended 30 September 2006 Intercede (AIM: IGP.L) is a leading developer of identity management softwarewhich manages the secure registration, issuance and life cycle of digitalidentities for a wide range of uses. SUMMARY - Order book and pipeline substantially increased year on year. - Sales of £1.21m broadly in line with corresponding period in previous year (2005: £1.24 million). - Gross margin rose to 98% (2005: 96%). - Operating loss of £0.27m (2005: Operating profit of £2k), reflecting further investment in sales initiatives, especially in the US. - Cash balances of £0.41m (2005: £1.03m) at 30 September 2006. - MyID technology has achieved significant traction in key US Federal Government ID card program. - Strategy of partnering with major global security players leading to increased adoption of MyID technology on a global basis. - Additional 200,000 MyID licenses sold to Gemalto in support of large European Public Sector employer. - On track to achieve growth in full year sales compared to previous financial year. Richard Parris, Chairman & Chief Executive of Intercede, said today: "This has been an important period of development for Intercede. Our MyIDtechnology is becoming increasingly recognised as the best of breed smart cardand identity management system and our partner strategy is producing tangibleresults around the world. This is demonstrated by our recent significantsuccesses within the US Federal Government market. We are therefore confident offurther progress." ENQUIRIES Intercede Group plc Tel. +44 (0)1455 558111Richard Parris, Chairman & Chief ExecutiveAndrew Walker, Finance Director Pelham Public RelationsArchie Berens Tel. +44 (0)20 7743 6679Kate Catchpole Tel. +44 (0)7803 033 43 KBC Peel HuntJulian Blunt Tel. +44 (0)20 7418 8900 About Intercede Intercede Group plc is a leading developer and supplier of smart card andidentity management software listed on the London Stock Exchange (IGP LN)(IGP.L). Intercede's MyID software manages the secure registration, issuance andlifecycle of digital identities for a wide range of uses. This requires theintegration of multiple technologies and products from many different vendors,including smart cards, biometrics, digital certificates and Open Platformapplets. Intercede works with a number of market leading OEM, re-seller and technologypartners that supply MyID technology including: Athena Smartcard Solutions,Gemalto, Oberthur Card Systems, RSA Security, SafeNet, Thales, VeriSign and avariety of systems integrators and other security product and service providers. Intercede and MyID are registered trademarks or trademarks in the UK, US and/orother countries. For more information visit http://www.intercede.com INTERCEDE GROUP plc Interim Results for the Six Months Ended 30 September 2006 Chairman's Statement Business and Product Development I am pleased to report that Intercede has continued to make excellent progressin the first half of the current financial year. As of the date of thisstatement, we have secured orders equaling the revenues achieved in the whole ofthe previous year and additional business is expected to close prior to the endof the full year. We are therefore confident of being able to report solid yearon year growth for the full year to 31 March 2007, notwithstanding the potentialfor implementation delays and revenue recognition issues. Most significantly, during the period we have solidified our operations in theUS market and, since the period end, we have secured some impressive early winsvia our partners with US Government Agencies under the long anticipated HomelandSecurity Presidential Directive-12 (HSPD-12) mandate. HSPD- 12 requires every USGovernment employee and contractor to be issued with a new, state-of-the-art IDcard. Under this program, Intercede's MyID system is now established inWashington DC as the market leader for issuing new generation secure identitycards to federal employees. This position has been achieved as the result of Intercede's strategic focus,our world-class technology and overall knowledge and professionalism. As aresult of the efforts of our dedicated staff and partners, the following keymilestones have already been achieved during this financial year: 1. Delivery of MyID v7.1 to channel partners including Athena, RSA, SafeNet, Thales and VeriSign. 2. First end customer contracts secured by last year's new partners RSA and VeriSign. 3. Additional order secured from one of the top four US banks - further and growing license sales are expected during the next 12-24 months. 4. Additional contract wins secured by our partners in the Middle East. 5. Additional 200,000 MyID licenses sold to Gemalto in support of a large European Public Sector employer, bringing the total number of MyID licenses deployed by this end customer to 500,000 - Intercede's largest single deployment to date. 6. Working in collaboration with Oberthur Card Systems and Fargo, MyID was used to manage the identities of 8,000 diplomats, conference delegation members, Latvian and NATO supporting units, security personnel and volunteers at the NATO Summit in Riga, 27-29 November 2006. 7. First orders secured via partners from the US Federal Government under HSPD- 12 including: The highest ranking Department within the Executive Branch of Government Department of Education Environmental Protection Agency Federal Trade Commission Federal Housing Finance Board Housing and Urban Development 8. The inclusion of MyID technology in a HSPD-12 managed service offering from a large scale provider targeting US Federal Government and civilian agencies. This managed service was used to enable 18 Federal Agencies to meet their 27 October 2006 HSPD- 12 deadline for initial smart card issuance. 9. Following these deployments, we are now integrated with the PKI services delivered by the US Federal Government's top three approved Shared Service Providers (SSP), namely VeriSign, Cybertrust and ORC. This makes it increasingly easier for new federal agencies to implement solutions based on MyID technology. 10. Certification of MyID v7.1 by the US General Services Agency for its use in Federal Government projects. The above activity shows the remarkable penetration we continue to make in therapidly emerging identity sector. Initial indications are that Intercede is themost successful smart card and identity management company in the HSPD-12market. The challenge is to turn these contracts into long term revenues and toexploit our lead position in related markets in the US and beyond. Financial Results Sales during the period totaled £1,212,000 which, at a gross margin of 98%,resulted in an operating loss of £270,000. This compares to sales in thecorresponding period last year of £1,241,000 at a gross margin of 96% and anoperating profit of £2,000. The sales during the period have arisen from servicing a wide variety of new andexisting accounts including but not limited to; Gemalto, RSA Security, AthenaSmart Card Solutions, Thales, Barclays Bank and Lloyds TSB. Geographically, over40% of revenues related to business in the UK. No US Federal Governmentscontracts were received prior to 30 September 2006. On the cost side of the business, additional staff have been recruited tosupport the substantial amount of time and effort involved in supporting anincreasing number of existing and new partners in multiple bids for US FederalAgencies. That work has typically been non-chargeable, but is expected to make apositive revenue contribution though additional license fees during the fullyear. It should be noted that, despite our success securing new contracts, US FederalAgencies are being slower in deploying HSPD-12 solutions than had beenpreviously expected. It is therefore premature to forecast the number oflicenses that may be sold by 31 March 2007. However, we can confirm that$500,000 of HSPD-12 related revenue has already been booked for the full year(excluding $500,000 of advance licenses previously purchased by RSA Security)and more orders are anticipated for the current year and beyond. During the period we extended the Company's convertible loan agreements by threeyears to May 2009. This demonstrates investor confidence and avoids the need torepay £1,790,000 including interest that otherwise would have fallen due forrepayment within the current financial year. As at 30 September 2006, the Group had net cash balances totaling £405,000.During the six months ended 30 September 2006, the cash outflow before financingwas £707,000 which compares with a cash inflow of £358,000 during thecomparative period. Outlook According to the Stanford Group, the top ten US Government identity initiativeswill generate approximately $8 billion in business for identity solutionscompanies over the next five years and overseas projects will contribute another$14 billion. Intercede's technology is positioned to play a key role in a numberof these initiatives. We believe that the US Government market will be the catalyst for the morewidespread adoption of smart cards across all walks of life in the US. This willcreate one of the world's largest markets for Intercede's technology. Inparallel with our US activities we are continuing to grow our activities inEurope and we are also building partnerships in anticipation of the UKGovernment starting the contracting process for the UK National ID card. While it is still too early to predict the size or timing of theseopportunities, our early successes provide good cause for confidence that theupside for Intercede will be significant. Richard Parris Chairman & Chief Executive 14 December 2006 Intercede Group plc 6 months ended 6 months ended Year endedConsolidated Profit and Loss Account 30 September 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 Turnover 1,212 1,241 2,142 Cost of sales (25) (50) (115) Gross profit 1,187 1,191 2,027 Other operating expenses (1,457) (1,189) (2,371) Operating (loss)/profit (270) 2 (344) Interest receivable and similar income 13 12 34 Interest payable and similar charges (43) (62) (72) Loss on ordinary activities before taxation (300) (48) (382) Tax on loss on ordinary activities 71 76 76 (Loss)/profit on ordinary activities aftertaxation and retained (loss)/profit for the period (229) 28 (306) Basic and diluted (loss)/profit per (0.7)p 0.1p (0.9)pordinary share Intercede Group plc As at As at As atConsolidated Balance Sheet 30 September 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 Fixed assetsTangible assets 31 22 27 Current AssetsDebtors 562 280 317Cash at bank and in hand 405 1,030 1,112 967 1,310 1,429 Creditors: Amounts falling due within one yearConvertible debt - - (1,432)Other creditors (982) (1,097) (1,555) Net current (liabilities)/assets (15) 213 (1,558) Total assets less current liabilities 16 235 (1,531) Creditors: Amounts falling due after more than one yearConvertible debt (1,432) (1,432) -Other creditors (344) - - (1,776) (1,432) - Net liabilities (1,760) (1,197) (1,531) Capital and reservesCalled-up share capital 4,271 4,271 4,271Share premium account 2,107 2,107 2,107Other reserves 1,508 1,508 1,508Profit and loss account (9,646) (9,083) (9,417) Shareholders' deficit - all equity (1,760) (1,197) (1,531) Intercede Group plc 6 months ended 6 months ended Year endedConsolidated Cash Flow Statement 30 September 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 Net cash (outflow)/inflow from operating activities (710) 274 347 Interest received 14 12 33 Taxation received - 76 76 Capital expenditure (11) (4) (16) Cash (outflow)/inflow before financing (707) 358 440 Financing - - - (Decrease)/increase in cash in the period (707) 358 440 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 theaccounting policies set out in the Group's 2006 statutory accounts. The interim financial statements are unaudited and do not constitute statutoryaccounts as defined in Section 240 of the Companies Act 1985. The figures forthe year ended 31 March 2006 are an abridged version of the Group's statutoryaccounts for that year which have been filed with the Registrar of Companies.The audit opinion on those statutory accounts was unqualified and did notinclude 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 availableon the website (www.intercede.com) and at the registered office: Intercede Groupplc, Lutterworth Hall, St Mary's Road, Lutterworth, Leicestershire, LE17 4PS. 2. Basic and diluted (loss)/profit per ordinary share The calculations of (loss)/profit per ordinary share are based on the (loss)/profit for the period and the weighted average number of ordinary shares inissue during each period. 6 months ended 6 months ended Year ended 30 September 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 (Loss)/profit for the period (229) 28 (306) Number Number Number Weighted average number of shares 33,963,438 33,963,438 33,963,438 Pence Pence Pence Basic and diluted (loss)/profit per ordinary share (0.7) 0.1 (0.9) 3. Reconciliation of movement in shareholders' deficit 6 months ended 6 months ended Year ended 30 September 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 Opening shareholders' deficit (1,531) (1,225) (1,225) (Loss)/profit for the period (229) 28 (306) Closing shareholders' deficit (1,760) (1,197) (1,531)4. Reconciliation of operating (loss)/profit to operating cash flow 6 months ended 6 months ended Year ended 30 September 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 Operating (loss)/profit (270) 2 (344) Depreciation charge 7 7 13 (Increase)/decrease in debtors (175) 99 64 (Decrease)/increase in creditors (272) 166 614 Net cash (outflow)/inflow from operating activities (710) 274 347 5. Analysis and reconciliation of net debt As at As at 31 March 30 September 2006 Cash Flow 2006 £'000 £'000 £'000 Cash at bank and in hand 1,112 (707) 405 Debt due within one year (1,432) 1,432 -Debt due after one year - (1,432) (1,432) Net debt (320) (707) (1,027) The reconciliation of net cash flow to the 6 months ended 6 months ended Year endedmovement in net debt is as follows: 30 September 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 (Decrease)/increase in cash in the period (707) 358 440 Net debt at the beginning of the period (320) (760) (760) Net debt at the end of the period (1,027) (402) (320) 6. Creditors: Amounts falling due after more than one year A variation of terms was agreed with the holders of both of the convertible loanstock agreements totalling £1,432,000 on 31 May 2006. The loan periods have bothbeen extended through to 31 May 2009. Interest will be charged at 6% per annumwith effect from 1 April 2006 and the loan stockholders will now be able toconvert the loans and associated interest outstanding at a price of 20.0p perordinary share (for the £982,000 loan) and 15.0p per ordinary share (for the£450,000 loan). The loans and associated interest totalling £2,005,000 will berepayable as at 31 May 2009 if they choose not to convert. 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