Last checked at 8 Dec 2009 07:00
8 DECEMBER 2009
INTERCEDE GROUP plc
('Intercede', 'the Company' or 'the Group')
Interim Results for the 6 Months Ended 30 September 2009
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
- 42% increase in sales to £2,811,000 (2008: £1,981,000).
- Operating profit before exceptional items of £674,000 (2008: £268,000).
- Profit before tax of £85,000 (2008: £222,000).
- Cash inflow of £202,000 (2008: £686,000).
- Cash balances of £3,913,000 at 30 September 2009 (30 September 2008: £1,839,000).
- All external borrowings eliminated following the decision of the convertible loan note holders to convert their loan notes into ordinary shares.
- Release of MyID 8 SR1, a major upgrade to the MyID platform.
- Successful deployment of MyID into two National ID schemes that have entered 'live' production.
- Continued expansion of Intercede's customer base in the US in partnership with VeriSign.
- Winning new contracts to supply MyID to government ministries, banks and business corporations around the world.
- Intercede overtakes competitors to be No1 in class as measured by the number of contract wins announced during the period.
Richard Parris, Chairman & Chief Executive of Intercede, said today:
"Our performance continues to grow in line with our expectations. Intercede has now delivered three consecutive half year periods of profitability as a result of substantial revenue growth. This growth is driven by a combination of recurring sales to existing installations, demand from new customers and an expansion of both our product scope and geographical reach. We remain very excited about the size and scope of contracts we are working on and the potential of our strongest ever sales pipeline."
ENQUIRIES
| Intercede Group plc | Tel.+44 (0)1455 558111 |
| Richard Parris, Chairman & Chief Executive | |
| Andrew Walker, Finance Director | |
| FinnCap | |
| Charles Cunningham | Tel. +44 (0)20 7600 1658 |
| Pelham Public Relations | |
| Archie Berens | Tel.+44 (0)20 7337 1509 |
| Francesca Tuckett | Tel.+44 (0)20 7337 1537 |
About Intercede
Intercede is the producer of the MyID® Identity and Credential Management System (IDCMS). Intercede's 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's MyID 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 10 Federal Agencies, a programme with Lockheed Martin and two major US financial institutions. In Europe and the Middle East, Intercede's MyID is being deployed in support of government identity, health and corporate employee ID security projects.
Intercede and MyID are registered trademarks or trademarks in the UK, US and/or other countries.
For more information visit http://www.intercede.com.
INTERCEDE GROUP plc
Interim Results for the Six Months Ended 30 September 2009
Chairman's Statement
Introduction
I am pleased to be able to report that excellent commercial and technical progress has been made during the first half of the year. Revenues have increased by 42% to £2,811,000 (2008: £1,981,000), resulting in an operating profit before exceptional items of £674,000 compared to £268,000 in the same period last year.
As a result of this improved performance and careful cash management, cash balances at 30 September 2009 totaled £3,913,000, which compares to £3,711,000 at 31 March 2009 and £1,839,000 at 30 September 2008. All external borrowings have also been eliminated during the period following the decision of the convertible loan note holders to convert their loan notes into ordinary shares.
This represents a turning point in the evolution of Intercede's business and is indicative of the strong commercial progress we continue to make.
Commercial Progress
Significant advances during the year to date include:
Successful commissioning of two National ID schemes powered by MyID; one in Kuwait and the other for an undisclosed government customer.
Winning new US Federal and State government customers in partnership with VeriSign.
Securing MyID sales with a Middle Eastern oil company, manufacturing companies in Austria and Switzerland, government ministries in Romania and Slovakia, and banks in Australia, the Czech Republic, Scandinavia and the Ukraine.
Winning a contract with a major security printing and smart card manufacturer for issuing identity cards to their employees at facilities around the world.
Selling an additional 100,000 MyID licenses to BT for the NHS Data Spine project which takes the total sold to date up to 700,000.
Securing additional orders totaling in excess of $1.0m for MyID software licenses and professional services in support of the internal identity badge of the world's largest defence contractor, Lockheed Martin.
Supporting Lockheed Martin on the US Transportation Worker Identity Credential (TWIC) program which has to date resulted in the issuance of 1.3 million cards to US dock workers using MyID.
Worked with a US partner to win a multi-year contract to supply MyID to a large US based, global management consultancy group for internal security and regulatory compliance.
The addition of the US Social Security Administration (SSA) to Intercede's HSPD-12 customer list.
The deployment of MyID 8 SR1 to two existing US Air Force base customers.
Following the successful launch of MyID 8 in June 2008, which repositioned MyID from being a smart card management system to a fully featured Identity and Credential Management System, MyID 8 SR1 was released on 26 October 2009. This updated version includes support for a wide range of third party systems and devices and enables partners and systems integrators to add value faster using Intercede's revolutionary Project Designer suite of Application Programming Interfaces (APIs) and customisation tools.
Financial Results
The financial results reflect the continued momentum from the Group's involvement in an increasing number of projects around the world.
Sales increased by 42% to £2,811,000 (2008: £1,981,000) which resulted in a substantial increase in operating profit before exceptional items from £268,000 to £674,000. Exceptional costs incurred during the period as a result of the ActivIdentity patent infringement lawsuit outlined below totaled £579,000 (2008: £nil).
Staff costs continue to represent the main area of expense representing approximately 80% of the total operating costs excluding exceptional items. The average number of employees increased from 44 to 54 year on year.
A profit for the period of £85,000 (2008: £283,000) resulted in a basic earnings per share of 0.2p (2008: 0.8p) and a fully diluted earnings per share of 0.2p (2008: 0.6p). Adjusting for the exceptional costs results in a fully diluted pre exceptional earnings per share of 1.4p (2008: 0.6p).
Cash balances at 30 September 2009 totaled £3,913,000 (2008: £1,839,000) and were therefore more than double that of a year ago, notwithstanding the exceptional legal costs incurred to date as a result of the ActivIdentity patent infringement lawsuit. During the period, the Group's financial position has also been substantially strengthened following the decision of all of the convertible loan note holders to convert their loan notes into ordinary shares.
Intellectual Property
The reported period includes exceptional costs for defending a previously reported patent infringement case which was filed in the US by ActivIdentity Corporation on 1 October 2008. Intercede's answer and counterclaims deny that its products infringe ActivIdentity's patent and allege further that this patent is invalid and unenforceable. In addition, Intercede has filed counterclaims against ActivIdentity alleging violations of US antitrust law. Intercede intends to pursue its defence and its counterclaims vigorously.
Outlook
The first half of the year has been profitable and cash generative. As in previous years, the full year outcome will be dependent upon the timing of receipt of orders and our subsequent ability to deliver and recognise revenues in accordance with the Group's accounting policy. Nevertheless, the level and pace of customer and partner activity is greater than in previous periods and the sales pipeline is stronger than ever. I therefore remain confident that our operating performance will continue to meet expectations.
Richard Parris
Chairman & Chief Executive
8 December 2009
Intercede Group plc
Consolidated Statement of Comprehensive Income
| 6 months ended | 6 months ended | Year ended | |
| 30 September | 30 September | 31 March | |
| 2009 | 2008 | 2009 | |
| £'000 | £'000 | £'000 | |
| Continuing operations | |||
| Revenue | 2,811 | 1,981 | 5,701 |
| Cost of sales | (73) | (25) | (41) |
|
| |||
| Gross profit | 2,738 | 1,956 | 5,660 |
| Administrative expenses | (2,643) | (1,688) | (4,173) |
|
| |||
| Operating profit | 95 | 268 | 1,487 |
| Operating profit before exceptional item | 674 | 268 | 1,858 |
| Exceptional item | (579) | - | (371) |
|
| |||
| Operating profit | 95 | 268 | 1,487 |
| Finance income | 16 | 28 | 68 |
| Finance costs | (26) | (74) | (147) |
|
| |||
| Profit before tax | 85 | 222 | 1,408 |
| Tax | - | 61 | 341 |
|
| |||
| Profit for the period | 85 | 283 | 1,749 |
| Total comprehensive income attributable to owners of the company | 85 | 283 | 1,749 |
| Earnings per share (pence) | |||
| - basic | 0.2p | 0.8p | 4.7p |
| - diluted | 0.2p | 0.6p | 3.6p |
Intercede Group plc
Consolidated Balance Sheet
| As at | As at | As at | |
| 30 September | 30 September | 31 March | |
| 2009 | 2008 | 2009 | |
| £'000 | £'000 | £'000 | |
| Non-current assets | |||
| Property, plant and equipment | 70 | 57 | 67 |
| Deferred tax | 280 | - | 280 |
| 350 | 57 | 347 | |
| Current assets | |||
| Trade and other receivables | 687 | 866 | 902 |
| Cash and cash equivalents | 3,913 | 1,839 | 3,711 |
|
| |||
| 4,600 | 2,705 | 4,613 | |
| Total assets | 4,950 | 2,762 | 4,960 |
| Equity | |||
| Called up share capital | 4,413 | 4,302 | 4,305 |
| Share premium account | 4,718 | 2,834 | 2,875 |
| Other reserves | 1,508 | 1,508 | 1,508 |
| Equity reserve | - | 109 | 109 |
| Retained earnings | (7,908) | (9,568) | (8,102) |
|
| |||
| Total equity | 2,731 | (815) | 695 |
| Current liabilities | |||
| Trade and other payables | 1,025 | 493 | 1,156 |
| Deferred revenue | 1,194 | 1,177 | 1,173 |
| Convertible loan notes | - | 1,907 | 1,936 |
|
| |||
| 2,219 | 3,577 | 4,265 | |
|
| |||
| Total equity and liabilities | 4,950 | 2,762 | 4,960 |
Intercede Group plc
Consolidated Statement of Changes in Equity
| Share | Share | Other | Equity | Retained | ||
| Capital | Premium | reserves | reserve | earnings | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| At 31 March 2009 | 4,305 | 2,875 | 1,508 | 109 | (8,102) | 695 |
| Issue of shares, net of costs | 108 | 1,843 | - | - | - | 1,951 |
| Loan note conversion - reversal of FRS25 equity component | - | - | - | (109) | 109 | - |
| Total comprehensive income | - | - | - | - | 85 | 85 |
| At 30 September 2009 | 4,413 | 4,718 | 1,508 | - | (7,908) | 2,731 |
| At 31 March 2008 | 4,292 | 2,764 | 1,508 | 109 | (9,851) | (1,178) |
| Issue of shares, net of costs | 10 | 70 | - | - | - | 80 |
| Total comprehensive income | - | - | - | - | 283 | 283 |
|
|
|
|
|
|
| |
| At 30 September 2008 | 4,302 | 2,834 | 1,508 | 109 | (9,568) | (815) |
| At 31 March 2008 | 4,292 | 2,764 | 1,508 | 109 | (9,851) | (1,178) |
| Issue of shares, net of costs | 13 | 111 | - | - | - | 124 |
| Total comprehensive income | - | - | - | - | 1,749 | 1,749 |
|
|
|
|
|
|
| |
| At 31 March 2009 | 4,305 | 2,875 | 1,508 | 109 | (8,102) | 695 |
Intercede Group plc
Consolidated Cash Flow Statement
| 6 months ended | 6 months ended | Year ended | |
| 30 September | 30 September | 31 March | |
| 2009 | 2008 | 2008 | |
| £'000 | £'000 | £'000 | |
| Cash flows from operating activities | |||
| Operating profit | 95 | 268 | 1,487 |
| Depreciation | 15 | 12 | 25 |
| Decrease/(increase) in trade and other receivables | 214 | (441) | (483) |
| (Decrease)/increase in trade and other payables | (111) | 701 | (1360) |
| Cash generated from operations | 213 | 540 | 2,389 |
| Taxation received | - | 61 | 61 |
| Net cash from operating activities | 213 | 601 | 2,450 |
| Investing activities | |||
| Interest received | 18 | 22 | 68 |
| Purchases of property, plant and equipment | (19) | (17) | (40) |
|
| |||
| Net cash from investing activities | (1) | 5 | 28 |
| Financing activities | |||
| (Cost)/proceeds on issue of shares | (10) | 80 | 80 |
|
| |||
| Net increase in cash and cash equivalents | 202 | 686 | 2,558 |
| Cash and cash equivalents at the start of the period | 3,711 | 1,153 | 1,153 |
|
| |||
| Cash and cash equivalents at the end of the period | 3,913 | 1,839 | 3,711 |
| Intercede Group plc | |||
| Notes to the Accounts | |||
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 2009.
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 2009 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 2009 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. Segmental Reporting
All of the Group's revenue, operating profits and net assets originate from operations in the United Kingdom. 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 | |
| 2009 | 2008 | 2009 | |
| £'000 | £'000 | £'000 | |
| United Kingdom | 795 | 882 | 2,488 |
| Rest of Europe | 806 | 380 | 846 |
| USA | 1,085 | 704 | 2,104 |
| Rest of World | 125 | 15 | 263 |
|
| |||
| 2,811 | 1,981 | 5,701 |
3. Exceptional item
The exceptional item, which is included within administrative expenses, represents the costs associated with defending a patent infringement lawsuit which was filed by ActivIdentity in the United States District Court for the Northern District of California on 1 October 2008.
No provision has been made as at 30 September 2009 in respect of the original ActivIdentity lawsuit or contingent asset disclosed in respect of Intercede's counterclaims.
4. Tax
There is no charge for corporation tax due to the availability of losses brought forward from prior years.
5. Earnings per share
The calculation of earnings per ordinary share is based on the profit and the weighted average number of ordinary shares in issue during each period i.e. September 2009: 44,704,340; September 2008: 36,871,850 and March 2009: 37,011,460. The diluted earnings per share is based on a weighted average of 48,735,005 ordinary shares (September 2008 and March 2009: 48,785,009) which reflects the potential exercise of all existing share options.
6. Dividend
The Directors do not recommend the payment of a dividend.
7. Analysis and reconciliation of net debt
| | 6 months ended | 6 months ended | Year ended |
| | 30 September | 30 September | 31 March |
| | 2009 | 2008 | 2009 |
| | £'000 | £'000 | £'000 |
| | | | |
| Cash and cash equivalents | 3,913 | 1,839 | 3,711 |
| | | | |
| Convertible loan notes | - | (1,907) | (1,936) |
| | | | |
| Net cash/(debt) | 3,913 | (68) | 1,775 |
On 29 May 2009, notification was received from the remaining holders of the convertible loan notes issued by the Company on 31 March 2000 and 6 December 2001 that they had elected to convert their loan notes together with associated interest for the period to 31 May 2009 into ordinary shares of 1p each in the Company. This resulted in the issue of 3,877,166 ordinary shares at a price of 15p per share and 6,897,083 ordinary shares at a price of 20p per share. Following the conversion, the total issued share capital of the Company is 48,178,005 ordinary shares of 1p each.