REG - Intercede Group PLC - Final Results
20/06/2023 07:00
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RNS Number : 2256D Intercede Group PLC 20 June 2023
20 June 2023
INTERCEDE GROUP plc
('Intercede', the 'Company' or the 'Group')
Preliminary Results for the year ended 31 March 2023
Intercede, a cybersecurity software company specialising in digital
identities, today announces its preliminary results for the year ended 31
March 2023 ("FY23").
Headlines:
· Record Group revenues at £12.1 million
· Strong net profit of £1.3 million
· Net cash generation from operating activities of £2.9 million
· Basic EPS of 2.3p
· Completion of maiden acquisition, Authlogics Ltd ("Authlogics") in
October 2022
· Integration of Authlogics on track
· Continued investment in product and code including internal IT
infrastructure
· Clear strategic vision on M&A plans
· Strong and unleveraged financial position
Financial Highlights
FY23 FY22 % Change
£ million £ million
Revenue 12.1 9.9 22.2%
Gross profit 11.7 9.7 20.6%
Profit before Tax 0.6 0.3 100.0%
Net Profit 1.3 0.7 85.7%
EPS - basic 2.3p 1.3p 76.9%
EPS - diluted 2.2p 1.2p 83.3%
Gross Margin 97% 98% -1.0%
Net Margin 11% 7% 57.1%
Cash and cash equivalents 8.3 7.8 6.4%
Net cash from operating activities 2.9 0.1 2800.0%
Deferred revenue 7.5 5.2 44.2%
Total Assets 17.4 12.9 34.9%
Total Equity 7.0 5.5 27.3%
Adjusted EBITDA 1.3 1.0 30%
Less:
Amortisation of intangibles 0.1 -
Depreciation of assets 0.1 0.1
Right-of-use depreciation 0.2 0.2
Acquisition costs 0.2 0.2
Employee Share/Unit incentive & option plan charges - 0.1
Exceptional costs 0.1 -
Operating Profit 0.6 0.4 50.0%
Revenue highlights for the year include:
· Revenues for the year ended 31 March 2023 totalling £12.1 million
were approximately 22% higher than last year (2022: £9.9 million) and a 13%
increase on a constant currency basis
· Multiple MyID PIV licence orders from the US Department of State (DoS)
for the MyID Identity Management System (IDMS) solution totalling $1.6
million. The same agency also placed services orders with a value totalling
$0.3 million. Linked to this sale is a third party embedded product which
marginally impacted gross profit in the year
· Licence orders continued in the latter half of the year, with sales
to a telecommunications provider in the US, an energy company in the EU, new
deployments for the UK government, and further new sales in UAE, Saudi Arabia
and Oman
· Several significant customers have chosen to upgrade their existing
MyID deployments including, but not limited to, a UK Government department, a
US central bank and a key US government agency. A major US defence and
consultancy contractor is upgrading to MyID v12.6
· A $0.2 million follow-on order of professional services for a
prestigious independent US Federal Agency that was won at the end of the last
financial year. The deployment will leverage Intercede's technology
partnership with Microsoft, by delivering PKI credentials into Microsoft
Intune managed smartphones enabling sensitive data protection and secure
access to agency systems
· A follow-on MyID Enterprise order from a US Federal agency tasked with
intelligence and security services. Orders have been received to date for
75,000 device licences.
Operating Highlights
· Acquisition of Authlogics Ltd, a UK based company, with annual
recurring revenues (ARR) of £0.5 million. It brings Multi Factor
Authentication (MFA) and Password Security Management (PSM) capabilities to
the Intercede Group. Integration plans are on track and a merged development
road map enacted for FY24
· Increased investment in key departments of the Group including
development & testing and product management
· The M&A programme continues, focused on targets that add recurring
revenues and have a strong industry and product logic
· A strategic review of the Group's IT infrastructure was conducted in
the year, and we has now commenced a deployment into the Microsoft cloud with
the aim of increasing resilience, stability and scalability
· Continued upgrades of MyID with v12.6 and v4.2 for Authlogics MFA
released at end of March 2023
· The Group successfully maintained ISO 9001 and 27001 certification
which now includes US operations.
Outlook
This has been an encouraging and successful year for the Group. However, to
maintain and sustain its current momentum, it needs to continue to invest in
its colleagues, IT Infrastructure, product development and sales and
marketing.
We embark in to FY24 with good visibility on the pipeline, known and fully
resourced internal critical investments and with a clear road map on our
acquisition strategy. As mentioned frequently, the focus is on 'growth' and
execution of strategic plans to deliver it.
Board Changes
During the year Andrew Walker retired from the Board with the appointment of
Nitil Patel as his successor and new Chief Financial Officer of Intercede.
Royston Hoggarth, Non-Executive Director of the Company succeeded Charles
'Chuck' Pol as the Group's Chairman. Tina Whitley was appointed as an
Independent Non-Executive Director, bringing over 30 years' experience across
the information technology sector.
As also announced today, Chuck Pol and Rob Chandhok will step down from the
Board as Non-Executive Directors in due course. The Board is delighted to
welcome John Linwood as a new Non-Executive Director. John brings with him
considerable market knowledge and a breadth and depth of skills and
experience. Our thanks and best wishes go to Chuck and Rob for their service
to the Company.
Royston Hoggarth, Chairman, said:
"I would like to take this opportunity to thank all our colleagues, customers,
partners and stakeholders for their efforts in helping deliver a successful
and profitable result. Furthermore, I extend my thanks to Klaas and his
management team for their leadership and invaluable assistance.
It has been a promising year of both financial and operational progress and
Intercede is now strongly positioned for further growth. With the release of
FIPS201-3, US federal agencies now have a wider set of credential options,
including PKI, FIDO, MFA as well as passwords, and this bodes well for the
Group. To be even more successful, we need to remain disciplined in terms of
how we allocate our resources, our capital and execute on our investment
plans.
With the current macro-economic environment harder to assess and navigate, the
Group will continue to be vigilant on its liquidity position and is well
placed to make strategic acquisitions when the opportunity arises."
ENQUIRIES
Intercede Group plc Tel. +44 (0)1455 558 111
Klaas van der Leest CEO
CFO
Nitil Patel
finnCap Ltd. Tel. +44 (0)20 7220 0500
Simon Hicks/Fergus Sullivan Corporate Finance
Tim Redfern/Charlotte Sutcliffe ECM
About Intercede
Intercede is a cybersecurity software company specialising in digital
identities, and its innovative solutions enable organisations to protect
themselves against the number one cause of data breach: compromised user
credentials.
The Intercede suite of products allows customers to choose the level of
security that best fits their needs, from Secure Registration and ID
Verification to Password Security Management, One-Time Passwords, FIDO and
PKI. Uniquely, Intercede provides the entire set of authentication options
from Passwords to PKI, supporting customers on their journey to passwordless
and stronger authentication environments. In addition to developing and
supporting Intercede software, the Group offers professional services and
custom development capabilities as well as managing the world's largest
password breach database.
For over 20 years, global customers in government, aerospace and defence,
financial services, healthcare, telecommunications, cloud services and
information technology have trusted Intercede solutions and expertise in
protecting their mission critical data and systems at the highest level of
assurance.
For more information visit: www.intercede.com (http://www.intercede.com)
The information communicated in this announcement contains inside information
for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as
it forms part of UK domestic law by virtue of the European Union (Withdrawal)
Act 2018 ("MAR"), and is disclosed in accordance with the company's
obligations under Article 17 of MAR.
The year in review
The Group entered FY23 with clear goals and a key strategic aim of 'growth',
both organically and inorganically. It has successfully delivered on this,
both in terms of revenue growth and by completing our first acquisition. FY23
has been a volatile and uncertain year in terms of geo-political instability
and it is therefore testament to the resilience of the Group that accelerated
revenue growth was delivered whilst also retaining a focus on cost control.
Market Opportunity and Growth Strategy
Intercede's MyID platform is a leading credential management system (CMS) and
identification and verification (ID&V) solution that integrates and
manages a broad range of PKI (Public Key Infrastructure) and FIDO (Faster
Identity Online) technologies. These are very attractive, but niche, market
segments which meet the needs of large organisations, such as Aerospace &
Defence contractors, and governments who are prepared to pay for military
grade security and can cope with the complex infrastructure.
For Intercede this is both a blessing, due to the potential for large initial
one-off licence orders and steady recurring Support & Maintenance, but it
can also present a challenge as the timing of contract awards are invariably
outside of Intercede's control.
For the growth to be sustained Intercede needs to expand faster and broaden
MyID's functionality as it moves down the authentication pyramid and increase
its addressable market. This lies at the heart of Phase Two of the turnaround
plan.
After considering options such as partnering and further internal development,
the Board decided that an acquisition approach would accelerate time-to-market
as well as leveraging new IP for existing clients and partners and extending
the target account market. On 10 October 2022 Intercede was pleased to
announce the acquisition of Authlogics, a Multi Factor Authentication ('MFA')
and Password Security Management ('PSM') software vendor which enables the
Group to offer its customers and prospects solutions that span the entire
authentication pyramid.
Strategy
Intercede continues to focus on its '6C strategy', centred around Colleagues,
Customers, Channels, Code, Cash and more recently, Corporate Development. In
the Phase 2 of its turnaround, the Group will actively explore buy-side
M&A, taking time to ensure the right strategic fit(s) to ensure
scalability and accelerated revenue growth.
1. Colleagues
It is no surprise that we start with Colleagues: they are the main asset we
have who in turn drive the other "Cs". The cybersecurity employment sector
has shown two distinct phases in the financial year; in the earlier phase we
experienced a temporary increase in employee churn rates and in the latter, as
larger technology companies downsized and employment market cooled, we have
seen recruitment opportunities increase as well as staff who had previously
left wanting to rebound.
As stated in previous reports, Intercede's innovation roadmap can leverage
many years of internal development expertise and the Group therefore places a
high degree of focus on its colleague strategy as it strives for
market-leading staff retention.
As at 31 March 2023 colleagues totalled 94 (2022: 87), while the average
number of colleagues during the period was 91 (2022: 84). The attrition rate
(average number of leavers over the year as a ratio of average headcount over
the year) rose to 10% compared to 7% last year. The increase in attrition was
not unexpected and was factored into the Group's hiring strategy and pay and
bonus policy. Intercede and its Board understands the issues everyone is
facing with the cost-of-living crisis, has listened to the Employee Working
Group (EWG) and taken onboard feedback from its more recent Employee
Satisfaction Survey. The Group made a one-off payment of a cost-of-living
allowance in November 2022 and discretionarybonus payments have been
maintained for eligible colleagues.
2. Customers
The wins generated at the end of FY22 created momentum that has carried into
FY23 and resulted in revenue for FY23 that is 22% higher than the prior year
on a reported basis. In particular, follow-on licence orders from existing
customers have driven the growth. Although the seven new customers signed up
during the year is broadly similar to last year (eleven new customers) the
level of attrition remains very low with renewal rates of 98% compared to 99%
in the prior year.
3. Channels
Intercede continues to invest in its Connect Partner Programme which deals
with resellers as well as technology partners. Over the period relationships
were further strengthened which resulted in new pipeline opportunities,
partner campaigns and most importantly driving the strong H1 revenue growth.
As reported in the Customers section above, licence sales have driven the
overall revenue growth compared to the prior period. Partner relationships
play an increasing role in these licence sales and generated 91% of all
licence software sales in FY23 (2022: 83%).
Our technology partners have confidence that as security standards change, and
new technologies become available, MyID, as a product portfolio, is designed
to cope with these changes both in order to support newer devices and systems,
but also to aid the transition between them ensuring the ongoing security of
system access as technology changes are implemented.
Whilst the resellers are focused on delivering complete end to end solutions
to their clients, it is paramount that MyID has a rich eco system of proven
technology partners and integrations which enables an out-of-the-box approach
to many complex use cases.
The addition of Authlogics's partner and channel footprint, with no overlap
with Intercede, further enhances the Group's geographic reach as well as
providing new cross and upsell opportunities.
4. Code
Code for Intercede's software products is written and managed by a large
in-house UK based team of expert and experienced software designers,
developers & testers, enabling Intercede to provide market leading digital
identity solutions at the level of security our customers require. During this
financial year, Intercede has continued to invest in its product portfolio in
accordance with its core development principles:
· To solve real world problems, meeting constantly evolving Customer
and Partner needs
· To create and maintain modern software products based upon market
leading technology
· To broaden the addressable market with new and competitive
functionality
· To deliver secure solutions enabling our customers to protect
sensitive systems and data
MyID PSM
Intercede MyID PSM software enables customers still using passwords to ensure
that they are as secure as they can be, with comprehensive user-friendly
policies, intelligent password audits, and continuous assessment against the
world's largest database of compromised credentials.
New features included:
· Updating the password breach database to contain over 6 billion
records currently, makes it the largest database of known compromised
passwords in the world. This enables our customers to ensure passwords they
are using are not known to be compromised as part of an online password breach
· Improved user experience in the self-service portal when a shared
password is found
· Live monitoring of public email address breaches
· Support for self-service password reset directly from the user's
desktop
MyID MFA
Intercede MyID MFA software enables customers to use stronger authentication
to anything from anywhere, by delivering modern authentication, that is easy
to use, deploy and manage.
New features included:
· A mobile push notification app with best of breed ease of use,
supporting biometric authentication
· Enhanced security and user experience with provision of context-based
information in the mobile app including a summary of the system being accessed
and location of the request
· Modern protection against push fatigue, enhancing phishing-resistance
· Support for offline logon from the mobile app
· Provision of a real-time dashboard for web-based reporting from the
management console
MyID CMS
Intercede MyID CMS software enables customers to issue and manage
high-assurance credentials including PKI and FIDO simply, securely and at
scale, enabling our customers to comply with regulations and deploy
phishing-resistant authentication to protect their systems and data against
breach.
New features included:
· An installation assistant helping customer verify and configure
environments prior to the CMS deployment, reducing costs and skill required
for installation
· Continued modernisation of the operator interface improving the user
experience resulting in increased operational efficiency and reduced training
times
· An enhanced set of APIs and SDK provided with the product, providing
partner and customers with the tools they need to integrate the CMS within a
wider identity ecosystem
· Additional batch operations, delivering operational efficiency for
large customer deployments
· Support for the latest US government FIPS 201-3 standard, ensuring
our customers remain compliant with federal government security regulations
· Enhanced integration with Microsoft Intune and VMWare Airwatch MDMs
(Mobile Device Management Systems) ensuring devices are complaint with
security policies in advance of delivering credentials
· Support for the latest FIDO device attestation standard, ensuring the
MyID CMS remains at the forefront of FIDO for the enterprise solutions
· Support for newer versions of partner technologies, including Yubico,
Keyfactor, Entrust, Thales, IDEMIA and Microsoft.
MyID ID&V
Intercede registration and identity verification software enables customers to
onboard users at the highest levels of identity assurance, compliant with US
FIPS 201 standards. The solution is fully integrated with the MyID CMS for
maximum security and ease of deployment
New features included:
· Modernising the user interface to be browser independent
· Improving the user experience to reduce training costs and time to
deployment
· Supporting electronic validation of identity documents (e.g. passport
or driving licence), enhancing the security of the onboarding process
· Providing secure export of fingerprint data to enable simple
integration with external background identity checking processes
From a strategic perspective, Intercede's initial aim is to broaden the
addressable market with new and competitive functionality and the acquisition
of Authlogics represents a leap forward in this regard.
It is Intercede's intention to sell the acquired products standalone and
create a product portfolio offering customers high, medium and low
authentication depending on their needs and circumstances. The development
team has commenced integration of the products so that a customer can manage
any form of authentication they need used under a 'single pane of glass' or
migrate users from one form of authentication to another.
In April 2023, Intercede was delighted to be named an overall leader by
KuppingerCole Analysts AG within their 2023 Secrets Management Leadership
Compass. Our MyID product was also praised for its Product Leadership and the
Innovation Leadership we bring to the industry through feedback from our
customer base. The full report can be downloaded from the Intercede website at
the following address:
https://www.intercede.com/kuppingercole-secrets-management-report-download/
(https://www.intercede.com/kuppingercole-secrets-management-report-download/)
5. Cash
Treasury and cash management is a significant pillar and crucial asset for the
Group. It operates a tight working capital model and aims to maintain
sufficient head room to ensure operations can continue in potentially
difficult global macroeconomic environments.
The Group's Daily Sales Outstanding (DSO) has improved from 67 days (2022) to
63 days (2023) which has helped to generate a significantly improved cash
inflow from operations during the period.
The Group had gross cash balances of £8.3 million as at 31 March 2023
compared to £7.8 million held at 31 March 2022. This is after a cash outflow
following the acquisition of Authlogics in October 2022 for an initial
consideration of £2.0 million and related acquisition costs expensed to the
Income Statement of £0.2 million.
6. Corporate Development
Corporate Development is a key strategic component to drive incremental
revenue growth, IP acceleration as well as market access whilst efficiently
utilising the Company's robust balance sheet. Following an intensive market
assessment over the last 12 months as well as the strategic intent of "moving
down the authentication pyramid", the Group was pleased to report its first
acquisition, Authlogics as announced in October 2022.
In the section '4. Code' above the acquisition of Authlogics was described as
enabling the Group to address the entire authentication pyramid by giving
customer access to a portfolio of products depending on whether their users
need high, medium or low authentication. Depending on a client's specific use
case, Intercede can now offer an end-to-end solution, from Passwords to PKI.
Whilst the immediate operational activities are now focused on a seamless
integration of Authlogics, the corporate development activity has firmly
maintained its pace and further targets are being assessed against
authentication side and remaining sides of the pyramid t. he Group will
maintain business as usual and maintain diligence in its M&A approach.
Financial Review
Income Statement
Revenue and operating results
The Group's revenue from continuing operations increased by 22% to £12.1
million (2022: £9.9 million) and gross profit increased by 21% to £11.7
million (2022: £9.7 million). Gross margin decreased slightly from 98% to 97%
as a third-party product was part of a significant licence sale in the year.
The Group's operating profit was £0.6 million (2022: £0.4 million), after
non-cash depreciation charge for property, plant and equipment in the year of
£0.1million (2022: £0.1 million), a right-of-use depreciation charge of
£0.2 million (2022: £0.2 million) and amortisation costs of £0.1 million
(2022: £nil). Acquisition costs for the period were £0.2 million (2022:
£0.2 million) with exceptional expense of £0.1 million (2022: £nil),
relating to exiting CFO expense overlapping incoming. Operating expenses
increased by 19% to £11.1 million (2022: £9.3 million).
Tight cost control continues to be a focus for the Group in conjunction with
considered project expenditure to support revenue growth. Meanwhile the Group
continues to recognise the achievements of its staff with pay rises and
performance-related rewards. Staff costs represents the highest area of
expense representing 81% of total operating costs (2022: 84%). Intercede had
94 employees and contractors as at 31 March 2023 (2022: 84). The average
number of employees and contractors during the period was 91 (2022: 84).
The statutory profit before tax for the period was £0.6 million (2022: £0.3
million) and profit for year was £1.3 million (2022: £0.7 million).
Taxation
The Group has a tax credit of £0.7 million for the year due to amounts
received from HMRC in respect of R&D claims, less US corporation tax
payable. (2022: tax credit of £0.4 million). The Group has carried forward
unused tax losses of £8.8 million. Intercede makes an R&D Claim as part
of its annual tax return and can choose whether to carry taxable losses
forward or to request a cash repayment from the UK government.
Finance Income
Net finance income was £0.1 million (2022: expense of £0.1 million)
reflecting increased interest income due to rate rises.
Earnings per share
Earnings per share from continuing operations in the year was 2.3 pence for
basic and 2.2 pence for diluted (2022: 1.3p pence for basic and 1.2p diluted)
and was based on the profit for the year of £1.3 million (2022: £0.7
million) with a basic weighted average number of shares in issue during the
period of 57,939,548 (2022: 57,265,739 shares). For diluted the weighted
average number of shares in issue during the period was 60,595,485 (2022:
59,413,261).
Dividend
The Board is not proposing a dividend (2022: £nil).
Financial Position
Acquisition of Authlogics
In early October 2022, the Group acquired Authlogics Limited ("Authlogics"), a
Multi Factor Authentication ('MFA') and Password Security Management ('PSM')
software vendor, for initial consideration of £1.7 million (adjusted to £2.0
million after repayment of debt held by AL) plus further deferred, conditional
and staged earnout payments estimated to be £0.5 million. The Group has
consolidated the results since acquisition under IFRS3, applying the purchase
method.
Assets
Non-current assets of £3.6 million comprise goodwill of £2.4 million (2022:
£nil), identifiable intangibles of £0.8 million (2022: £nil), property,
plant and equipment of £0.1 million (2022: £0.1 million) and IFRS 16
right-of-use assets of £0.2 million (2022: £0.4 million).
Trade and other receivables increased by £0.9 million to £5.5 million (2022:
£4.6 million) reflecting a higher level of customer orders towards the end of
the year.
Liabilities
Current liabilities increased by £2.7 million to £9.5 million (2022: £6.8
million) reflecting increased deferred revenue at the year end of £7.0
million (2022: £5.0 million).
Non-Current liabilities increased by £0.3 million to £0.9 million (2022:
£0.6 million), which also reflects increased deferred revenue at the year end
of £0.6 million (2022: £0.2 million). This reflects the inclusion of
Authlogics which is able to negotiate longer renewal terms with customers.
Contingent Consideration
Included in current and non-current liabilities are contingent consideration
amounts due on the acquisition of AL. These amounts have been based on the
reasonable estimates by management of Authlogics achieving its recognised
revenue targets for the calendar year's ending June 2023 and June 2024. The
Group's current and non-current liabilities include £0.3 million and £0.2
million respectively for the contingent consideration liabilities.
Capital and Reserves
Total equity increased to £7.0 million (2022: £5.5 million), reflecting the
profit for the year and shares issuance in September 2022. Accordingly the
Accumulated deficit account for the year decreased to £0.5 million (2022:
£1.8 million).
Liquidity and capital resources
The Group remains in a good financial position, with gross cash balances of
£8.3 million as at 31 March 2023 compared to £7.8 million held at 31 March
2022. During the second half of the year, there was a net cash outflow for
investing activities of £2.2 million (2022: less than £0.1 million) mainly
due to the £2.0 million acquisition of AL.
The net cash inflow from operating activities rose significantly to £2.9
million (2022: £0.1 million) which reflects an increased profit for the year,
good management of working capital movements and a bigger inflow from deferred
revenue thanks to the increase in support and maintenance. The increase of
this recurring revenue stream is underpinned by strong licence orders in the
year.
The Group had no debt at the year end (2022: £nil).
By order of the Board
Klaas van der
Leest
Nitil Patel
Chief Executive
Officer
Chief Financial Officer
19 June 2023
INTERCEDE GROUP plc
Consolidated Statement of Comprehensive Income for the year ended 31 March
2023
2023 2022
£'000 £'000
Continuing operations
Revenue 12,110 9,925
Cost of sales (403) (198)
Gross profit 11,707 9,727
Operating expenses (11,136) (9,337)
Operating profit 571 390
Finance income 130 16
Finance costs (75) (83)
Profit before tax 626 323
Taxation 685 400
Profit for the year 1,311 723
Total comprehensive income attributable to owners of the parent company 1,311 723
Earnings per share (pence)
- basic 2.3p 1.3p
- diluted 2.2p 1.2p
INTERCEDE GROUP plc
Consolidated Balance Sheet as at 31 March 2023
2023 2022
£'000 £'000
Non-current assets
Goodwill arising on acquisition 2,442 -
Other intangible assets 785 -
Property, plant and equipment 125 117
Right-of-use assets 262 431
3,614 548
Current assets
Trade and other receivables 5,489 4,598
Cash and cash equivalents 8,334 7,787
13,823 12,385
Total assets 17,437 12,933
Equity
Share capital 584 577
Share premium 5,430 5,268
Merger reserve 1,508 1,508
Accumulated deficit (492) (1,842)
Total equity 7,030 5,511
Non-current liabilities
Lease liabilities 204 388
Deferred Consideration 174 -
Deferred revenue 550 233
928 621
Current liabilities
Lease liabilities 261 368
Deferred consideration 313 -
Trade and other payables 1,918 1,464
Deferred revenue 6,987 4,969
9,479 6,801
Total liabilities 10,407 7,422
Total equity and liabilities 17,437 12,933
INTERCEDE GROUP plc
Consolidated Statement of Changes in Equity for the year ended 31 March 2023
Share Share Merger Accumulated Total
capital premium reserve deficit equity
£'000 £'000 £'000 £'000 £'000
As at 1 April 2021 571 5,138 1,508 (2,471) 4,746
Purchase of own shares - - - (187) (187)
Issue of new shares 6 130 - - 136
Employee share option plan charge - - - 67 67
Employee share incentive plan charge - - - 26 26
Profit for the year and total comprehensive income - - - 723 723
As at 31 March 2022 577 5,268 1,508 (1,842) 5,511
Purchase of own shares - - - (54) (54)
Issue of new shares 7 162 - - 169
Employee share option plan charge - - - 50 50
Employee share incentive plan charge - - - 43 43
Profit for the year and total comprehensive income - - - 1,311 1,311
As at 31 March 2023 584 5,430 1,508 (492) 7,030
All amounts included in the table above are attributable to owners of the
parent company.
INTERCEDE GROUP plc
Consolidated Cash Flow Statement for the year ended 31 March 2023
2023 2022
£'000 £'000
Cash flows from operating activities
Profit for the year 1,311 723
Taxation (685) (400)
Finance income (130) (16)
Finance costs 75 83
Depreciation of property, plant & equipment 66 70
Depreciation of right-of-use assets 246 237
Exchange losses on foreign currency lease liabilities 40 22
Employee share option plan charge 50 67
Employee share incentive plan charge 43 26
Employee unit incentive plan (credit) / charge (51) 9
Employee unit incentive plan payment (3) -
Increase in trade and other receivables (831) (550)
Increase / (decrease) in trade and other payables 334 (465)
Increase / (decrease) in deferred revenue 1,668 (26)
Cash generated / (used in) from operations 2,133 (220)
Finance income 116 13
Finance costs on leases (44) (83)
Tax received 574 400
Net cash generated from operating activities 2,862 110
Investing activities
Purchases of property, plant and equipment (70) (33)
Purchase of business (net of cash acquired) (2,009) -
Cash used in investing activities (2,079) (33)
Financing activities
Purchase of own shares (54) (187)
Proceeds from issue of ordinary share capital 169 136
Principal element of lease payments (409) (321)
Cash used in financing activities (294) (372)
Net increase / (decrease) in cash and cash equivalents 489 (295)
Cash and cash equivalents at the beginning of the year 7,787 8,029
Exchange gains on cash and cash equivalents 58 53
Cash and cash equivalents at the end of the year 8,334 7,787
INTERCEDE GROUP plc
Preliminary Results for the Year Ended 31 March 2023
NOTES
1. While the financial information included in this
annual financial results announcement has been prepared in accordance with UK
adopted international accounting standards (IFRS) and with those parts of the
Companies Act 2006 applicable to companies reporting under IFRS, this
announcement does not contain sufficient information to comply therewith. The
financial information set out in this announcement does not constitute the
Group's Statutory Accounts for the years ended 31 March 2023 or 2022.
Statutory Accounts for 2022 have been delivered to the Registrar of Companies
and those for 2023, which have been approved by the Board of Directors, will
be delivered following the Group's Annual General Meeting. The Company's
auditors have reported on those accounts; their reports were unqualified and
did not contain statements under Section 498 of the Companies Act 2006.
The Annual General Meeting will be held on Wednesday 21 September 2023. Copies
of the full Statutory Accounts and the Notice of Annual General Meeting will
be despatched to shareholders in due course. Copies will also be available on
the website (www.intercede.com (https://www.intercede.com/) ) and from the
registered office of the Company: Lutterworth Hall, St. Mary's Road,
Lutterworth, Leicestershire, LE17 4PS.
Going concern assessment
Reported profit in each of the last five years have been underpinned by
increasing recurring revenues and a continued high level of cash balances. The
Directors have reviewed forecasts for the years ended 31 March 2024 and 31
March 2025 and concluded that the Group is expected to have sufficient cash to
enable it to meet its liabilities, as and when they fall due, for a period of
at least 12 months from the date of signing these financial statements.
Accordingly, they believe it is appropriate to prepare the financial
statements on a going concern basis under the historical cost convention
2. REVENUE
All of the Group's revenue, operating profits and net assets originate from
operations in the UK. 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:
2023 2022
£'000 £'000
UK 539 119
Rest of Europe 906 992
Americas 9,879 7,801
Rest of World 786 1,013
12,110 9,925
3. OPERATING PROFIT
Operating profit is stated after charging / (crediting):
2023 2022
£'000 £'000
Staff costs 9,027 7,819
Foreign exchange (gain) / loss (19) 31
Depreciation of property, plant and equipment 66 70
Depreciation of right-of-use buildings 226 210
Depreciation of right-of-use equipment 20 27
Amortisation 83 -
Included in the staff costs above is research and development expenditure
totalling £3,053,000 (2022: £2,953,000).
4. TAXATION
The tax credit comprises: 2023 2022
£'000 £'000
Current year - UK corporation tax - -
Current year - US corporation tax (30) (33)
Research and development tax credits relating to prior years 604 433
Deferred tax on separately identifiable acquired intangibles 111 -
Taxation 685 400
The Group has unused tax losses of £9,777,000 (2022: £10,446,000) and
unrecognised deferred tax assets of £2,444,000 (2022: £2,612,000) calculated
at the corporation tax rate of 25% (2022: 25%), being the enacted rate at
which the deferred tax assets would unwind, were they to be recognised.
Intercede makes an R&D Claim as part of its annual tax return and can
choose whether to carry taxable losses forward or to request a cash repayment
from the UK government.
5. EARNINGS PER SHARE
The calculations of earnings per ordinary share are based on the profit for
the financial year and the weighted average number of ordinary shares in issue
during each year.
2023 2022
£'000 £'000
Profit for the year 1,311 723
Number Number
Weighted average number of shares - basic 57,939,548 57,265,739
60,595,485 59,413,261
- diluted
Pence Pence
Earnings per share - basic 2.3p 1.3p
- diluted 2.2p 1.2p
The weighted average number of shares used in the calculation of basic and
diluted earnings per share for each year were calculated as
follows:
2023 2022
Number Number
Issued ordinary shares at start of year 57,743,357 57,143,357
Effect of treasury shares (131,645) (112,412)
Effect of issue of ordinary share capital 327,836 234,794
Weighted average number of shares - basic 57,939,548 57,265,739
Add back effect of treasury shares 131,645 112,412
Effect of share options in issue 2,524,292 2,035,110
Weighted average number of shares - diluted 60,595,485 59,413,261
Please see note 7 for details of issues of ordinary share capital.
6. DIVIDEND
The Directors do not recommend the payment of a dividend.
7. SHARE CAPITAL
2023 2022
£'000 £'000
Authorised
481,861,616 ordinary shares of 1p each (2022: 481,861,616) 4,819 4,819
Issued and fully paid
58,363,357 ordinary shares of 1p each (2022: 57,743,357) 584 577
The increase in issued and fully paid ordinary shares of 1p each represents
the issue of 620,000 shares to facilitate the exercise of options by a
Director in September 2022.
As at 31 March 2023, the Company had 131,645 ordinary shares held in treasury
(2022: 131,645). During the year no options were exercised using treasury
shares (2022: 67,500) and the Company purchased no ordinary shares (2022:
157,000 were purchased for a consideration of £155,000 to facilitate the
exercise of options by senior managers during that year).
8. INTANGIBLE ASSETS
Acquired intangible assets Goodwill Total
£'000 £'000 £'000
Cost
At 1 April 2021 - - -
Businesses acquired - - -
At 1 April 2022 - - -
Businesses acquired 868 2,442 3,310
At 31 March 2023 868 2,442 3,310
Amortisation
At 1 April 2021 - - -
Charge for the year - - -
At 1 April 2022 - - -
Charge for the year 83 - 83
At 31 March 2023 83 - 83
Carrying amount
At 31 March 2023 785 2,442 3,227
At 31 March 2022 - - -
Acquired intangible assets are made up of the separately identified
intangibles acquired with the purchase of Authlogics Ltd in October 2022. See
note 9 for further detail.
9. BUSINESS ACQUIRED - AUTHLOGICS LTD
On 7 October 2022, the Group acquired 100% of the equity of Authlogics Ltd
("Authlogics"), a UK-based business.
Authlogics, which is based in Bracknell and was founded in June 2015, is a
Multi Factor Authentication ('MFA') and Password Security Management ('PSM')
software vendor and the only business to cover all three key authentication
segments (password security management, password breach database and multi
factor authentication) with a seamless integrated solution.
The acquisition of Authlogics enables the Group to deliver on the strategic
vision of addressing the entire authentication pyramid, beyond its current
position in the Public Key Infrastructure Credential Management System ('PKI
CMS') segment. The addition of the Authlogics products will allow the
Intercede Group to support its customers and prospects wherever they are in
their authentication journey and enlarges the addressable market.
The details of the business combination are as follows:
£'000
Fair value of consideration:
Amount settled in cash 1,708
Contingent consideration (subject to achievement of revenue growth targets 456
over three years)
Total consideration 2,164
Identifiable net liabilities (recognised at fair value):
Other intangibles 868
Property, plant and equipment 4
Trade and other receivables 119
Cash 39
Total assets 1,030
Trade and other payables (190)
Deferred revenue (current) (387)
Deferred revenue (non-current) (280)
Deferred tax liability (net of related deferred tax asset) (111)
Amounts owed to parent company (340)
Total liabilities (1,308)
Net liabilities (278)
Goodwill on acquisition 2,442
Consideration settled in cash 1,708
Debt repaid 340
Cash and cash equivalents acquired (39)
Net cash outflow on acquisition 2,009
9. BUSINESS ACQUIRED - AUTHLOGICS LTD (CONTINUED)
Consideration transferred
The acquisition of Authlogics was settled in cash amounting to £1,708,000.
Acquisition related costs amounting to £227,000 were expensed. Debt owed by
Authlogics of £340,000 was discharged on acquisition.
Identifiable net liabilities
The fair value of identifiable net liabilities acquired as part of the
business combination amounted to £278,000, with a gross contractual amount
also being £278,000. As of the acquisition date, the Group expected to pay
the full balance of the contractual cashflow.
Separable intangible assets
One separable intangible asset was identified at acquisition, being the
acquired customer relationships. The acquired customer list was valued by
assessing a discounted cashflow based on expected customer attrition rates and
using the Group discount factor of 11.6%. The useful life has been estimated
at 5 years.
Goodwill
Goodwill is primarily related to the core growth expectations that are
expected from combining Authlogics and Intercede's technologies and upselling
this to existing customers.
Authlogics contribution to the Group results
Authlogics generated a loss of £117,000 for the period from 7 October 2022 to
the reporting date. Revenue for the period to 31 March 2023 was £261,000. In
its financial year ending 30 June 2022, Authlogics' sales were approximately
£406,000 with loss before tax of £260,000 and net liabilities (including
cash) amounting to £716,000. If the businesses had been consolidated during
that period, approximately £200,000 would have been added to Group sales per
annum.
END
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