Intercede Group PLC Final Results (3470H)

TIDMIGP

RNS Number : 3470H

Intercede Group PLC

07 June 2017

7 June 2017

INTERCEDE GROUP plc

("Intercede", the "Group" or the "Company")

Preliminary Results for the Year Ended 31 March 2017

Intercede, the leading specialist in digital identity, credential management and secure mobility, today announces its preliminary results for the year ended 31 March 2017.

Highlights

-- Revenues of GBP8.3m (2016: GBP11.0m), reflecting a stronger second half, in line with the same period last year.

-- Operating expenses increased to GBP12.9m (2016: GBP12.5m) reflecting continued high levels of investment in technology development totalling GBP4.0m (2016: GBP3.9m).

   --      Average number of employees and contractors unchanged year on year at 125. 
   --      Loss for the year of GBP3.9m (2016: loss of GBP1.0m). 

-- Successful fundraising totalling GBP4.9m during the year (GBP4.6m net of expenses) in support of new market opportunities.

   --      Cash balances of GBP6.9m at 31 March 2017 (2016: GBP5.3m). 
   --      Launch of RapID, RapID-SL and MyID as a Service (MyIDaaS) cloud-based services. 

-- Significant recent contract wins include a major US Government Agency, a US Healthcare group and a major US Aerospace & Defence contractor.

-- Appointments of Helen Adams as Chief Sales Officer (formerly ARM VP Sales, Europe & Asia Pacific) and Chuck Pol as Non-Executive Director (formerly Chairperson, Vodafone Americas).

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

"I am pleased to report Intercede's considerable progress during a challenging year. We have recovered successfully from a difficult first half, returning to the record revenue levels of the previous year in the second half. We have completed a significant fund raising, positioning the Group well to capture the potential growth in our addressable markets. We have strengthened the management team with key personnel who bring directly relevant experience to our strategic aims. Finally, we have continued to develop new, market-leading applications for our software which, I believe, will find sizeable and profitable markets in the medium term. Notwithstanding our reported results, Intercede is in excellent shape and I view the future with a high degree of confidence."

Contact

 
 Intercede Group plc    Tel. [phone] 
 Richard Parris         Chairman & Chief Executive 
 Andrew Walker          Finance Director 
 FinnCap                Tel. + 44 (0)20 7220 
                         0500 
 Stuart Andrews         Corporate Finance 
 Simon Hicks            Corporate Finance 
  Steven Norcross        Corporate Broking 
 Capital Access Group   Tel. [phone] 
 Scott Fulton           Media 
  Ed Welsby              Investors 
 

About Intercede

Intercede is a software and service company specializing 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 product portfolio includes MyID, an identity and credential management system that assigns trusted digital identities to employees citizens and machines. 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. In 2016, Intercede launched RapID, a secure, easy to implement authentication service for mobile apps and cloud services to completely eliminate the need for passwords.

For more information visit: www.intercede.com

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

INTERCEDE GROUP plc

Preliminary Results for the Year Ended 31 March 2017

CHAIRMAN'S STATEMENT

Introduction

It has always been my view that success in business is best gauged by how well management copes with adversity. The year to 31 March 2017 was a challenging period for Intercede; however, I am pleased to report that the management team has responded admirably. Revenue for the year was GBP8.3m (2016: GBP11.0m) which, given our reporting a 49.0% fall during the first half, highlights a return in the second half to the record levels of business recorded by the Group in 2015/16. The improvement is both a testament to the on-going attractions of MyID and a reminder that its addressable market is dominated by a small number of large, highly secure organisations.

Mindful of this, the Intercede team has been focused on developing further applications for its market leading cybersecurity software. We have been at the forefront of mobile usage in evolving MyID for this important segment of our original market. RapID provides a compelling answer to the questions posed by the growth of mobile transactions, particularly in banking, while MyTAM is an innovative security solution for developers within the Internet of Things (IoT). We have also recently launched MyID as a Service (MyIDaaS) which takes the core functionality of MyID and offers it as a cloud-based service that is easy to operate. We believe MyIDaaS provides a proven, cost effective solution for enterprises of all sizes that need to comply with new regulations for protecting customer information.

These developments, and the associated investment in skilled people and marketing, are reflected in our results for the year. I am convinced that we have positioned Intercede well for the demands of these new markets.

The Group has continued to expand its customer base and interaction with partners. During the year, Intercede has won orders from within its traditional markets of the US Federal Government, with an order from the Department of State, and Aerospace & Defence, namely CDG (part of Boeing), MBDA and Hanscom Air Force Base. There was also growth in the banking sector, with new wins from LGT Vestra and the Swiss National Bank, and the newer market of healthcare, with orders from Alexion Pharmaceuticals and Mayo Clinic. In addition, there has been significant repeat business from existing customers including ANZ, Boeing, the US Department of Homeland Security Transportation Security Administration, Deutsche Telekom, Telus, the US Federal Aviation Administration, the US Federal Reserve Bank, Northrop Grumman, RDW, the United Health Group and Wells Fargo.

Following the year end, Intercede has won orders from BAE Systems, M.C. Dean and Verizon. Intercede is proud to note that MyID is now used by five of the seven largest Aerospace & Defence companies.

Establishing Intercede at the heart of the critical eco-systems in place or being developed in our space is central to the Group's strategy. I am pleased to report that we are working with a number of partners including ARM, Centrify, Citrix, Intel, LG Electronics, Microsoft, MobileIron, Symantec and VMWare (Airwatch) to further this aim.

Since its foundation, Intercede has developed largely through the use of its own funds. However, recognising the need to accelerate our progress in key areas, the Group raised a total of GBP4.6m (net of costs) via the issue of Convertible Loan Notes (CLNs) and new equity in January 2017. These funds are already being deployed successfully and will provide the Group with considerable resources with which to address our expanding market place. Notwithstanding this investment, at the financial year end on 31 March 2017, Intercede had cash and short term deposits totalling GBP6.9m (31 March 2016: GBP5.3m).

Financial Results

The following section is extracted from the Company's forthcoming Annual Report and contains graphics to support the commentary. These graphics can only be viewed by reading a PDF version of this announcement, which can be accessed by clicking here:

http://www.rns-pdf.londonstockexchange.com/rns/3470H_-2017-6-6.pdf

For those unable to access the PDF, the data represented graphically is instead set out in tabular format below.

Revenue, Opex, Profit/Loss & Cash

 
  GBPm   Revenue   OpEx   Profit/Loss   Cash 
  2013       6.7    7.5          -0.6    6.8 
  2014       9.8    9.4           0.8    7.2 
  2015       8.8   10.2          -1.3    5.9 
  2016      11.0   12.5          -1.0    5.3 
  2017       8.3   12.9          -3.9    6.9 
 

The substantial increase in operating expenses (OpEx) over the last five years primarily reflects continued high levels of strategic investment to exploit new market opportunities. This investment is expected to result in increased revenue and cash flow generation in future periods. The 2017 year-end cash includes net funds raised of GBP4.6m during the year.

Employees and ID's

 
         Average Number 
           of Employees   ID's (millions) 
  2013               77                 7 
  2014               90                 9 
  2015              113                11 
  2016              125                12 
  2017              125                13 
 

Intercede's strategic investment plan has resulted in a progressive increase in employees, resulting in one of the largest teams with cryptographic key management experience and expertise anywhere in the world. The introduction of RapID, MyIDaaS and MyTAM is expected to result in exponential growth of apps and devices under the management of Intercede's software.

Research & Development (R&D)

 
                               R&D Tax 
                            Credit (in 
  GBPm   R&D Expenditure      arrears) 
  2013               2.3           0.1 
  2014               2.9           0.4 
  2015               3.6           0.4 
  2016               3.9           0.9 
  2017               4.0           0.9 
 

Research and development (R&D) is an important part of Intercede's investment strategy. Money spent on people qualifies, in arrears, for UK government tax credits which are paid in cash in the following year.

Regional Sales

 
                         Rest of 
  GBPm   North America     World 
  2013             4.8       1.9 
  2014             6.0       3.8 
  2015             4.5       4.3 
  2016             8.7       2.3 
  2017             6.4       1.9 
 

The US represents Intercede's largest market with sales to North America again approaching 80% of total sales during FY 2017.

Revenue Breakdown

 
               Professional    Software 
  GBPm   S&M       Services    Licences   Other 
  2013   2.5            1.7         2.4     0.1 
  2014   2.8            2.1         4.6     0.3 
  2015   3.1            2.5         2.6     0.6 
  2016   3.5            2.6         4.8     0.1 
  2017   4.0            1.7         2.6     0.0 
 

The last five years has seen progressive growth in recurring Support & Maintenance (S&M) revenues due to a cumulative increase in customers which has also resulted in a substantial level of ongoing Professional Services activity. Software license revenues from the traditional MyID business tend to be lumpy but the introduction of the RapID, MyIDaaS and MyTAM cloud-based services (which currently represent less than 5% of total annual revenues) is expected to both increase growth and smooth future volatility.

Review of Operations

Intercede's heritage is in securing sensitive data assets in the most data critical industries but today few companies, in any market sector, can afford to ignore the requirement to more effectively establish digital identity and create the trust relationships that enable 21st Century commerce. The volume of data held has increased dramatically, the regulatory requirements are much more onerous, cybercrime is sophisticated and widespread, consumers are demanding answers and yet much of the world's data is still protected by little more than a username and password combination. That situation cannot continue and it represents a significant market opportunity that Intercede is ideally placed to address.

I believe that Intercede's products will be integral to the way we all conduct a wide range of activities; from work through transactions to managing every day activities. It is a developing market but I am encouraged by the new enquiries we are now receiving, from companies large and small, that recognise the need for change.

Our goal has been to evolve the business in order that it can provide support to this broader range of customers. We have developed cloud-based delivery and applications. We have adapted our products to enable mobile usage. We have produced one of the few applications which allow the secure deployment of apps within the Internet of Things.

Over the last few years, the Directors' believe that Intercede has built one of the most talented teams in the world to address this evolution while maintaining its core principles. We have demonstrated our ability to bring products and, increasingly, services to the market. Indeed, I am pleased to report that Intercede:

(1) was the first company to receive an authority to operate (ATO) a mobile derived credential service within the US Government;

(2) was selected to provide a proof-of-concept implementation of RapID within the Italian banking industry for PSD2 authentication; and

(3) has begun operations of a production MyTAM service for retail banking consumers in Korea.

Intercede now works with some of the largest organisations in the world; both as customers or as partners.

Intercede's Customer base includes:

US Department of Homeland Security, Kuwait National ID, US Federal Aviation Administration, US Nuclear Regulatory Commission, US Social Security Administration, HM Government (UK), RDW, Airbus, Boeing, Lockheed Martin, Northrop Grumman, Australian Government Department of Defence, Booz Allen Hamilton, Deutsche Telekom, BASF, REWE, Telus, United Health Group, Wells Fargo, Handelsbanken, Coutts, Barclays, Swedbank, ANZ.

Intercede's Interoperability Partners include:

RSA Security, Microsoft, Intel, Gemalto, ARM, Symantec, Giesecke & Devrient, Thales, Oberthur Technologies, Entrust, Immix Group, Blackberry, Imagination Technologies, Samsung, NIST, Verizon, NXP Semiconductors, Cross Match Technologies, LG, Citrix, MobileIron, IdenTrust, ForgeRock, Centrify, Ping Identity, Solacia, VMware Airwatch, Evidian, Trustonic.

We are continuing to strengthen our team and, therefore, our ability to address our widening market. Since the end of our financial year, I am pleased to report that we have recruited two high profile and competent team members who will add materially to Intercede's efforts.

Charles ("Chuck") Pol has recently served as Chairperson of Vodafone Americas, a role he has held since 2013 and in which he has led the development of applications for the Internet of Things. Chuck joined Vodafone Americas as President of its Global Enterprise division where he built a US-wide mobile business focused exclusively on Enterprises. Prior to Vodafone Americas, Chuck held senior roles at BT Americas including Chief Operating Officer and President. On leaving BT in 2008, Chuck was President of BT Global Financial Services where he was responsible for BT's relationships with the top 40 global investment banks.

Chuck, who was appointed on with effect from 1 June 2017, is now Intercede's Senior Independent Director, reflecting his considerable experience within the North American technology and telecoms industries.

Helen Adams joined the Group on 5 June 2017 from ARM Holdings plc, the world's leading semiconductor intellectual property supplier, where she was Vice President of Regional Sales for both Europe and Asia/Pacific, leading a global team which, under her leadership, delivered more than half of ARM's total revenue which was last reported as GBP1.3bn. Her mandate will be to manage the growing sales, marketing and business development activity at the Group across all principal product lines and services. Helen is specifically tasked with increasing the Group's engagement with its growing partner base. In addition, given her silicon industry background, Helen will also be responsible for leading the development and growth of its emerging Internet of Things business.

Chuck and Helen join a talented team which is focused clearly on our vision, mission and goals. I would like to take this opportunity to thank that team for its efforts during the last year and to congratulate them on their successes. I believe that the Group is ideally placed to benefit from the likely evolution of the interconnected world in which we live. This position is a reflection of our enthusiasm and skills; values which will be, I am sure, a factor in the success of Intercede.

Outlook

Intercede is now ready to address the demands of a significantly wider customer base. Our team has developed a range of applications for our digital trust software and services which lead the evolution of security across most of the eco-systems in place or likely to form part of interconnectivity for a generation to come.

We face the future with increased confidence and our growth prospects appear significant. We must be mindful of the challenges ahead, but I am convinced that these are surmountable and that the Group is on the cusp of a period of sustained growth and shareholder value creation.

Richard Parris

Chairman & Chief Executive

INTERCEDE GROUP plc

Preliminary Results for the Year Ended 31 March 2017

STRATEGIC REPORT

Introduction

Intercede is a cyber security software and services company specialising in digital trust for a hyper-connected, increasingly mobile world.

The Group's vision is a world without passwords and its mission is to provide the enabling technology and services to make this possible for people and things. Intercede's core pillars of strength can be outlined as follows:

-- For over 20 years, Intercede has been providing trusted identities to people, devices and apps for some of the world's largest corporations and government agencies.

-- Intercede's product innovation roadmap leverages over 1,000 man years of internal expertise and is underpinned by strong customer demand and a committed set of international partners.

-- New solutions can be engineered at high speed by a specialist team with longevity of employment. Product design is also informed by major customers and interoperability partners.

-- Software is US and UK Government accredited, which secures access to regulated markets. Traditionally it was delivered as an on premise solution but can now be delivered via the Cloud to make it a scalable solution with the potential for exponential growth.

These core strengths mean that Intercede is well placed to take advantage of opportunities in the market, in particular:

-- Passwords are universally recognized as being insecure and inconvenient by organizations and end users.

-- A growing number of governments and industry bodies are enacting legislation to mandate enhanced levels of security by removing passwords. This increased regulation covers a wide range of activities including banking & finance, general data protection and critical national infrastructure.

-- In-house cybersecurity skills are in short supply creating an increased demand for outsourced security solutions.

-- There is a growing demand for cloud-based identity as a service (IDaaS) solutions to meet the scalability requirements of large end user populations, particularly in the consumer and IoT markets.

Intercede have the heritage, skills and technology platform to deliver digital identity solutions across a wide range of market sectors and geographical regions, meeting the growing demand for a secure and convenient alternative to passwords.

Strategic Investment

Intercede has embarked upon a period of substantial investment in order to take advantage of the opportunities outlined above. The costs associated with this strategy are being incurred now but the benefits, in terms of increased revenues and cash flow generation, are anticipated to arise in future periods.

The main areas of selective investment are:

-- The development of mobile security applications involving interoperability with technologies such as iOS, Android, Windows and BlackBerry.

-- The establishment and launch of RapID, a cloud-based service that enables service providers to simply replace passwords with a digital identity, protecting themselves against identity fraud and the resultant data breach.

-- Increased collaboration with major industry players such as Intel, Microsoft, ARM and Google.

-- Strengthening of the dedicated Intercede Services team focused on delivering Intercede solutions into the consumer and IoT markets.

-- Enhancing the core MyID platform to support US Standard FIPS 201-2 compliant derived PIV credentials, thereby extending Intercede's strong position in the US federal government market to incorporate the growing demand for digital identity on mobile devices.

-- Re-engineering and expansion of the MyID platform as a cloud-based service to improve scalability to consumer levels and to ensure all of the new areas of opportunity are supported.

-- Sales and marketing to promote and protect the MyID, MyTAM and RapID names and technology and to build industry relationships.

To support this investment Intercede raised GBP4,945,000 in new funding during the year (GBP4,624,000 net of costs) via the issue of convertible loan notes and equity. The funding has come from new and existing institutional and other investors, as well as experienced technology entrepreneurs. This demonstrates the confidence of our long term backers as well as illustrating that our strategic story resonates strongly with a new generation of technology and security savvy investors.

Trading Results

Revenues for the year ended 31 March 2017 totalled GBP8,286,000, a 25% reduction on the previous year's record revenues of GBP11,004,000. The US presidential race resulted in delays from government agencies making investment decisions but we have seen the resumption of business for the MyID platform. We are pleased to see that revenues generated in the second half of the year matched the record revenues achieved in both halves of the previous year.

The rate of investment in the Company's newer products, RapID and MyTAM, continues and business development has resulted in the identification of target markets and talks with reference customers in each of those markets. Work continues on pilot RapID solutions for customers in the wealth management and banking sectors and revenues are expected to be generated in the coming months. While MyTAM continues to be sold as a standalone product it will also become a core component in an Internet of Things product that will address a number of challenges in the IoT market, namely security, interoperability and control via a single interface. The Directors' believe that this development work is expected to result in significant revenues in the coming years.

In the second half of the year, a cost-cutting review removed GBP600,000 of annualised costs from the business without impacting our development of new products. This partly offset the strategic investment as outlined and resulted in a lower than initially planned increase of 3% in operating expenses from GBP12,511,000 to GBP12,891,000. The drop in revenues has primarily lead to a GBP4,721,000 operating loss (2016: GBP1,917,000 operating loss).

Staff costs continue to represent the main area of expense, representing 78% of total operating expenses (2016: 79%). Intercede had 121 employees and contractors as at 31 March 2017 (2016: 123). The average number of employees and contractors was unchanged from the previous year at 125.

Expenditure on research and development (R&D) activities totaled GBP3,994,000 (2016: GBP3,905,000), approximately 62% of which related to the areas of strategic investment outlined above (2016: 71%). In accordance with the IFRS recognition criteria, 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 2017 (2016: GBPnil).

The net finance cost for the year was GBP57,000 (2016: GBP32,000 income) as a result of the interest payable on the convertible loan notes issued during the year.

An GBP888,000 taxation credit for the period (2016: GBP892,000 taxation credit) primarily reflects cash received following the 2016 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 130% of qualifying R&D expenditure to be offset against taxable profits.

A loss for the year of GBP3,890,000 (2016: loss of GBP993,000) resulted in a basic and fully diluted loss per share of 8.0p (2016: loss per share 2.1p).

Financial Position

The Group's cash position remains strong with cash and short term deposits totaling GBP6,891,000 as at 31 March 2017 (2016: GBP5,289,000). The increase reflects the fundraising that was announced on 28 December 2016 but, it is also worth noting that, following a difficult first half of the year, the Group generated cash from its operating activities in the second half.

The Group has no plans to commence the payment of dividends and will do so when the Board considers this to be appropriate.

Treasury

The Group manages its treasury function as part of the finance department. Whilst the Group's operations are primarily based in the UK it has successfully exported its technology throughout the world for many years. This results in invoices being raised in currencies other than sterling; the most notable being US dollars and euros. A number of suppliers also invoice the Group in US dollars and euros. The Group's current policy is not to hedge these exposures and the exchange differences are recognised in the statement of comprehensive income in the year in which they arise.

Key Performance Indicators (KPIs)

The following KPIs are some of the tools used by management to monitor performance in addition to the more traditional financial statement and sales pipeline information that is provided to the Board each month.

 
                              2014         2015         2016         2017        Target 
 
 Trusted identities, 
  devices and apps       9 million   11 million   12 million   13 million   250 million 
 Sales growth                  45%        (10%)          25%        (25%)          30%+ 
 Export sales                  91%          85%          96%          95%          80%+ 
 North American sales          61%          51%          79%          77%          50%+ 
 New deployments 
  with revenues over 
  GBP20,000                     10            6            6            8           10+ 
 

All of the above KPIs are geared towards the traditional MyID business. The introduction of RapID and MyTAM is expected to result in the growth of devices (IoT enabled equipment) and apps (online banking) under the management of Intercede's software. This suite of software supports the overall target of 250 million identities, devices and apps under management by 2020.

Principal Risks and Uncertainties

The principal risks and uncertainties facing the Group are as follows:

-- The Group operates in multiple markets, both geographically and by sector, so there is a risk that territory and global macro-economic conditions may result in one or more of these markets being adversely affected and the revenues of the business impacted accordingly. This risk is mitigated to an extent, both through the long term nature of customer relationships and the diversification that results from operating in multiple markets.

-- The Group operates in a complex and competitive technological environment so the business will be negatively affected if the Group does not enhance its product offerings and/or respond effectively to technological change. This risk is mitigated by ongoing investment in research and development.

-- Technology companies are exposed to intellectual property infringement and piracy. The Group rigorously defends its intellectual property in the primary jurisdictions within which it operates.

-- The Group's performance is largely dependent on the experience and expertise of its employees. The loss or lack of key personnel is likely to adversely impact the Group's results. To mitigate this risk, the Group aims to put in place appropriate management structures and to provide competitive remuneration packages to retain and attract key personnel.

By order of the Board

Andrew Walker

Finance Director

INTERCEDE GROUP plc

Consolidated Statement of Comprehensive Income for the year ended 31 March 2017

 
                                               2017      2016 
                                            GBP'000   GBP'000 
Continuing operations 
Revenue                                       8,286    11,004 
Cost of sales                                 (116)     (410) 
                                           --------  -------- 
 
Gross profit                                  8,170    10,594 
Operating expenses                         (12,891)  (12,511) 
                                           --------  -------- 
 
Operating loss                              (4,721)   (1,917) 
 
Finance income                                   13        32 
Finance costs                                  (70)         - 
                                           --------  -------- 
 
Loss before tax                             (4,778)   (1,885) 
Taxation                                        888       892 
                                           --------  -------- 
 
Loss for the year                           (3,890)     (993) 

                                           --------  -------- 
 
Total comprehensive expense attributable 
 to owners of the parent company            (3,890)     (993) 
                                           --------  -------- 
 
Loss per share (pence) 
 - basic                                     (8.0)p    (2.1)p 
 - diluted                                   (8.0)p    (2.1)p 
                                           --------  -------- 
 
 

INTERCEDE GROUP plc

Consolidated Balance Sheet as at 31 March 2017

 
                                    2017     2016 
                                 GBP'000  GBP'000 
Non-current assets 
Property, plant and equipment        695      864 
                                 -------  ------- 
 
Current assets 
Trade and other receivables        1,280    1,146 
Cash and cash equivalents          6,891    5,289 
                                 -------  ------- 
                                   8,171    6,435 
                                 -------  ------- 
 
Total assets                       8,866    7,299 
                                 -------  ------- 
 
Equity 
Share capital                        499      487 
Share premium                        673      232 
Equity reserve                        60        - 
Merger reserve                     1,508    1,508 
(Losses)/retained earnings       (2,354)    1,131 
                                 -------  ------- 
Total equity                         386    3,358 
                                 -------  ------- 
 
Non-current liabilities 
Convertible loan notes             4,124        - 
Deferred revenue                     141      122 
                                   4,265      122 
 
Current liabilities 
Trade and other payables           1,390    1,795 
Deferred revenue                   2,825    2,024 
                                 -------  ------- 
                                   4,215    3,819 
                                 -------  ------- 
 
Total liabilities                  8,480    3,941 
                                 -------  ------- 
 
  Total equity and liabilities     8,866    7,299 
                                 -------  ------- 
 

INTERCEDE GROUP plc

Consolidated Statement of Changes in Equity for the year ended 31 March 2017

 
                             Share    Share   Equity   Merger  (Losses)/    Total 
                           capital  premium  reserve  reserve   retained   equity 
                                                                earnings 
                           GBP'000  GBP'000  GBP'000  GBP'000    GBP'000  GBP'000 
 
As at 1 April 2015             487      232        -    1,508      2,257    4,484 
Purchase of own shares           -        -        -        -      (610)    (610) 
Employee share option 
 plan charge                     -        -        -        -        115      115 
Employee share incentive 
 plan charge                     -        -        -        -        334      334 
Employee treasury share 
 transfer                        -        -        -        -         28       28 
Loss for the year and 
 total comprehensive 
 expense                         -        -        -        -      (993)    (993) 
                                    -------  -------  -------  ---------  ------- 
 
As at 31 March 2016            487      232        -    1,508      1,131    3,358 
Purchase of own shares           -        -        -        -      (143)    (143) 
Employee share option 
 plan charge                     -        -        -        -         60       60 
Employee share incentive 
 plan charge                     -        -        -        -        488      488 
Issue of new shares             12      441        -        -          -      453 
Equity component of 
 convertible loan notes                   -       60        -          -       60 
Loss for the year and 
 total comprehensive 
 expense                         -        -        -        -    (3,890)  (3,890) 
                           -------  -------  -------  -------  ---------  ------- 
 
As at 31 March 2017            499      673       60    1,508    (2,354)      386 
                           -------  -------  -------  -------  ---------  ------- 
 

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 2017

 
                                                  2017      2016 
                                               GBP'000   GBP'000 
Cash flows from operating activities 
Operating loss                                 (4,721)   (1,917) 
Depreciation                                       194       186 
Loss on disposal of property, 
 plant and equipment                                48         - 
Employee share option plan charge                   60       115 
Employee share incentive plan 
 charge                                            488       334 
Employee unit incentive plan (credit)/charge      (20)        58 
Employee unit incentive plan payment              (28)         - 
Employee treasury share transfer                     -        28 
Increase in trade and other receivables          (364)     (100) 
(Decrease)/increase in trade and 
 other payables                                  (417)       611 
Increase/(decrease) in deferred 
 revenue                                           820      (66) 
 
Cash used in operations                        (3,940)     (751) 
Finance income                                      14        36 
Taxation                                           888       892 
                                               -------   ------- 
 
Net cash (used in)/generated from 
 operating activities                          (3,038)       177 
                                               -------   ------- 
 
 
Investing activities 
Purchases of property, plant and 
 equipment                                        (73)     (197) 
                                               -------   ------- 
 
Cash used in investing activities                 (73)     (197) 
                                               -------   ------- 
 
 
Financing activities 
Purchase of own shares                           (143)     (610) 
Proceeds from issue of ordinary 
 share capital                                     453         - 
Proceeds from issue of convertible 
 loan notes                                      4,495         - 
Convertible loan note issue costs                (321)         - 
                                               -------   ------- 
 
Cash generated from/(used in) 
 financing activities                            4,484     (610) 
                                               -------   ------- 
 
 
Net increase/(decrease) in cash 
 and cash equivalents                            1,373     (630) 
Cash and cash equivalents at the 
 beginning of the year                           5,289     5,895 
 Exchange gains on cash and cash 
  equivalents                                      229        24 
                                               -------   ------- 
 
Cash and cash equivalents at the 
 end of the year                                 6,891     5,289 
                                               -------   ------- 
 
 

INTERCEDE GROUP plc

Preliminary Results for the Year Ended 31 March 2017

NOTES

1. The financial information set out in this announcement does not constitute the Group's Statutory Accounts for the years ended 31 March 2017 or 2016, but is derived from those accounts. Statutory Accounts for 2016 have been delivered to the Registrar of Companies and those for 2017, 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 at 2.00 pm on Wednesday 13 September 2017 at the registered office of the Company. 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) 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:

 
                    2017     2016 
                 GBP'000  GBP'000 
UK                   403      462 
Rest of Europe       960    1,312 
North America      6,367    8,699 
Rest of World        556      531 
                 -------  ------- 
 
                   8,286   11,004 
                 -------  ------- 
 
 
   3.      TAXATION 
 
The tax credit comprises:                 2017     2016 
                                       GBP'000  GBP'000 
Current year - UK corporation                -        - 
 tax 
Current year - US corporation 
 tax                                      (34)     (40) 
Research and development tax credits 
 relating to prior years                   922      932 
                                       -------  ------- 
 
Taxation                                   888      892 
                                       -------  ------- 
 
 

The Group has unused tax losses of GBP11,773,000 (2016: GBP9,460,000) and unrecognised deferred tax assets of GBP2,001,000 (2016: GBP1,703,000) calculated at the UK corporation tax rate of 17% (2016: 18%).

   4.         LOSS PER SHARE 

The calculations of loss per ordinary share are based on the loss for the financial year and the weighted average number of ordinary shares in issue during each year. Basic and diluted loss per share are the same as potential dilution cannot be applied to a loss making year.

 
                                                                            2017        2016 
                                                                         GBP'000     GBP'000 
Loss for the year                                                        (3,890)       (993) 
                                                                      ----------  ---------- 
 
 
                                                                          Number      Number 
 
Weighted average number of shares 
 - basic                                                              48,835,080  48,429,489 
                                                          - diluted   48,835,080  48,429,489 
                                                                      ----------  ---------- 
 
 
                                                                           Pence       Pence 
Loss per share - basic                                                    (8.0)p      (2.1)p 
                       - diluted                                          (8.0)p      (2.1)p 
                                                                      ----------  ---------- 
 
 

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

 
                                          2017        2016 
                                        Number      Number 
 
Issued ordinary shares at start 
 of year                            48,735,005  48,735,005 
Effect of purchase of own shares     (294,000)   (305,516) 
Effect of issue of ordinary share 
 capital                               394,075           - 
                                    ----------  ---------- 
 
Weighted average number of shares 
 - basic                            48,835,080  48,429,489 
                                    ----------  ---------- 
 
 
Add back effect of purchase of             N/A         N/A 
 own shares 
Effect of share options in issue           N/A         N/A 
Effect of convertible loan notes           N/A         N/A 
 in issue 
                                    ----------  ---------- 
 
Weighted average number of shares 
 - diluted                          48,835,080  48,429,489 
                                    ----------  ---------- 
 
 
   5.       DIVIDEND 

The Directors do not recommend the payment of a dividend.

   6.       SHARE CAPITAL 
 
                                    2017     2016 
                                 GBP'000  GBP'000 
Authorised 
481,861,616 ordinary shares of 
 1p each (2016: 481,861,616)       4,819    4,819 
                                 -------  ------- 
 
Issued and fully paid 
49,903,143 ordinary shares of 
 1p each (2016: 48,735,005)          499      487 
                                 -------  ------- 
 

The increase in issued and fully paid ordinary shares of 1p each represents the issue of 379,542 shares on 29 July 2016 to facilitate the July 2016 Free Share award and the issue of 788,596 shares on 27 January 2017, at an issue price of 57.0p per ordinary share, in connection with the fundraising that was announced on 28 December 2016.

As at 31 March 2017, the Company had 294,000 ordinary shares held in treasury (2016: 294,000). There were no purchases or transfers of shares to or from treasury during the year. During the previous year, the Company purchased 32,500 ordinary shares for a consideration of GBP47,000; 32,500 options were exercised using treasury shares and 15,000 ordinary shares were transferred to an employee pursuant to an incentive arrangement.

   7.       Convertible loan notes 
 
                                  2017       2016 
                               GBP'000    GBP'000 
Non-current 
8% Convertible loan notes (29    4,124          - 
 December 2021) 
                               -------    ------- 
 
 

Borrowings are repayable as follows:

 
                               2017       2016 
                            GBP'000    GBP'000 
Between two and five years    4,124          - 
                            -------    ------- 
 
 

On 30 January 2017 the Company issued GBP4,495,000 convertible loan notes that carry an interest coupon of 8.0% pa payable quarterly. The Company has granted security by way of a composite guarantee and debenture in favour of Welbeck Capital Partners LLP to secure the repayment of principal and interest due on the convertible loan notes to the holders. Holders of the convertible loan notes may convert into ordinary shares, at a conversion price of 68.8125 pence per ordinary share, at any time until the final redemption date of 29 December 2021.

The amount recognised in the balance sheet in relation to the convertible loan notes is as follows:

 
                                        2017     2016 
                                     GBP'000  GBP'000 
Nominal value of convertible loan 
 note issue                            4,495        - 
Issue costs                            (321)        - 
Equity component at date of issue       (60)        - 
                                     -------  ------- 
Liability component at date of 
 issue                                 4,114        - 
Effective interest rate adjustment        10        - 
                                     -------  ------- 
 
Liability component at 31 March        4,124        - 
                                     -------  ------- 
 

This information is provided by RNS

The company news service from the London Stock Exchange

END

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June 07, 2017 02:00 ET (06:00 GMT)