Intercede Regulatory News (IGP)

16 February 2012

Intercede Group plc

("Intercede")

Trading Update

Intercede reports that the financial year ending 31 March 2012 will be profitable and cash generating. However, with six weeks to go before the end of the period, the order book of £6.3m stands at a similar position to the prior year. The Company's ability to book further orders before 31 March is dependent on a small number of projects in the pipeline receiving customer approval in sufficient time for deliveries to be made and revenue recognised.

In a challenging global economy, customers are moving to rental models that defer revenue recognition into future periods (with the potential to generate much higher medium term shareholder value from greater earnings visibility) and/or deferring project start dates. A number of large prospects have transitioned within the last six months from wishing to buy perpetual software licenses to specifying rental models, driven by market trends for Software as a Service (SaaS),at the expense of reducing current year revenue expectations. We continue to invest for growth as ID and Credentials Management remains a key priority for governments and enterprise. We see a continuing global pipeline of opportunities, which may be delayed, but not cancelled.

As at 10 February 2012 cash balances totalled £7.0m up from £6.6m reported on 30 September 2011.

Richard Parris, Intercede Chairman & Chief Executive, said:

"Whilst it is disappointing that short term revenues do not reflect the significant strategic and commercial progress made by Intercede, we nevertheless believe the business is in a better position to generate long term shareholder value. We are continuing to work to address any revenue gap in the current year but we are dependent on the buying behaviour of large government and corporate customers.

"In the period we have invested according to plan to reinforce our positioning with major partners such as Microsoft, extended our product reach into the smart phone market and are poised to participate in a number of high volume managed service projects.

"To fully exploit the growth opportunity we have created, Intercede has also appointed an international sales director, increased our marketing expenditure, invested in a new website, engaged with UKTI to drive export sales into new markets and extended our US office.

"We will issue a further update on trading in early April."

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ENQUIRIES

About Intercede

Intercede is the producer of the MyID® identity and credential management system (IDCMS), the MyID Management Agent for Microsoft® Forefront™ Identity Manager and a range of mobile applications for securing smartphones.

The company's website has recently been re-launched to better reflect its enhanced proposition. For more information visit www.intercede.com, email info@intercede.com or call +44 (0)1455 558111.

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 340,000 smart corporate identity badges for Boeing, Booz Allen Hamilton and Lockheed Martin. In Europe, Australasia and the Middle East, MyID is being deployed in support of government identity, financial services, healthcare and corporate employee ID security projects.

MyID is the only IDCMS software product that enables organizations to easily and securely manage the identities of people, secure devices and their associated 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 and smartphone personalization, issuance and management.

At the forefront of the secure identity field, Intercede also offers innovative new solutions for smartphones, including secure email, physical and logical access, identity verification via near field communications and attribute management. With the trend towards 'bring your own device' in the workplace and the move to cloud-based services, MyID allows organizations to embrace new and more convenient approaches to security.

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 (CIV) deployments.

MyID provides 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.