REG - Intercede Group PLC - Half Yearly Report <Origin Href="QuoteRef">IGP.L</Origin>

IntercedeAnnouncement

03/11/2015 07:01

RNS Number : 2902E
Intercede Group PLC
03 November 2015
3 November 2015
INTERCEDE GROUP plc
('Intercede', the 'Company' or the 'Group')
Interim Results for the Six Months Ended 30 September 2015
Intercede, the software and service company specialising in identity, credential management and secure mobility, today announces its interim results for the six months ended 30 September 2015.
Highlights
 
 Revenues of 5.5m (2014: 4.0m), an increase of 37%.
 Operating expenses increased to 5.7m (2014: 4.9m), as a result of continuing investment in infrastructure, technology development and sales capacity. 
 Headcount increased to 125 at 30 September 2015 (30 September 2014: 116).
 Operating loss of 0.4m (2014: 1.1m).
 Profit for the period of 0.5m (2014: loss of 0.7m).
 Basic earnings per share 1.0p (2014: basic loss per share 1.4p).
 Cash balances of 5.8m remain strong at 30 September 2015 (30 September 2014: 6.3m).
 Four new contracts signed during period, which will all contribute to revenues during the current financial year and beyond:
 Enterprise-wide contract with one of the largest US healthcare corporations.
 Mobile Derived Credential solution sold to a major US Federal Agency.
 New agreement with a US West Coast bank.
 First sale following the announcement of the Partner Agreement with Citrix on 13 May 2015.
Richard Parris, Chairman & Chief Executive of Intercede, said: 
"We continue to execute our strategy of attacking multiple markets within the broader spectrum of identity and credential management. The more mature market is where our MyID product has entrenched itself as the industry standard, based on a high margin and strongly cash generative business model. This in turn provides the financial stability to invest in the second strand of our strategy, which is to use our technical knowledge and industry network to exploit newer opportunities based on the convergence of mobile data, cybersecurity and the Internet of Things. While we must be mindful of the fact that because they are new, the timing of the conversion of these opportunities into committed orders is harder to predict, we are increasingly confident that the success we have enjoyed in delivering the first part of our strategy will be replicated."
ENQUIRIES
Intercede Group plc  Tel. +44 (0)1455 558 111
Richard Parris, Chairman & Chief Executive
Andrew Walker, Finance Director
FinnCap Tel. +44 (0)20 7220 0500
Stuart Andrews, Corporate Finance
Joanna Weaving, Corporate Broking 
Bell Pottinger  Tel. +44 (0)7802 442486
Archie Berens
About Intercede
Intercede is a software and service company specialising in identity, credential management and secure mobility. Its solutions create a foundation of trust between connected people, devices and apps and combine expertise with innovation to provide world-class cybersecurity.
Intercede has been delivering solutions to high profile customers, from the US and UK governments to some of the world's largest corporations, telecommunications providers and information technology firms, for over 20 years.
Intercede's MyID software is an identity and credential management system that enables organisations to create and assign trusted digital identities to employees, citizens and machines and in turn allows secure access to services, facilities, information and networks. MyID adheres to international standards, while remaining simple enough to be deployed onto consumer devices such as smartphones, tablets and other devices in the Internet of Things.
In 2015 Intercede launched MyTAM; enabling trusted applications to be loaded into a mobile device's Trusted Execution Environment (TEE), providing hardware-level security for Android apps. The cloud-based service provides a cost-effective and convenient way for developers and corporations to protect their apps and users' sensitive data.
For more information visit: www.intercede.com


INTERCEDE GROUP plc
('Intercede', 'the Company' or 'the Group')
Interim Results for the Six Months Ended 30 September 2015
Chairman's Statement
Introduction
Intercede has enjoyed a successful first half of the current financial year. We have grown revenues and maintained a strong financial position, whilst also making good progress in the newer markets where we believe there is significant scope for our latest suite of products to secure a leading position. 
The Group's short to medium term financial target is to deliver accelerated revenue growth by investing in people and resources to take advantage of the opportunities provided by the impact of smart phones and global cybersecurity concerns. This strategic investment has been funded organically to date. 
Financial Results
As previously stated, Intercede has achieved strong revenue growth during the first half of the financial year. This is in line with market expectations and reflects continued progress with existing customers and a number of new contract wins. 
Revenues in the period totaled 5,547,000, a 37% increase compared to 4,045,000 in the corresponding period last year. Existing and new products have gained traction in target markets with significant revenues expected in future periods.
Planned investment in additional resources as outlined above has resulted in a 16% increase in operating expenses from 4,868,000 to 5,670,000. The combined effect of increased revenues and planned investment has resulted in a substantial reduction in operating losses from 1,119,000 to 447,000.
Staff costs continue to represent the main area of expense, representing 78% of total operating costs (2014: 77%). Intercede had 125 employees and contractors as at 30 September 2015 (30 September 2014: 116). The average number of employees and contractors during the period increased from 110 to 121 year on year.
A 912,000 taxation credit for the period (2014: 383,000 taxation credit) primarily reflects cash received following the 2015 Research & Development ("R&D") claim as a result of the investment activities outlined above. The Group is a beneficiary of the UK Government's efforts to encourage innovation by allowing 125% of qualifying R&D expenditure to be offset against taxable profits and allowing 14.5% (2014: 11.0%) of the lower of R&D losses or taxable losses to be paid as tax credits. 
A profit for the period of 480,000 (2014: loss of 705,000) resulted in a basic earnings per share of 1.0p and a fully diluted earnings per share of 0.9p (2014: basic and fully diluted loss per share 1.4p). 
The Group has no debt and continues to fund its growth through existing cash resources. Cash balances as at 30 September 2015 totaled 5,767,000 compared to 5,895,000 as at 31 March 2015 and 6,301,000 as at 30 September 2014. 
Operational Highlights
This has been a very busy period in terms of product development and customer engagement. Thefollowing additional contractwinswere added totheorderbookduringtheperiod, all of which will contribute to revenues in the current financial year and beyond: 
 Enterprise-wide contract with one of the largest US healthcare corporations.
 Mobile Derived Credential solution sold to a major US Federal Agency.
 New agreement with a US West Coast bank.
 First sale following the announcement of the Partner Agreement with Citrix on 13 May 2015.
Strategy and Outlook 
Intercede's strategy is to grow its digital trust service and software business from a core of existing high value reference customers to a much broader range of industry sectors and customer size. 
Intercede plans to achieve this by continuing to generate revenues in its historically strong markets and to reinvest in the significantly higher growth opportunity that is anticipated in the Cloud-enabled, application service centric, mobile and Internet of Things markets. For example, in the next few weeks Intercede will announce details of a new business unit to be headquartered in California. This new team will focus on creating disruptive opportunities by exploiting the value of digital trust in both the consumer and general enterprise markets.
Intercede has already developed much of the required core technology, such as the MyID and MyTAM platforms. The strategic focus is now moving to packaging Intercede's portfolio of IP assets into new combinations to provide innovative solutions to some of the most intractable challenges of the digital economy. In doing so there is the potential for a step change in revenue and strategic value. To deliver this Intercede has streamlined its development processes, enlarged its sales team, expanded its geographical footprint and invested in new business development functions.
We believe the upside of success is huge. For example, trusted applications on mobile devices will increase convenience, privacy and security for everyday consumer and business applications and, by 2020, the Internet of Things market is estimated to be in excess of 50 billion devices with each 'thing' needing to validate the trustworthiness of its peers across a network. Each point of trust is an opportunity for Intercede to provide an enabling service. 
Our expectations are for accelerating year on year growth. In the longer term it has become clear that Intercede is exceptionally well placed to capitalise on the market for digital trust services.
Richard Parris
Chairman & Chief Executive
3 November 2015

Consolidated Statement of Comprehensive Income
For the period ended 30 September 2015




6 months ended 
30 September 2015
6 months ended 
30 September 2014
Year ended 31 March
2015

'000
'000
'000
Continuing operations



Revenue
5,547
4,045
8,819
Cost of sales
(324)
(296)
(344)

__________
__________
__________
Gross profit
5,223
3,749
8,475
Operating expenses
(5,670)
(4,868)
(10,215)

__________
__________
__________
Operating loss
(447)
(1,119)
(1,740)
Finance income
15
31
68

__________
__________
__________
Loss before tax
(432)
(1,088)
(1,672)
Taxation
912
383
363

__________
__________
__________
Profit/(loss) for the period
480
(705)
(1,309)

__________
__________
__________
Total comprehensive income/(expense) attributable to owners of the parent company
480
(705)
(1,309)

__________
__________
__________
Earnings/(loss) per share (pence)



- basic
1.0p
(1.4)p
(2.7)p
- diluted
0.9p
(1.4)p
(2.7)p

__________
__________
__________





Consolidated Balance Sheet
As at 30 September 2015




As at
30 September 2015
As at
30 September 2014
As at
31 March
2015

'000
'000
'000
Non-current assets



Property, plant and equipment
835
786
853

__________
__________
__________




Current assets



Trade and other receivables 
1,812
1,744
1,074
Cash and cash equivalents
5,767
6,301
5,895

__________
__________
__________

7,579
8,045
6,969

__________
__________
__________




Total assets
8,414
8,831
7,822

__________
__________
__________




Equity



Share capital
487
487
487
Share premium account
232
232
232
Other reserves
1,508
1,508
1,508
Retained earnings
2,453
3,010
2,257

__________
__________
__________
Total equity attributable to owners of the parent company
4,680
5,237
4,484

__________
__________
__________




Non-current liabilities



Deferred revenue
210
48
229

__________
__________
__________




Current liabilities



Trade and other payables
1,109
1,396
1,126
Deferred revenue
2,415
2,150
1,983

__________
__________
__________

3,524
3,546
3,109

__________
__________
__________




Total liabilities
3,734
3,594
3,338

__________
__________
__________




Total equity and liabilities
8,414
8,831
7,822

__________
__________
__________

Consolidated Statement of Changes in Equity
For the period ended 30 September 2015






Share capital
Share premium
Other reserves
Retained earnings
Total

'000
'000
'000
'000
'000






At 1 April 2015
487
232
1,508
2,257
4,484
Purchase of own shares
-
-
-
(488)
(488)
Employee share option plan charge
-
-
-
57
57
Employee share incentive plan charge
-
-
-
147
147
Profit for the period and total comprehensive income
-
-
-
480
480

________
________
________
________
_______
At 30 September 2015
487
232
1,508
2,453
4,680

________
________
________
___________
_______






At 1 April 2014
487
232
1,508
3,972
6,199
Purchase of own shares
-
-
-
(379)
(379)
Employee share option plan charge
-
-
-
62
62
Employee share incentive plan charge
-
-
-
60
60
Loss for the period and total comprehensive expense
-
-
-
(705)
(705)

________
________
________
________
_______
At 30 September 2014
487
232
1,508
3,010
5,237

________
________
________
___________
_______






At 1 April 2014
487
232
1,508
3,972
6,199
Purchase of own shares
-
-
-
(688)
(688)
Employee share option plan charge
-
-
-
118
118
Employee share incentive plan charge
-
-
-
164
164
Loss for the year and total comprehensive expense
-
-
-
(1,309)
(1,309)

________
________
________
________
_______
At 31 March 2015
487
232
1,508
2,257
4,484

________
________
________
___________
_______


Consolidated Cash Flow Statement
For the period ended 30 September 2015




6 months ended 30 September 2015
6 months ended 30 September 2014
Year ended
31 March 2015

'000
'000
'000
Cash flows from operating activities



Operating loss
(447)
(1,119)
(1,740)
Depreciation
89
72
153
Employee share option plan charge
57
62
118
Employee share incentive plan charge
147
60
164
(Increase)/decrease in trade and other receivables 
(742)
41
709
(Decrease) in trade and other payables
(17)
(323)
(593)
Increase in deferred revenue
413
327
341
Interest received
19
31
70

__________
__________
__________
Cash used in operations 
(481)
(849)
(778)
Taxation 
912
383
363

__________
__________
__________
Net cash generated from/(used in) operating activities
431
(466)
(415)

__________
__________
__________




Investing activities



Purchases of property, plant and equipment
(71)
(101)
(249)

__________
__________
__________
Cash used in investing activities
(71)
(101)
(249)

__________
__________
__________




Financing activities



Purchase of own shares
(488)
(379)
(688)

__________
__________
__________
Cash used in financing activities
(488)
(379)
(688)

__________
__________
__________




Net decrease in cash and cash equivalents
(128)
(946)
(1,352)
Cash and cash equivalents at the beginning of the period
5,895
7,247
7,247

__________
__________
__________
Cash and cash equivalents at the end of the period
5,767
6,301
5,895

__________
__________
__________

Notes to the Consolidated Accounts
For the period ended 30 September 2015
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 2015. 
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 2015 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 within the next few weeks 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 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:

6 months ended
30 September 2015
6 months ended 30 September 2014
Year ended 31 March 2015

'000
'000
'000




UK
313
746
1,301
Rest of Europe
570
815
1,848
North America
4,410
1,628
4,493
Rest of World
254
856
1,177

__________
__________
__________

5,547
4,045
8,819

__________
__________
__________



3 Taxation 
Taxation represents the net effect of amounts receivable from HMRC in respect of R&D claims and US corporation tax payable.
4 Earnings/(loss) per share 
The calculations of the earnings/(loss) per ordinary share are based on the profit/(loss) for the period and the weighted average number of ordinary shares in issue during each period. The basic and diluted loss per share are the same as potential dilution cannot be applied to a loss making period. 

6 months ended
30 September 2015
6 months ended
30 September 2014
Year ended 31 March 2015

'000
'000
'000




Profit/(loss) for the period
480
(705)
(1,309)

__________
__________
__________





Number
Number
Number
Weighted average number of shares
- basic
48,426,005
48,571,005
48,526,457
- diluted
50,517,373
48,571,005
48,526,457

__________
__________
__________





Pence
Pence
Pence
Earnings/(loss) per share
- basic
1.0p
(1.4)p
(2.7)p
- diluted
0.9p
(1.4)p
(2.7)p 

__________
__________
__________
The weighted average number of shares used in the calculation of basic and diluted earnings per share for each period were calculated as follows:

6 months ended
30 September 2015
6 months ended
30 September 2014
Year ended 31 March 2015

Number
Number
Number




Issued ordinary shares at start of period
48,735,005
48,735,005
48,735,005
Effect of purchase of treasury shares 
(309,000) 
(164,000) 
(208,548) 

__________
__________
__________
Weighted average number of shares
- basic
48,426,005
48,571,005
48,526,457

__________
__________
__________
Add back effect of purchase of treasury shares
309,000
N/A
N/A
Effect of share options in issue
2,016,683
N/A
N/A

__________
__________
__________
Weighted average number of shares
- diluted
50,751,688
48,571,005 
48,526,457

__________
__________
__________
5 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
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