Intercede Regulatory News (IGP)

11 Dec 2007 07:01

Intercede Group PLC11 December 2007 11 DECEMBER 2007 INTERCEDE GROUP plc ('Intercede', 'the Company' or 'the Group') Interim Results for the 6 Months Ended 30 September 2007 Intercede (AIM: IGP.L) is a leading developer of identity management software,called MyID, which manages the secure registration, issuance and life cycle ofdigital identities for a wide range of uses. SUMMARY - 28% increase in sales to £1.6m (2006: £1.2m). - Gross margin rose to 99% (2006: 98%). - Operating profit of £0.1m (2006: Operating loss of £0.3m). - Cash balances rose significantly to £1.6m at 30 September 2007 (30 September 2006: £0.4m). - Delivery of MyID technology as the smart card management system for the US Transport Workers Identity Card (TWIC), which has the potential to result in the issue of more than 6 million new identity cards. - Further development of MyID for existing and new partners including RSA Security, Thales e-Security, Oracle and Secure Services Corporation. - Contract wins via a variety of partners in the US and Europe. Richard Parris, Chairman & Chief Executive of Intercede, said today: "Our financial and operational performance leaves us very well placed to exploita growing global market for identity and smart card solutions. There has been anumber of significant achievements during the period, providing further evidencethat our partnering strategy is providing many different routes into a growingmarket. The level and pace of customer and partner activity is at an all timehigh and I remain confident that the long term growth potential for Intercedehas never been stronger." 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 6679 KBC Peel HuntRichard Kauffer 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, Open Platform appletsand physical access control systems. Intercede works with a number of market leading OEM, re-seller and technologypartners that supply MyID technology to the global marketplace including: AthenaSmartcard Solutions, Gemalto, Oberthur Card Systems, Oracle, RSA Security,SafeNet, Thales, VeriSign and a variety of systems integrators and othersecurity product and service providers. Intercede and MyID are registered trademarks or trademarks in the UK, US and/orother countries. For more information on Intercede and MyID visit http://www.intercede.com. INTERCEDE GROUP plc Interim Results for the Six Months Ended 30 September 2007 Chairman's Statement Business Review I am pleased to be able to report that good commercial and technical progresshas been made during the first half of the year. Revenues have increased by 28%and the Company has generated a profit before tax of £45,000 compared to a lossbefore tax of £314,000 in the same period last year. As a result of thisenhanced performance and the placing on 16 May 2007 which raised £678,000 net ofexpenses, the level of cash balances increased by £922,000 to £1,575,000 duringthe six months ended 30 September 2007. This places Intercede in a much strongerposition to exploit a growing global market for identity and smart cardsolutions. Significant advances during the year to date include: 1. The delivery of MyID as the smart card management system for the US Transport Workers Identity Card (TWIC). 2. The ongoing development of a customised version of MyID to power Thales e-Security's SafeSite Management Server (SSMS). 3. The receipt of £500,000 in September from Thales e-Security in respect of advance licence fees under the existing OEM agreement. 4. The delivery of a new version of MyID to RSA Security, a division of EMC, for incorporation in a major product release of RSA Card Manager. 5. Intercede's admission to the Oracle Extended Identity Management Ecosystem following the integration of MyID with Oracle's Identity Manager. 6. The establishment of a new partner agreement with Secure Services Corporation, a US Healthcare provider. 7. The sale of an additional 28,000 licences to a US Federal banking organisation. 8. The go-live deployment of MyID for a major US bank to facilitate a combined physical and logical smart card security system across its branch network. 9. A new contract through our VeriSign partner for an HSPD-12 solution for a major US Federal agency. 10. The extension of an existing HSPD-12 contract by a further 15,000 licences. 11. A new contract in partnership with VeriSign for an EU Government agency. 12. Further project development contracts secured with Lockheed Martin, Lloyds TSB, the UK NHS and VeriSign. Of the items listed above, I would like to draw particular attention to the TWICprogramme. TWIC is a common identification credential for all personnelrequiring unescorted access to secure areas in more than 140 US ports. TheTransportation Security Administration (TSA) will issue qualifying workers witha smart card containing the worker's digital certificate and a fingerprintbiometric. Intercede's technology is supplied via RSA Security to LockheedMartin who are the prime contractor on this project. The TWIC card uses some of the same technology and standards as Federal PIVcards issued under the HSPD-12 initiative and builds on Intercede's corecapabilities in this area. The TSA plans to issue TWIC cards in more than 50ports before the end of Q1 2008 and aims to have issued more than 1 millioncards within the first year. The TWIC programme has the potential to be extendedto other groups of workers involved in critical national infrastructureincluding railways, airports, utilities, petrochemicals and hazardous materials.This could push the number of cards issued to more than 6 million. The TWIC contract demonstrates the high volume security and scalability of theMyID platform. Under Intercede's OEM contract with RSA Security, the first onemillion licences for TWIC will be offset against the advance licence feespayable over the first three years of the agreement through to September 2008.Additional licences above 1 million will attract incremental licence fees andannual maintenance. This single agreement represents an attractive andpotentially substantial future revenue stream for Intercede. Under the US Government HSPD-12 initiative, Intercede has now sold more than165,000 licences, excluding TWIC and FRAC, to Federal Agencies. This constitutessuccessful initial penetration of a market that has grown more slowly thanexpected over the last year due to short term US Government budgetaryconstraints, but which nevertheless represents a significant long termopportunity. Financial Results Sales during the period totaled £1,546,000 which, at a gross margin of 99%,resulted in an operating profit of £90,000. This compares with sales in thecorresponding period last year of £1,212,000 at a gross margin of 98% and anoperating loss of £264,000. Continued tight control over costs and cash management resulted in a £244,000cash inflow before financing which compares with a £707,000 outflow during thecomparative period. This inflow, coupled with the placing of new shares in May2007 which raised £678,000 net of expenses, resulted in cash balances totalling£1,575,000 as at 30 September 2007. This is the first set of financial statements prepared under InternationalFinancial Reporting Standards (IFRS). The results for comparative periods haveaccordingly been restated from UK Generally Accepted Accounting Principles toIFRS. The transition has not had a material impact on the results, details ofwhich are outlined in Note 4 to the Accounts. Outlook The first half of the year has been profitable for Intercede. However, as inprevious years, the full year outcome will be dependent upon our partners beingable to close long sales cycle contracts in a timely fashion and our subsequentability to deliver and recognise revenues in accordance with the Group'saccounting policy. Nevertheless, the level and pace of customer and partneractivity is at an all time high and I remain confident that the long term growthpotential for Intercede has never been stronger. Richard ParrisChairman & Chief Executive11 December 2007 Intercede Group plcConsolidated Income Statement 6 months ended 6 months ended Year ended 30 September 30 September 31 March 2007 2006 2007 £'000 £'000 £'000 Revenue 1,546 1,212 2,620 Cost of sales (21) (25) (74) Gross profit 1,525 1,187 2,546 Administrative expenses (1,435) (1,451) (2,895) Operating profit/(loss) 90 (264) (349) Financial income 23 13 25 Financial expenses (68) (63) (126) Profit/(loss) before tax 45 (314) (450) Tax 90 71 71 Profit/(loss) for the period 135 (243) (379) Earnings per share (pence) - basic 0.4p (0.7)p (1.1)p - diluted 0.3p (0.7)p (1.1)p All of the Group's trading activities relate to continuing operations. The comparatives for the periods ended30 September 2006 and 31 March 2007 have been restated as outlined in the Notes to the Accounts. Intercede Group plcConsolidated Balance Sheet As at As at As at 30 September 30 September 31 March 2007 2006 2007 £'000 £'000 £'000Non-current assetsProperty, plant and equipment 37 31 38 Current AssetsTrade and other receivables 223 491 234Current tax assets - 71 -Cash and cash equivalents 1,575 405 653 1,798 967 887 Total assets 1,835 998 925 EquityShare capital 4,292 4,271 4,271Share premium account 2,764 2,107 2,107Other reserves 1,508 1,508 1,508Equity reserve 109 109 109Retained earnings (9,629) (9,628) (9,764) Total equity (956) (1,633) (1,769) Current liabilitiesTrade and other payables 288 359 313Current tax liabilities 182 142 101Deferred income 556 496 583 1,026 997 997Non-current liabilitiesConvertible loan notes 1,765 1,634 1,697 Total equity and liabilities 1,835 998 925 The comparatives for the periods ended 30 September 2006 and 31 March 2007 have been restated as outlined in the Notes to the Accounts. Intercede Group plcConsolidated Statement of Changes in Equity Share Share Other Equity Retained capital premium reserves reserve earnings Total £000 £000 £000 £000 £000 £000 At 1 April 2006 - UK GAAP 4,271 2,107 1,508 214 (9,577) (1,477) IFRS transition (see note 4) - - - - (22) (22) At 1 April 2006 - IFRS 4,271 2,107 1,508 214 (9,599) (1,499) Change in equity component on - - - (105) 214 109extension of convertible loan notes Retained loss for the period - UK GAAP - - - - (249) (249) IFRS transition (see note 4) - - - - 6 6 At 30 September 2006 - IFRS 4,271 2,107 1,508 109 (9,628) (1,633) Retained loss for the period - UK GAAP - - - - (119) (119) IFRS transition (see note 4) - - - - (17) (17) At 31 March 2007 - IFRS 4,271 2,107 1,508 109 (9,764) (1,769) Issue of shares, net of costs 21 657 - - - 678 Retained profit for the period - UK - - - - 129 129GAAP IFRS transition (see note 4) - - - - 6 6 At 30 September 2007 - IFRS 4,292 2,764 1,508 109 (9,629) (956) Intercede Group plcConsolidated Cash Flow Statement 6 months ended 6 months ended Year ended 30 September 30 September 31 March 2007 2006 2007 £'000 £'000 £'000 Cash flows from operating activitiesOperating profit/(loss) 90 (264) (349)Depreciation 8 7 15Decrease/(increase) in trade and other receivables 12 (175) 82Increase/(decrease) in trade and other payables 29 (278) (277)Taxation received 90 - 71 Net cash from operating activities 229 (710) (458) Investing ActivitiesInterest received 22 14 25Purchases of property, plant and equipment (7) (11) (26) Net cash from/(used in) investing activities 15 3 (1) Financing ActivitiesProceeds on issue of shares 678 - - Net increase/(decrease) in cash and cash equivalents 922 (707) (459) Non-cash movement (68) 45 (18)Net debt at beginning of period (1,044) (567) (567) Net debt at end of period (190) (1,229) (1,044) Intercede Group plcNotes to the Accounts 1. Preparation of the interim financial statements The financial information contained herein does not constitute statutoryaccounts as defined in Section 240 of the Companies Act 1985. The AIM rules require the Group's financial statements for the yearending 31 March 2008 to be prepared under International Financial ReportingStandards (IFRS). As the results presented in these consolidated interimstatements will form part of the results for that year, these interim statementsare accordingly presented under IFRS. The accounting policies differ in somerespects to the accounting policies used for the last audited financialstatements for the year ended 31 March 2007, which were presented under UKGenerally Accepted Accounting Principles (UK GAAP). The Group is not required to apply IAS 34 Interim Financial Reporting at this time. The results for the comparative periods have been restated under IFRS inaccordance with the requirements of IFRS 1. An explanation of how IFRS hasaffected the reported financial position, financial performance and cash flowsof the Group is provided in note 4. The comparative figures for the financial year ended 31 March 2007 are notthe Group's statutory accounts for that financial year. Those accounts, whichwere prepared under UK GAAP, have been reported on by the Group's auditors anddelivered to the Registrar of Companies. The audit opinion on those statutory accounts was unqualified and did not include a statement under Section237(2) or (3) of the Companies Act 1985. The Interim Report will be mailed to shareholders and copies will beavailable 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. Earnings per Share The calculations of earnings per ordinary share are based on theprofit/(loss) for the period and the weighted average number of ordinary sharesin issue during each period ie September 2007: 35,569,896; September 2006 &March 2007: 33,963,438. The diluted earnings per share is based on a weightedaverage of 48,211,164 which reflects the potential conversion of all existingconvertible loan stock, warrants and share options. Basic and diluted earningsper share are the same for both of the comparative periods as potential dilutioncannot be applied to a loss making period. 3. Dividend The Directors do not recommend the payment of a dividend. 4. Explanation of transition to IFRS As outlined in note 1, the AIM listing rules require the Group to present itsresults under IFRS for the year ending 31 March 2008. In accordance with IFRS 1, the Group has applied the applicable mandatoryexemptions and the following optional exemptions: i) Business combinations that took place prior to the transition date of 1 April 2006 have not been restated; and ii) IFRS 2 Share Based Payments has not been applied to any share options granted prior to 7 November 2002. The preparation of financial statements in accordance with generallyaccepted accounting principles requires management to make judgements, estimatesand assumptions that affect the application of policies and reported amounts ofassets and liabilities, income and expenses. The estimates and associatedassumptions are based upon historical experience and various other factors thatare believed to be reasonable under the circumstances, the results of which formthe basis of making judgements about carrying values of assets and liabilitiesthat are not readily available from other sources. Actual results may differfrom these estimates. The accounting estimates that have the most risk ofcausing a material adjustment to the carrying value of assets and liabilitiesare in relation to the measurement and impairment of intangible assets andgoodwill and the recognition of current and deferred income tax assets andliabilities. The only adjustment identified as being necessary as a result of thetransition to IFRS relates to the requirement for a holiday pay accrual inaccordance with IAS 19. The accruals required are £22,000 at 1 April 2007,£16,000 at 30 September 2007 and £33,000 at 31 March 2007. The impact on theincome statement is a £6,000 credit to profits for the 6 months to 30 September2006 and an £11,000 charge against profits for the year ended 31 March 2007. This information is provided by RNS The company news service from the London Stock Exchange