Preliminary Results for Year Ended 31 March 2012

RNS Number : 0375F

Intercede Group PLC

11 June 2012

 



INTERCEDE GROUP plc

Preliminary Results for the Year Ended 31 March 2012

Intercede, one of the world's leading digital identity software providers, today announces its preliminary results for the year ended 31 March 2012.

SUMMARY

-     Continued robust financial performance:

·      Sales revenues increased from £6.9m to £7.0m                                                                                                      

·      Profit before tax of £0.9m (2011: £2.0m)

·      Fully diluted EPS 1.4p (2011: 4.1p)

·      Increased cash balances of £7.0m at 31 March 2012 (2011: £6.0m)

-     New customer accounts contributed 21% of total sales with the number of user licences issued rising to over 5 million.

-     Sales in North America have grown strongly as a result of several big wins to contribute over 64% of total sales.

-     Significant development of technology to manage virtual identity credentials and security of mobile devices.

-     Collaboration on multiple tender responses for large scale US Federal identity programs.

-     Implementations at a broad range of global customers including ANZ Bank, Booz Allen Hamilton, BASF, Boeing, HealthSmart Australia, Lockheed Martin and Swedbank.

-     Increasing managed service/Software as a Service (SaaS) activity; revenues in excess of £0.5m.

-     Additional office space and staff recruitment in the UK and US to support next phase of growth.

Richard Parris, Chairman & Chief Executive of Intercede, said today:

"There is an increasingly irresistible case for believing that the digital identity market is rapidly moving to mass adoption.  For an organisation to fully exploit this opportunity, it needs to have developed a suitably robust technology platform, entrenched itself in the market and scaled up its infrastructure.  Intercede has spent many years achieving the first two of these and I'm pleased to report that we have made significant progress towards achieving the third. The investment we have made this year in our sales and delivery capability gives us a real competitive advantage.

Our pipeline of commercial opportunities continues to grow as we seek to deepen our penetration of the markets where Intercede's MyID digital identity technology has become an industry standard. There are also a number of new technology-led trends which provide additional opportunities for Intercede; for example mobile device security and the deployment of digital patient identities in healthcare. The outlook is therefore extremely positive."

About Intercede

Intercede™ is a security software provider whose MyID® identity management platform enables global organisations and governments to create trusted digital identities for employees and citizens on secure devices such as smartcards, smartphones and tablets. MyID® enables the protection of IP, assets, and digital content, delivering trusted digital identities as the cornerstone of cyber security strategies for government, defence, financial services and other industries.

The Company operates in global markets (including the US, Europe and Middle East) and works with large international partners including BT, Gemalto, HP, Microsoft, Oberthur, SafeNet, Symantec and Thales to deliver flexible digital identity solutions that are interoperable with other existing technologies and which are tailored to customer needs.

Corporations such as Boeing, Booz Allen Hamilton and Lockheed Martin, and governments including the USA, UK and Kuwait, trust Intercede's deep expertise to deliver effective solutions. The Company's technology achievements reflect an investment of 300 plus man years of development, exemplary speed of deployment and adherence to international standards including FIPS 201, where MyID® was the first electronic personalisation product to obtain GSA approval. This trust is reflected in Intercede's rate of repeat business with its customers, which typically runs at 70-80% of annual revenues. 

Intercede has been developing ID management systems since 1992 and MyID® is currently deployed by end customers located in 24 countries. The company is headquartered in the UK, listed on the London Stock Exchange (AIM: IGP) and is ISO 9001 and TickIT certified.

For more information visit http://www.intercede.com

ENQUIRIES

Intercede Group plc	Tel.      [phone]
Richard Parris, Chairman & Chief Executive
Andrew Walker, Finance Director
FinnCap	Tel.      + 44 (0)20 7600 1658
Sarah Wharry/Rose Herbert, Corporate Finance
Joanna Weaving, Corporate Broking
Pelham Bell Pottinger	Tel.      [phone]
Archie Berens

Chairman's Statement

Financial and Operational Highlights

Significant progress has been made this year in building a platform for a step change in performance as the market for identity management moves towards mass adoption. Highlights include:

·      Continued robust financial performance

-     Sales revenues increased from £6.9m to £7.0m

-     Profit before tax of £0.9m (2011: £2.0m)

-     Fully diluted EPS 1.4p (2011: 4.1p)

-     Cash balances of £7.0m at 31 March 2012 (2011: £6.0m)

·      Over 5 million licences issued to users of identity credentials.

·      Large scale corporate identity card projects continued with implementations for global customers including: ANZ Bank, Booz Allen Hamilton, BASF, Boeing, HealthSmart Australia, Lockheed Martin and Swedbank.

·      Large scale border security project with a US partner; initial revenues in excess of £0.6m.

·      Services to support major MyID system upgrades in US Federal Aviation Authority, Kuwait Public Authority for Civil Information, Road Safety Authority Ireland.

·      MyID and Software as a Service (SaaS) sales to support a North American managed service organisation and the securing of three other SaaS customers. Recognised revenue in the period exceeds £0.5m.

·      Success with major systems integrators, collaborating on multiple tender responses for large scale US Federal identity programs requiring Personal-Identity-Verification (PIV) and PIV-Interoperable (PIV-I) solutions. Revenues are expected from this investment in the next period.

·      Technology developments

-     Over-the-air (OTA) provisioning of digital certificates to mobile devices.

-     MyID extension to manage virtual identity credentials on Trusted Platform Modules (TPM) in anticipation of the forthcoming release of Windows 8.

-     Near Field Communications (NFC) technology to support the use of mobile devices featuring NFC for personal identity verification.

-     MyID improvements including the release of MyID v8 Enterprise SP2 and MyID v9 PIV Service Pack.

·      International Standards:  ISO 9001 and TickIT certification announced on 14 September 2011.

·      Business expansion: additional office space and staff recruitment in the UK and US to support the next phase of Intercede's growth.

Results

In the year ended 31 March 2012, revenue increased by 1.3% from £6,872,000 to £6,964,000 at a gross margin of 98.4%.

Good progress has been made growing our sales and delivery capabilities. North American sales have increased to £4,450,000 (2011: £3,965,000) and Intercede has expanded its office in Reston, Virginia, to support further growth.

The operating profit for the period was £829,000 which compares to £1,952,000 in the previous year. As at 31 March 2012, the Group had cash balances of £6,968,000; an increase of £922,000 from 2011. 

During the year Intercede delivered a profit before tax of £910,000 (2011: £2,005,000), reflecting the fourth consecutive full year of profitability. The reduced profit is, as previously indicated, due to increased investment in our infrastructure, technology development and sales capacity. 

Intercede has invested in supporting strategic partnerships in North America and in the Germany, Austria, Switzerland region of continental Europe. 

Key Performance Indicators

·      The level of exports has further increased to 89% (2011: 80%).

·      Within that, the proportion of revenue attributable to North American customers has continued to grow from 58% to 64%. This is important because it both fuels and justifies our ongoing investment in this major market.

·      The level of repeat business with existing customers remains high at 79% (2011: 73%) which reflects the level of trust placed in MyID as a critical component of their IT security infrastructure. 

·      Against a backdrop where government spending continues to be subject to an increased level of scrutiny, the level of private sector customers has further increased from 48% to 52% year on year.

Product Development

In response to complex cyber and physical security threats, the US Federal Identity Credential and Access Management (ICAM) initiative is demanding greater reliance on Personal-Identity-Verification (PIV) credentials. In the previous year this has driven the development of new core capabilities within the MyID platform. 

The adoption by the private sector of digital identities that either interoperate or are compatible with US government PIV standards has gained market traction. This has resulted in the development of PIV-Interoperable (PIV-I) and Commercial-Identity-Verification (CIV) products and services that are derivative of MyID's core PIV functionality.

The international market for national identity cards and identity provider credentials requires ongoing development work to accommodate diverse standards and a high degree of country specific integration. Intercede continues to develop the MyID platform to ensure it remains scalable and appropriate for large national deployments building on its experience in Kuwait and the UK.

Intercede's MyID product suite is undergoing extensive development to support new form factors such as smart phones and tablet computers for both business and consumer applications.

The Board continues to support ongoing investment in existing and new product capability to maximise the potential of market leadership and to ensure Intercede is best placed for future exploitation.

Strategy

The Group's 2011-12 Business Goals were as follows:

·      Invest in sales and marketing.

·      Grow UK revenues by participating in the UK Government's recently announced Identity Assurance (IDA) programme.

·      Exploit the growing PIV-I market in the US in partnership with major US systems integrators and aerospace and defence contractors.

·      Further collaboration with Microsoft.

·      Establish Intercede MyID as a platform for issuing trustworthy identities on mobile devices.

·      Expand our ecosystem through strategic partnerships including selective investments.

·      Secure participation in additional large scale national identity card projects.

·      Develop the value of the Intercede MyID brand through participation in industry conferences, standards groups and the use of new media in order to extend the influence and reach of our sales channels.

Intercede has delivered against these objectives with solid progress:

·      A sales director has been appointed and additional sales staff have been recruited. The website has been re-launched (www.intercede.com) and Racepoint, an international technology-focused PR firm, has been hired to extend the reach of our marketing activities.

·      Intercede has been actively engaged with the UK Cabinet Office in the IDA consultation programme. Intercede also met the Prime Minister's Business and Defence advisors in the No 10 Policy Unit to discuss the Government's support of technology SMEs and Intercede's success as a UK software exporter. The Company has fully engaged with the Department for Business Innovation & Skills and Intercede's growth opportunities were recently reviewed with Lord Green, the Minister of State for Trade and Industry.

·      As the PIV market has moved out of the US Federal Government into the private sector, the market for PIV-Interoperable credentials delivered by SaaS has emerged. Intercede has teamed with a number of new entrants to this market.

·      Intercede has developed a solution to manage virtual smart cards in a Windows 8 environment.

·      Intercede has also developed an OTA solution for issuing identity credentials to secure elements in smart phones in partnership with a number of major mobile security companies.

·      A number of strategic alliances in emerging markets and technology areas have been initiated, exemplified by the announcement of a partnership with HP.

·      Intercede is participating in US state and local verified identity programs and is also awaiting the outcome of a number of national ID card bids through partners.

·      Intercede's profile continues to grow through participation in a number of industry conferences and standards groups. In February 2012, a trade reception was hosted by Intercede at the British Consulate in San Francisco and attracted more than 80 attendees, including several CEOs and Presidents from some of Silicon Valley's most influential digital security companies. Our active participation in the Transglobal Secure Collaboration Program is proving to be particularly helpful in influencing customers within the Aerospace & Defence sector. Our attendance at industry events can now be followed on Twitter at @intercedemyid.

The Group's 2012-13 Business Strategy is as follows:

·      Corporate development

-     Continue to invest in sales and marketing in order to increase the pipeline of opportunities.

-     Position MyID as the convergence platform of choice for the next generation of physical access control systems (PACS) as an extension of our support of ICAM.

-     Be the partner of choice for provisioning digital identities to mobile devices.

-     Invest in intellectual property protection.

·      Product and innovation

-     Exploitation of existing MyID product in maturing markets.

-     Development of new product to target the mobile device market.

-     Development of a SaaS model and the positioning of MyID as a core technology to sell to third party SaaS providers supporting the PIV-I and CIV markets.

-     Close alignment with the release of Microsoft Windows 8.

·      Regional sales growth

-     Emphasis on US market.

-     Build stronger collaborations with resale and OEM partners.

-     Develop sales channels to service Latin America.

Intellectual Property

Intercede continues to invest to protect its intellectual property and trademarks. During the year a number of additional patent applications have been filed in our key markets.

Intercede has worked with legal counsel in both Europe and the United States to protect our registered MyID trademark. This continues to be an expensive process; however Intercede considers that the MyID trademark has significant commercial value.

Vision and Outlook

Intercede currently has more than 5 million digital identities actively managed by MyID. Intercede's Vision is to have more than 100 million identities under management by its MyID software by 2020. This Vision anticipates that the 20-fold increase in volume will yield a 10-fold increase in revenue and a doubling in the cost base. This is a very attractive business model. On the basis of this, Intercede is planning additional investment in the next 12 months to ensure the Company is best placed to exploit this opportunity and to maximise the medium and long term returns to shareholders.

The validity of this Vision is reinforced by a new White House Report that was published on 23 May 2012 "Digital Government: Building a 21^st Century Platform to Better Serve the American People". The report addresses mobility and getting government information to the public via mobile devices. The strategy focuses on three objectives:

·      Enable citizens and the growing mobile workforce to access high-quality digital government information and services anywhere, anytime, on any device.

·      Institute an information-centric model for interoperability and openness to deliver better digital government services at a lower cost.

·      Update and implement policies to buy and manage devices, applications and data in smart, secure and affordable ways.

According to written analyses, the plan highlights the importance of agencies being open and interoperable by asking them to develop IT infrastructures and adopt technologies that will empower the practice of access anywhere, anytime, on any device. It places a premium on "secure" - with the phrase attached to nearly every activity - and acknowledges that the goal of openness may compete with the need for security.

The plan gives the departments of Defense and Homeland Security and the National Institute of Standards and Technology (with whose standards Intercede complies) responsibility for developing standards for expanding the secure use of mobile and wireless devices within one year.

Secure digital identities for both Federal employees and US citizens are critical to this call for action by the White House and its enactment will stimulate a large market for the Intercede MyID product line.

In 2012-2013, Intercede will focus on two core drivers of business growth as a foundation for realising its 2020 Vision:

·      Deepening our penetration of existing markets, where MyID has already been particularly applicable; and

·      Tapping into new technology-led trends where growth opportunities are developing.

Deepening our penetration of existing markets

·      PIV smartcards

-     Intercede is emerging as the dominant supplier in the PIV smartcard market in the Federal and corporate space. As existing PIV contracts are rebid and new contract opportunities emerge, Intercede will compete on the basis of technical excellence, life-time value for money and reference sites.

-     Framework contracts are in place with a US service provider to meet an emerging opportunity for first responder and citizen benefit smartcards in West Virginia. If successful it is anticipated other states will follow the same model.

-     Discussions are in progress to supply MyID to a number of leading additional aerospace and defence companies.

-     Intercede is seeking to expand the number of licences issued under recent border security and national identity projects.

·      Software as a Service (SaaS)

-     Several managed service organizations have built PIV-I SaaS solutions based on MyID, potentially providing Intercede with significant long term revenue streams. One service is in production, the others will go public in the next few months.

-     Together with partners Deep-Secure and adept4, we launched the world's first secure email service based on TSCP specification (TSCP is the Transglobal Secure Collaboration Program, a co-operative forum of leading aerospace and defence companies and government agencies working together to develop an open standards based security framework).

Harnessing new technology opportunities and trends

·      Government as a catalyst for creating a market for identity provision to citizens

-     Intercede is participating in a consortium of leading US companies, trade organisations and service providers in bidding for a share of grant funding from the National Program Office for the National Strategy for Trusted Identities in Cyberspace (NSTIC). If successful, the consortium will build a pilot infrastructure to demonstrate the governance, security and privacy requirements of digital identities in support of the world's leading consumer economy.

-     In the UK, we are participating in a consortium bidding to win the first contract under the HMG Identity Assurance Program to supply up to 22m secure digital identities for citizens claiming Universal Credit from the Department of Work and Pensions. Whatever the outcome, other opportunities are expected to follow.

·      US healthcare sector

-     As the sector undergoes structural reform resulting from President Obama's 'Patient Protection and Affordable Care Act', Intercede is working with healthcare organisations to ensure a share of the digital identity market that will emerge.

·      Mobile device security

-     Two recent developments are likely to provide a significant market opportunity for Intercede to license MyID to manufacturers, service providers and end users:

1)   The impending release by Microsoft of its Windows 8 operating system will introduce support for virtual smartcards on the Trusted Platform Modules (TPM) already embedded in the motherboards of most laptops and PCs. This will enable any new Windows platform to operate at the same level of security as if it had a smart card physically inserted. Each virtual smart card can be issued and managed by MyID.

2)   ARM Holdings, together with Intercede's existing partners, Gemalto and Giesecke & Devrient, announced their intention to form a new company to develop a Trusted Execution Environment (TEE) for smart connected devices. This will allow Global Platform standards to be used to inject secure identities into the next generation of smartphones.

-     In most cases there will be a need for the TPM or TEE to be bound to the trusted electronic identity of the user. Intercede intends to ensure MyID can be used to manage digital identities within the TPM or TEE environment.

·      Bring Your Own Device (BYOD)

-     As the market opportunity to enable employee owned mobile devices to be used for business purposes becomes mainstream, we are making significant investment in the MyID platform to enable the secure provision of identities and credentials to BYOD devices. New partnerships will be announced shortly.

·      The Internet of Things

-     Making significant investment in the MyID platform to extend the secure provisioning of identities from people to any internet-connected, real or virtual entity. This provides the potential to use MyID to manage tens of billions of people and items.

In summary, our pipeline of commercial opportunities continues to grow as we seek to deepen the penetration of markets where Intercede's MyID product has become an industry standard. There are also a number of new technology-led trends which provide additional opportunities for Intercede. The outlook is therefore extremely positive.

Richard Parris   

Chairman & Chief Executive

Business and Finance Review

Introduction

The Group has embarked upon a period of substantial investment in order to be able to take full advantage of the opportunities it has created for itself. This is considered to be appropriate, notwithstanding a backdrop of challenging trading conditions, as the scale of the potential market for our MyID technology continues to grow and new related markets are emerging.  

Business Development

The Group's overall objective is to put in place the platform and processes to accelerate revenue growth fuelled by increasing investment in new markets and new partners. A number of opportunities are opening up as a result of the progress made to date. The challenge is how to obtain the resources required for expansion into areas such as mobile, whilst continuing to develop the core MyID digital identity technology in conjunction with existing and potential new partners.

The Group had 70 employees and contractors as at 31 March 2012, which represents a substantial increase in experience and expertise over the past two to three years, a time during which we have established a major US and European presence. Selective investment has also increased across a variety of other areas during the same period, for example;

·      Sales and marketing including participation in trade exhibitions/conferences and membership of industry bodies such as Intellect and the Transglobal Secure Collaboration Program;

·      Partner development and support;

·      Technical and product development;

·      Quality management processes; and

·      Office and IT infrastructure and equipment;

The Group entered 2012/13 with a larger order book and pipeline than ever before. Whilst experience tells us that project delays can and will happen for a variety of reasons, we remain focused on the action we can take to ensure that we are best placed to deal with any changes to project timings.

Financial Results

Revenue for the year ended 31 March 2012 was £6,964,000 (2011: £6,872,000) with no one project representing more than 15% of total revenue (2011: 22%). Over the last three years, exports have increased from 56% to 89% of total revenue.

Whilst gross profit margins remain high, the increase in costs resulting from the selective investment in additional resources outlined above has resulted in a reduction in operating profit from £1,952,000 to £829,000. Staff costs continue to represent the main area of expense, representing 77% of total operating costs (2011: 81%). Intercede had 70 employees and contractors as at 31 March 2012 (2011: 64). The average number of employees and contractors increased from 58 to 68 year on year.

Expenditure on research and development (R&D) activities totalled £2,071,000 (2011: £1,601,000). In accordance with International Financial Reporting Standards, the Board has continued to determine that all internal R&D costs incurred in the year are expensed. No development expenditure has been capitalised as at 31 March 2012 (2011: £nil).

Finance income for the year was £81,000 (2011: £53,000) as the Group has continued to generate cash and increase the level of interest bearing short term deposits despite increased levels of investment.

A £233,000 taxation charge for the period (2011: £7,000) primarily reflects the de-recognition of the deferred tax asset that had previously been recognised in respect of prior year trading losses as it is considered less probable that those losses will be utilised within the foreseeable future. Whilst the Group has been profitable for four consecutive years, it is a beneficiary of the UK Government's efforts to encourage innovation by allowing 100% (2011: 75%) of qualifying R&D expenditure to be offset against taxable profits. Given the increased level of R&D expenditure outlined above, this has resulted in the current period being converted from a taxable profit to a taxable loss.

Against the backdrop of a further increase in the R&D tax credit to 125% with effect from 1 April 2012 and the introduction of the patent box regime (which provides for a reduction of corporation tax on profits from patented inventions), the Group has £4,091,000 (2011: £3,168,000) of prior year tax losses available for carry forward.  

A profit for the year of £677,000 (2011: £1,998,000) resulted in a basic and fully diluted earnings per share of 1.4p (2011: 4.1p).

Funding

As at 31 March 2012, the Group had cash balances totaling £6,968,000 (2011: £6,046,000). The increase in cash balances principally reflects a £909,000 inflow from operating activities (2011: £1,415,000).

The Group has no debt and, following the Capital Reduction which was registered by the Registrar of Companies on 30 October 2010, is in a position to commence the payment of dividends as and when the Board considers this to be appropriate.

Summary

The Group has delivered another robust trading and financial performance. As a result we enter the new financial year with £7m of cash available to fuel our accelerated growth plans.

Andrew Walker

Finance Director

INTERCEDE GROUP plc

Consolidated Statement of Comprehensive Income for the year ended 31 March 2012

	Notes	2012	2011
		£'000	£'000
Continuing operations
Revenue	2	6,964	6,872
Cost of sales		(112)	(22)
		__________	__________
Gross profit		6,852	6,850
Administrative expenses		(6,023)	(4,898)
		__________	__________
Operating profit		829	1,952
Finance income		81	53
		__________	__________
Profit before tax		910	2,005
Taxation	3	(233)	(7)
		__________	__________
Profit for the year		677	1,998
		__________	__________
Total comprehensive income attributable to owners of the company		677	1,998
Earnings per share (pence)	4
- basic		1.4p	4.1p
- diluted		1.4p	4.1p
		__________	__________

There is no other comprehensive income for the year.

The accompanying notes are an integral part of these financial statements.

INTERCEDE GROUP plc

Consolidated Balance Sheet at 31 March 2012

	Notes	2012	2011
		£'000	£'000
Non-current assets
Property, plant and equipment		183	167
Deferred tax	3	-	280
		__________	__________
		183	447
		__________	__________
Current assets
Trade and other receivables		1,311	841
Cash and cash equivalents		6,968	6,046
		__________	__________
		8,279	6,887
		__________	__________
Total assets		8,462	7,334
		__________	__________
Equity
Share capital	6	484	484
Share premium account		110	86
Other reserves		1,508	1,508
Retained earnings		3,930	3,113
		__________	__________
Total equity		6,032	5,191
		__________	__________
Current liabilities
Trade and other payables		910	790
Deferred revenue		1,520	1,353
		__________	__________
		2,430	2,143
		__________	__________
Total equity and liabilities		8,462	7,334
		__________	__________

The accompanying notes are an integral part of these financial statements.

INTERCEDE GROUP plc

Consolidated Statement of Changes in Equity for the year ended 31 March 2012

	Share	Share	Other	Retained	Total
	capital	premium	reserves	earnings
	£'000	£'000	£'000	£'000	£'000
At 31 March 2010	4,413	4,718	1,508	(7,497)	3,142
Capital reduction (note 6)	(3,931)	(4,718)	-	8,649	-
Issue of shares, net of costs (note 6)	2	86	-	-	88
Purchase of treasury shares (note 6)	-	-	-	(37)	(37)
Total comprehensive income	-	-	-	1,998	1,998
	_______	________	________	________	_______
At 31 March 2011	484	86	1,508	3,113	5,191
Issue of shares, net of costs (note 6)	-	24	-	-	24
Employee share option scheme charge	-	-	-	140	140
Total comprehensive income	-	-	-	677	677
	_______	________	________	_______	_______
At 31 March 2012	484	110	1,508	3,930	6,032
	________	________	________	_______	_______

The accompanying notes are an integral part of these financial statements.

INTERCEDE GROUP plc

Consolidated Cash Flow Statement for the year ended 31 March 2012

	2012	2011
	£'000	£'000
Cash flows from operating activities
Operating profit	829	1,952
Depreciation	67	51
Employee share option scheme charge	140	-
(Increase)/decrease in trade and other receivables	(461)	116
Increase/(decrease) in trade and other payables	287	(697)
	__________	__________
Cash generated from operations	862	1,422
Taxation	47	(7)
	__________	__________
Net cash generated from operating activities	909	1,415
	__________	__________
Investing activities
Interest received	73	50
Purchases of property, plant and equipment	(84)	(134)
	__________	__________
Net cash from investing activities	(11)	(84)
	__________	__________
Financing activities
Proceeds on issue of shares	24	88
Purchase of treasury shares	-	(37)
	__________	__________
Net cash from financing activities	24	51
	__________	__________
Net increase in cash and cash equivalents	922	1,382
Cash and cash equivalents at the beginning of the year	6,046	4,664
	__________	__________
Cash and cash equivalents at the end of the year	6,968	6,046
	__________	__________

The accompanying notes are an integral part of these financial statements.

INTERCEDE GROUP plc

Preliminary Results for the Year Ended 31 March 2012

NOTES

1.       The financial information set out in this announcement does not constitute the Group's Statutory Accounts for the years ended 31 March 2011 or 2012, but is derived from those accounts. Statutory Accounts for 2011 have been delivered to the Registrar of Companies and those for 2012, 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 of the Company will be held at 11.00 am on Wednesday 26 September 2012 at Lutterworth Hall. Copies of the full Statutory Accounts will be despatched to shareholders in due course. Copies will also be available on the website (www.intercede.com) and from the registered office of the Company: 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:

	2012	2011
	£'000	£'000
UK	779	1,369
Rest of Europe	814	928
North America	4,450	3,965
Rest of World	921	610
	__________	_________
	6,964	6,872
	__________	_________

3.      TAXATION

         The tax charge comprises:

	2012	2011
	£'000	£'000
Current year - UK corporation tax	-	-
Current year - UK deferred tax	(280)	-
Current year - US corporation tax	(12)	(7)
Prior year - US corporation tax	(11)	-
Research and Development tax credits relating to prior years	70	-
	__________	_________
	(233)	(7)
	__________	_________

The deferred tax asset that had previously been recognised in respect of prior year trading losses has been de-recognised as the combined effect of increased expenditure on research and development and an increase in the level of R&D tax credits claimable serves to make it less probable that those losses will be utilised within the foreseeable future. The Group has unused tax losses of £4,091,000 (2011: £3,168,000) and unrecognised deferred tax assets of £982,000 calculated at the UK corporation tax rate of 24% that came into effect from 1 April 2012 (2011: £544,000 calculated at the previous UK corporation tax rate of 26%).

4.      EARNINGS PER ORDINARY 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.

		2012	2011
		£'000	£'000
	Profit for the year	677	1,998
		__________	_________
		Number	Number
	Weighted average number of shares - basic	48,367,939	48,239,997
	- diluted	49,662,277	48,735,005
		__________	__________
		Pence	Pence
	Earnings per share - basic	1.4	4.1
	- diluted	1.4	4.1
		__________	__________

          The increase in the weighted average number of shares used for the calculation of diluted earnings per share reflects the grant of share options to directors and senior managers during July, August and December 2011.

5.       DIVIDEND

The Directors do not recommend the payment of a dividend.

6.      SHARE CAPITAL

	2012	2011
	£'000	£'000
Authorised
481,861,616 ordinary shares of 1p each (2011: 481,861,616)	4,819	4,819
	__________	__________
Issued and fully paid
48,428,005 ordinary shares of 1p each (2011: 48,365,005)	484	484
	___________	__________

On 24 September 2010, shareholder approval was obtained at a General Meeting of the Company to cancel the share premium account and to cancel and extinguish the deferred shares. This Capital Reduction was registered by the Registrar of Companies on 30 October 2010.

On 30 November 2010, certain employees and a Director of the Company exercised options over a total of 187,000 ordinary shares at an exercise price of 47p per share. On 3 December 2010, the Company subsequently purchased 57,975 of these shares at a price of 63.06p per share. The shares purchased, none of which relate to options exercised by a Director, are held as treasury shares.

On 14 March 2012, certain employees exercised options over a total of 63,000 ordinary shares at an exercise price of 40.5p per share.

 

END

 

 

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