Intercede Share Discussion Threads

[igoe104] 19/5/2007 18:37

And hopefully with results. we can hear about other up and coming projects. like frac,commonwealth state card projects.

PS IF YOU HAVE ANY SPARE FUNDS TAKE ALOOK at this up-coming winner
ebt mobile.

[garth] 19/5/2007 17:57

Topvest,

I believe that you are right re. the prospects here - I have always believed that which is why I started a thread 3 years ago. What has been a constant frustration though is the way they have crept towards profitability without ever - as yet- reaching it.

5% dilution? You are right - its neither here nor there.

The depth of the discount, the timing, the possible urgency with which it was needed - now those are issues and Aphro and others are right to raise questions over the quality of the decisions that have been made by management.

Me? Not bothered either way at present. I have no position at present and already have what I consider to be excellent exposure to the sector via SMRT. Why I forsook IGP for SMRT was exactly the issue of profitability. SMRT already are - IGP are still flirting? Excellent prospects? They both have that.

I do feel sorry for those who piled in at pushing 80p though. Warning voices were sounded by a number of seasoned and honourable heads on here that things were starting to run away.

I have no quarrel here. I want IGP to succeed. Long-termers have nothing to worry about and everything to look forward to, IMO. I believe that the current price is attractive. I believed that they could eventually approach this level but I was far from certain and did not expect it to happen quite this way. 42p was, incidentally, the price I had pencilled in to buy but I will now wait until the results before deciding whether to stick my hand in my pocket again.

G.

[topvest] 19/5/2007 17:13

It was a disappointing announcement for sure. No point complaining though. Sell if you don't like it! I'm going to keep holding as ultimately it's how they develop the business that is important and a bodged 5% placing is neither here nor there in the longer term scheme of things!

[garth] 19/5/2007 16:47

Aphro,

Rant over?

You've missed the point. I never even suggested that IGP ramped their own shares, and are you really so naive as to believe that 'friends' and 'new institutional investors' are mutually exclusive terms?

I said 'ramp up of contracts' not 'ramping of contract news' or 'share price ramped up on the back of contract news'.

I find it hard to believe that the funds have been raised at such a steep discount with individuals and institutions with whom there was no prior relationship. And you are incorrect in your facts about the money being raised with new institutions. The RNS has it in black and white:

"Intercede, one of the world's leading developers and suppliers of smart card and identity management software, is pleased to announce today the conditional
placing of 2,130,303 new Ordinary Shares of 1 pence each at a price of 33 pence
per new Ordinary Share with institutional and other investors to raise
approximately #0.7 million (approximately #0.7 million after expenses)."

Lets say it again "with institutional and other investors"

As for my theory about raising cash ahead of results with no time for a wider rights issue, how about this:

"On 27 March 2007, Intercede reported that it expected revenues for the full year ended 31 March 2007 to be no less than 20% ahead of the previous financial year. The Board expects to confirm this when the Company's preliminary results are announced, which will take place within the next two weeks.

2 weeks until results. No time for a full rights issue. Why the rush? Ask yourself. Ask yourself....

'No less that 20% increase in REVENUE' but no comment on likely losses or cash position. If that trend continues as contracts ramp up what might cash look like in 6 months. They don't have control of the contacts.......

Would the auditors have been a position to sign off the accounts without the extra cash? I expect not.

Try reading my post again with a cooler head. I've been holding or watching these for pushing 4 years now.

G.

[aphrodites] 19/5/2007 15:35

garth & Taurus

Totally disagree with you both.

IGP did not just start to ramp up the price with announcements with the news of the contracts.

The news of the contracts and IGP's involvement is fact and some of the most positive news we have had for a long, long time.

On the back of this the shares deservedly rose in the market.

What I would agree is the principle behind raising cash which many companies adopt. Make the announcements with the specific purpose of driving the share price up and then make the rights issue or placement afterwards.

If this was IGP's and their financial advisors intention why the bloody hell did they wait until the share price had receded from the mid 70's to mid 50's to make the announcement.

I am sorry this does not make any sense whatsoever.

And as for not giving any insider information to me that also does not stack up on the delay argument.

The only point that does ring true is the failure of the FD to grasp the cash requirements of his expanding business and to raise cash at the most opportune time.

And come on Taurus do not give the FD the benefit of the liquidity argument as an excuse for the timing of this diabolical cash raising exercise. It has nothing to do with that whatsoever. On the back of the release of the contract news if the financial advisors were geared up correctly they would have placed the stock very easily.

I do not think there will be any seriously bad news in the interims as they would not have been able to raise cash without informing those with whom they placed the shares that this was in the pipe-line. In fact it would have been sensible to wait until after the interims. Would you want to have been brought into a new company only to find you have been duped? Of course not.

And cut the placing with friends out of the equation. The C.E. was specific that the shares had been placed with new institutions.

I am sorry this all leads up to the F.D. not being up to the job and either being led astray by his financial advisors or failing to understand the requirements of the business he is financially in charge of. Q.E.D!!!!!!!!!!!!

[taurusthebear] 19/5/2007 11:26

I agree, garth. Fact is that when Aphro contacted the FD, latter was not in a position to give any insider info. about possibly raising cash. I always thought a fund-raising was on the cards, and the discount it was raised at just shows how illiquid and un-marketable the company currently is. Which we all knew anyway - have you ever tried to sell 10k shares or more?

The only way this is going to go up, and get on serious radars, is if and when IGP start generating revenue. That is, and always has been, largely out of their hands... :0)

[garth] 19/5/2007 08:01

Is it possible that it has gone something like this:

1. Ramp up of contracts got everyone a bit over-excited
2. Failure to grasp just what the working capital/increased staffing + training for consultancy needs might be.
3. Cash gets squeezed more dramatically than expected - prospect looms that auditors might not, by the end of the year, sign off as a going concern.
4. Effect on share price at interims might be fairly negative with that in view.
5. Institutional 'pals' recognise that and so pitch for shares at a price commensurate with what the share price might be if they don't!
6. Accepting the situation and in order to prevent a further squeeze on cash, the FD - balls in a sling - issues the shares (possibly to pals?)

No idea if thats the case. But a possible one?

G.

[aphrodites] 18/5/2007 22:25

topvest

As you know from my post of several days ago, I shall be writing to the C.E. after the release of their interim results.

I want to see if there is any explanation then before I make my comments.

I agree this has been a very disappointing week.

More disapointing when you feel the confidence you have put in the F.D. has been totally undermined by his misreading of the financial needs of the company he is employed by to get it right.

Having said that, I attended a Board meeting yesterday and raised the need to manage the interest rate risk on an invoice finance facility we have for £5m. I explained how the use of an interest rate cap would achieve this but it might cost £100k depending on the level of the cap. The F.D.'s first reaction was that this was a "gamble"!!!!!

If my experience is anything to go by it will explain why IGP's F.D. may not have the necessary exposure to appreciate how he can be taken in by the company's financial advisors when involved in raising this cash.

I agree investor relations are a highly important factor to bear in mind but remember this is the first time the F.D. has probably been put in this position.

I blame the financial advisors.

But as we know they might well have a dealing position in place which they want to fill.

As I have said before, while this stinks it will not be the first company where the F.D. has been taken to the cleaners by his financial advisors.

[topvest] 18/5/2007 22:05

All very disappointing this week. It's difficult to understand why the placing was done at such a low price, given the strong contract news. There is a need to think about their investor relations following this episode. We are in a bull market and this company has won lots of US contracts. If it needed a bit of extra working capital surely it should have been able to issue shares at more than a 50% discount to recent share price levels!?

[rambutan2] 18/5/2007 17:02

relevant?


has anyone spoken to the co? or had an email reply?

i've not had the chance to ring this week but intend to vent my views next week.

[igoe104] 17/5/2007 15:12

thiNGS HAVE MOVED ON FROM LAST YEAR. bell id was also part of that consortium as well. it will be interesting to see if gamalto, will go with bell again or will they go with igp.

[jailbird] 17/5/2007 15:07

igoe,

i am not convinced

this is the second contract..so no mention if IGP before.

Precise Biometrics has won the procurement contract in a consortium led by the digital security leader Gemalto, with whom Precise Biometrics also won the procurement contract for national ID cards in Qatar in 2006.

[igoe104] 17/5/2007 14:49

I wonder if igp, will be part of the team as well ?

[igoe104] 17/5/2007 09:31

I totally agree with you athpodites, i feel the same.

ps i,ve told the company, about my feelings as well.

[bigpunt10] 17/5/2007 09:17

Will TTI soon become (TTI I)?

[carly2] 17/5/2007 09:05

That explains all of the big motors in the car park that Friday afternoon - unfortunately nothing to do with new contracts...

[wjccghcc] 17/5/2007 08:02

I think they get most of the partner payments in H2 (particularly RSA) making H2 cashflow positive but H1 negative. Clearly they thought this year would be different but I expect there's a lot of upfront costs being incurred working with the US states like Pennsylvania and on the TWIC contract.

Doesn't excuse their lousy timing though.

[jailbird] 17/5/2007 08:00

APD,

we should count our lucky starts...have u sen SUN's RNS large dilution and these were profitable...may have needed some cash but the surprise is the amount...so much for shareholder value.

[aphrodites] 17/5/2007 07:46

jailbird

On the subject of dilution I agree it is almost irrelevant.

But what has harmed this share price most is the obvious insider dealing which has led to a weakening in the price to allow instituitions to get a birthday present of shares at 33p.

Once the damage has been done to the share price as we have seen here it takes time to restore confidence.

[jailbird] 16/5/2007 13:31

And another 6 monts later..all on citywire

Published: 16:24 Thursday 23 May 2002
By Joanne Wallen, Online Editor

As expected, Intercede saw turnover fall and losses widen last year but all in the quest to transform itself into an international provider of smart card management software with very interesting potential, writes Joanne Wallen.

Intercede has turned itself from a company that did project-based systems integration work to a software company with a software product, edefice. Edefice enables companies or organisations to manage the issuance and maintenance of smart cards or tokens for security and access.

As Citywire reported in December, the company expected to see turnover fall temporarily as it focused its sales efforts of building key channel partners to sell its software.

The company warned again in February that second half performance would be roughly in line with first half.

For the full year to March, turnover was £1.2 million, down from £2 million last time, and pre-tax losses rose to £2.2 million from £1.1 million.

Finance director Andrew Walker told Citywire: 'Our sales efforts have been focused on building our international channels, instead of on winning UK-based project work.'

Those efforts resulted in deals with French smart card manufacturer Oberthur, US smart card applications provider ActivCard and Datakey, a US-based security and access specialist. These partners will embed edefice into their own products, and sell it as their own. Intercede will get a fee per smart card issued by their end customers.

The deals have brought Intercede advance licence commitments of nearly $2 million, of which is has already received $800,000. However, the company expects with such deals for it to take at least nine months between signing the partner and revenues coming through. Walker said some revenues from these deals should start coming through this year, but the second half is certainly likely to be better than the first.

Intercede is also looking for straight reseller partners, which will sell the software on a standalone basis rather than embed it into other products. These sales should have shorter lead times.

The company has already sold its product to a major UK government department, which will deploy edefice to provide enhanced security for employees accessing its networks. It also has a long-term relationship with Fujitsu, formerly ICL, a big supplier of IT systems to government.

The software will handle the new breed of security cards using fingerprint or iris recognition technology, as well as digital certificates, passwords or other security devices.

Intercede claims industry analysts expect that within the next three to five years, the majority of people will carry at least one form of electronic identity, probably in the form of a smart card, be that a corporate identity card in New York, health records in France, a national citizen's ID card in Malaysia, a driving licence in India or a bank debit card in the UK.

Walker said this is a new and emerging market, and by getting its software out around the world through partners, Intercede is hoping it will become a de facto industry standard.

The company had £1.8 million cash at the end of March, having raised a total of £5.1 million since February 1999. The cash in hand includes £982,000 of new funding raised as a convertible five-year loan in December. An existing convertible loan for £450,000 was also extended for a further five years.

Shares fell 2p to 42.5p, valuing the business at just £6.9 million.

Citywire Verdict:

Intercede seems to be being punished for taking time out to transform its business. It looks as though there could be a very large, international market for edefice in security and access alone, and that is before the company starts marketing it for other applications such as driving licences and consumer applications.

Revised broker forecasts are not yet out, but it doesn't really look like there is much of the new potential priced into the shares. This is still a risky unknown quantity, but could be interesting. Keep a close watch for progress.

[jailbird] 16/5/2007 13:28

just found some old articles worth a read again

Published: 17:01 Friday 07 December 2001
By Joanne Wallen, Online Editor

Intercede has taken short-term pain to leap from being a systems integrator to a smart card management software business; the pay-off should come next year, writes Joanne Wallen.

'We realised software would be bigger for us,' chairman and chief executive Richard Parris told Citywire.

So Intercede focused development on its edefice software which enables businesses to manage large numbers of smart cards for security purposes and to incorporate PKI (public key infrastructure) security on them without too much technical intervention.

The change in business model saw Intercede's turnover in the first six months to September slump to £471,000 from £1.1 million last time. Losses rose to £1.2 million from £313,000.

The company raised £2.2 million when it floated on AIM at the start of the year and had just over £1 million left at the end of September. It has topped up those funds
by raising a £982,000 5% unsecured loan, convertible at 60p a share on or before the fifth anniversary of the draw down.

Intercede shares rose 4p to 57.5p today, valuing the business at around £9.4 million. They were placed in January at 60p, and reached a high of 91.5p in May.

In September, Intercede signed a licence deal with smart card company Oberthur Card Systems which earns licence royalties for every card issued.

The company also announced today a second major contract with an unnamed Nasdaq-listed 'major industry player', which has committed to buying licences to the value of $800,000 (£560,000) provided certain development targets are met by March. The entry into the US market is a 'very significant switch' for Intercede, said Parris.

Intercede has also developed some reseller relationships, including Compaq and ICL in the UK, both of which are working on 'at least one major prospect for edefice'.

Parris said smart card deployment is set to take off, with the UK government committed to the system for its connected electronic government. The US defence department is also set to issue some 4 million cards to servicemen and any further talks on national ID cards or airport security cards would benefit the company.

'Anyone that requires mass deployment of cards from distributed workstations would need software such as ours,' said Parris.

Parris said real revenues from the new product sales will start to come through in the remainder of the year, and accelerate in the next financial year.

Citywire Verdict:

Smart cards have been around for several years but have still not come into their own, particularly in the UK.

PKI has been the subject of considerable controversy as a security standard and the problems experienced by London-listed Baltimore have done it few favours.

One of the problems with PKI has been its complexity, and if Intercede's software really can simplify things it should help to encourage the acceptance of smart cards.

Worth watching, but also worth waiting for further signs that smart cards and PKI have come of age.

[jailbird] 16/5/2007 12:57

well someone looks to have bought 100k @40.5p..that is when L2(KBC MM) ticked up on the bid