Intercede Share Discussion Threads

[felix99] 12/10/2011 08:49

You need a sales guy to just have someone responsible for pushing and closing the deals asap. They take forever to close and its easy to just sit back and say the Govt is slow to commit etc so its pointless pushing - it will happen when it happens.

You always need someone to ensure IGP pushes for completion at your end and keeps the buyer on its toes - its easy to just disappear down a buyers priorities and when you do get to the top of the pile for consideration and they ask for responses from IGP they need to be sending it back straight away. Take your time and the response lands when its moved off the top of the heap and it wont get progressed further till it rises.

If IGP are on top of this without a sales director then great but if not they need one.

[yump] 12/10/2011 08:29

fft

Thanks for the post and for going to the trouble - very succinct and useful.

The implication seems to be that new sales growth could partly be a reflection of the lack of senior sales responsibility, although in many small companies I guess everyone is supposed to do their bit and the names on the doors don't count for much.

However, it was said that IGP are well known and that customers come to them, I think that's not a very business like attitude. People appear on Dragon's Den saying that a product sells itself and I have never, ever known that to be the case, anywhere I have worked or invested in. Except perhaps with a website that happens to go viral.

[wjccghcc] 12/10/2011 08:15

fft, sorry about your back.

Thanks for the writeup. The reason Microsoft are unlikely to push the MyID Forefront plugin is more because of their treatment of Forefront within the Microsoft ecosystem. Basically, Forefront is still in the "development lab" part of MS while they evaluate its performance/demand/economic benefits and as such is not pushed by the MS salesforce. Once/if it moves into the mainstream, then that will change.

The real benefit of the MS partnership is that it means MS are not entering the high security space with their own products. That means that IGP only has one main competitor which is Actividentity.

[fft] 12/10/2011 04:51

Thoughts on IGP AGMApologies for the delay in this. My back problems (getting up off a paris metro seat !), got a lot worse and sitting down, walking and a whole lot more made the thought of sitting down and writing anything not appealing. After an MRI scan of my lower back, i now have 2 hours of heat treatment, ultrasound, massage and exercises a day, which is making things a lot better.The following comments are my recollections. If anyone has any corrections or additional info, please reply.PreambleIGP occupy a very pleasant building in the middle of nowhere. Whether this accounts for the remarkably low staff turnover i dont know. But it is now effectively full. According to Jayne (ops/hr director), there is space for 2-3 more. However, while core development will always remain at head office, it is anticipated that hiring in the future will concentrate on the USA, but no development will occur there.The board are incredibly pleasant people. However, having been turned over by pleasant people who have run companies i invested in during the last few years, i tend to enter these sorts of things far more cynical and less sunny than i used to. LTIP. The board did not seem to really 'get' the issues raised regarding the LTIP (long term incentive plan). Basically the 'hurdle' is RPI+5 and has a price of 1p. The room was fairly quiet when that was all mentioned. Hard to tell whether it was shock or shock. Richard said the price was 1p (instead of say 60p to provide a real hurdle) because otherwise he wouldnt be able to afford to exercise them. It was pointed out that in those cases, the director normally sells a portion of them to be able to pay for the rest. I seem to recall no reply. It just seems like a pay increase via another means. Richard said it was important because of he had to maintain a 10% stake to maintain some tax break (which i hadnt heard of before). He also mentioned that when the company was floated he had had 40+ % of the company and was now down to 11% because of the fund raisings. He is also getting a salary + bonus of 258k, which i suspect would increase if the company starts doing really well. They skirted around the hint from myself that option holders should see smaller increases in pay and bonuses. The head of Remcom (Royston) said they had talked to all the major shareholders about this and that they were in favor. Royston headed straight over to me after the AGM, and amongst other discussions, i said it was 'perception'. The fact that no information had been released at the time of the RNS, and the price it was being done at created an uneasy feeling. Strangely, i had also used the word 'perception' many times the day before when talking with Peter Cowgill. He didnt seem to get it either, trying to compare bonuses at MUBL with Manchester United and Banks.... Jayne (Operations Director, HR etc) mentioned afterwards that it could also be seen a deterrent to a takeover. I dont think so, since 10% more shares is neither here not there in that situation. What i didnt realise til someone told me later was that Richard and Jayne are an item. And Jayne also benefits from this LTIP. Development.It does appear to be a big development year. Expenses are forecast to rise 1.4m, mainly on staff. They only have one contractor from my recollection. Loyal staff. Big news was the launch of My ID on mobile devices this year. Further questioning elucidated that the only hardware platform that could provide secure id handling was the blackberry. My understanding was that it wouldnt work, at the moment, on other platforms (iphones, android etc), not because of the operating system but because they dont have the secure hardware.Other news was that Microsoft now have a customer for My ID. However, the board really played down the MS news, and they said that MS salesmen woudl not be pushing IGP products. I dont think many in the room really understood what was going on with this, as it would appear logical for MS to push IGP products if a customer is not happy with the security level of the MS product and would like something stronger. So good news, but not as good as we would like, or are they just underplaying it ?Sales Vs Maintenance Other comments from Royston included that earlier maintenance contracts were not that great and newer ones generated more revenue. During the meeting FD said that the % of revenue from maintenance contracts had risen from 19% 2 years ago to 30% now. This is good - as it reliable income - but also makes the increase in revenue from new business look worse if you deduct the maintenance revenue from new business. If we assume that Maintenance revenue in the middle year was 24% we get the following real sales increases. The year before (2007-2008) increase looks interesting so i will plug in a 7% maintenance revenue for that (based on roystons comments about how early maintenance contracts could be improved). Year endTotalTotal RevNew SalesNew Sales MarchRevenue (T)%IncreaseMaint %Revenue% Increase2007-2008 2,805 7% 2,609 2008-2009 5,701 103%19% 4,618 77% 2009-2010 6,194 9%24% 4,707 2% 2010-2011 6,872 11%25% 4,810 2% Excluding maintenance, new sales appear to have only increased at 2% a year for the last 2 years. Sales FocusLooking at the IGP Web-site, there is a 5 man board, but no specific Sales responsibility. There is a 4 man management team, but no sales director. In the AGM, when asked about who was in charge of the sales focus, one of the non-execs said he lived and breathed sales. But, he was non-exec so presumably not full time. It was afterwards that Jayne mentioned there were 3 sales staff in UK, 3 in USA (1 is presales).The situation reminds me of LNG a few years ago. Technically good, sound finances, but not geared up on the sales side. Since then, LNG have had a complete change of emphasis, getting rid of the existing sales side and bringing in new blood, esp. at the very top. This has led to new sales, new opportunities being explored and what looks to be a far more dynamic approach. BTW, It is only possible to do this once you have put solid foundations in place. Personally, i think that IGP need to do the same. Sales needs to be promoted. Jayne said that IGP were so well known that many people came to them, rather than having to be chased. Hiring some big hitters who know the right people to talk to would be a first step. Many companies probably have what they think is a secure system, and so are not that interested in the IGP solution. In that situation, unless you can convince a key person in the company to allow to give a presentation, you will never get any business from them. IMHO, the key is getting that first presentation where you outline the extra benefits of MyID. Indeed, It seems to me that having a sales director on the management board to push the board into a more sales led approach would also not go amiss. The lack of MS push (mentioned above) is also puzzling. The above is even more relevant given the development push that is occurring this year.Dividends. It was asked at the AGM, and the answer was negative saying that they wanted to reserve the cash for working capital. Given they have 6m in the bank, then unless there working capital requirements miraculously unwind at the financial year end, it is hard to justify that figure. If growth takes off, then WC will also need to increase.Non-Execs. One other issue is that the board have all been together for over 10 years, or were involved in funding IGP before joining the board within the last 10 years (Jacques Tredoux). How independent are non-execs when they have been part of the team for so long. How easy is it for the whole team to slip into 'habits' whether good or bad.Events SinceSince the AGM, IGP have won a $1m contract. That sounds great, and relative to the IGP sales figures it is, but it is 'only' $1m. I look forward to the day when that sort of value doesnt represent such a large % of revenue. Disclosure. I hold - and have done since buying mostly at the 40p (and higher) level over the last few years. The company is well run, and will remain part of my portfolio, but i do think that shareholders are not seeing the benefit they could if a more aggressive sales approach was adopted.

[rambutan2] 11/10/2011 15:12

hi fft, you still around?

[fft] 11/10/2011 14:52

My recollection from the AGM is that its a hardware issue. Only Blackberry has the hardware that allows a secure solution (i guess an encryption type chip). I asked about this after the AGM and Iphone, and other smart phones cannot be used, regardless of the operating system, as they are not secure. I dont think it is a server issue. I would think it is getting the info on and off the actual phone securely so it cant be intercepted by someone sat outside in a van.

IMHO, this is good and bad. Loads of businesses use Blackberries, but, this does limit the market going forward as most of the increasing number of smartphones will not be blackberrie but Samsung, iphones etc. A hope would be that the parts that enable a smartphone to be secure will be introduced into other smartphones, possibly as an option.

p.s. rambutan, have you got an email i can send something for you to check.

[felix99] 11/10/2011 13:46

I think Blackberry have secure servers - middle east tried to ban as govt found it difficult to monitor / hack - and US govt is all blackberry becuase their servers appear to be super secure.

So I guess if you want a mobile based credential mgt the natural place to start is blackberry. Might actually help blackberry sell some phones !

I think the mobile ID is quite a big thing and IGP appear to be at front of development queue. If you can get ID onto someones mobile again its another app all on one thing meaning people can dump PIV cards or whatever other forms of secure ID they have to carry around.

The holy grail seems to be get everything onto one unit - phone, music , camera, secure ID , door entry ID etc etc, banking log ins . All depends how secure a phone can be from being hacked from what I see - and blackberry sounds like its at the front of that queue.

I can smell the profit/market leader / market share thing for IGP but no idea how it lands at IGP doorstep and who else is in the mix. All I see is a hugely valuable platform and place at the poker table for IGP which somoene like Lockheed etc will surely just buy out for what is petty cash for them.

Sorry for my non technical ramblings - but I can smell the money to be made here I just hope that shareholders get to see it and that the large upside is not taken away from us by an MBO or takeover on the cheap before the real action starts.

[rambutan2] 11/10/2011 12:56

I understand that IGP went the Blackberry route because requested to do so by customers, in partic by US govt ones.

Re Apple, currently it's not possible for IGP to do their magic ie i suppose its operating system is lacking in some ways.

[pyman] 11/10/2011 12:26

Question is: what s the mobile side of things worth?

[yump] 11/10/2011 12:17

The mobile connection seems to be below the radar, judging by the lack of share price reaction (which appeared to be in response to the contract announcement).

[pyman] 11/10/2011 11:27

so tomorrow 's show might produce some excitment. Winning Blackberry would be fantastic result. 11% or world market share. Apple have 21% samsung 19%. Blackerry loosing share over last year to Samsung and apple. Hope IGP will target those two and become industry standard. Dreaming of £1 again...

[rambutan2] 11/10/2011 09:22

From the above, and out of interest, Cassidian are part of EADs...

[igoe104] 11/10/2011 08:24

Latest news.



Intercede (London Stock Exchange AIM: IGP), the producer of MyID, a world-leader in identity and credential management systems (IDCMS) announces that the Intercede MyID solution for provisioning Personal Identity Verification (PIV) Credentials to a Blackberry phone has been selected as a finalist in the Cartes 2011 SESAME award competition.

The BlackBerry PIV credentialing module for MyID allows BlackBerry smart phones to be enabled for secure email, signing and authentication. The solution makes use of the inherent security within MyID, ensuring keys are delivered in a secure manner and that the credential holder is strongly authenticated as part of the credentialing process. PIV is a US government standard defining the form and content of smart cards used for identity verification.

Based on 317 submissions received from leading manufacturers, integrators and developers in the card industry worldwide, Intercede's MyID platform has been recognized as one of the three finalists in the Identification/ID Card SESAME award categories.

The SESAME awards represent an unchallenged seal of approval in innovation and are regarded as the global standard for card manufacturers and related industries. The contest is a unique opportunity for the candidates to showcase their energy and their achievements to 20 000 professionals and 200 journalists attending from over 140 countries, all on the lookout for new products in this market.

This year, the SESAME Awards Ceremony will be held on 14 November 2011 in Paris in conjunction with the Cartes and Identification Expo.

The solution will be demonstrated in collaboration with Cassidian at the TSCP Expo in The Hague on 12-13 October 2011.

US customers can also view Intercede's Blackberry Credentialing Solution at the 10th Annual Smart Card Alliance Government Conference, Washington DC, 2-3 November 2011, booth 209.

Richard Parris, Chief Executive at Intercede, commented: "The SESAME awards are the gold-standard for innovation in the smart card and identity industry. To be shortlisted by our peer group as one of the top three global players in our category is validation of our technology leadership in the fast moving mobile credentialing market".

[pyman] 07/10/2011 12:03

hahah. Dont give them ideas! I just hope there wont be a dodgy aquistion. Given the length of time IGP have taken to grow I cant imagine that would be greeted with enthusiasm by sharholders or city.

[shanklin] 06/10/2011 09:38

Based on the recent options, they'll just give all the money to the directors

[pyman] 06/10/2011 07:58

Thanks. It does make me wonder what to do with all that money...pay a dividend!

[wjccghcc] 05/10/2011 12:08

pyman, you're thinking of capital expenditure i.e. when you buy new equipment, which doesn't affect the P&L except through increased depreciation.

IGP's investment is primarily in headcount which increases operating expenses directly. These go straight to the P&L and hence the drop in PBT until the revenues from the increased contract awards derived from the step up in bidding activity the new headcount is supporting come through.

The cashpile of 6mm is irrelevant from a PBT perspective (minimal interest income in current interest rate environment) although it does mean they have the financial strength to commit to this expansion.

[pyman] 05/10/2011 10:53

I see Finncap are estimating £1.5m pre tax next time due to investment. Surely the £6m cash in the bank is being used to fund investment and the related loss of interest earned will not hit the pretax figure by so much? unless of course we are talking about a spend of £3m plus?

[igoe104] 04/10/2011 13:26

Thanks for that wjcc.

Write up from growthcompany.

[wjccghcc] 04/10/2011 11:58

Indeed. When I spoke to Parris a few months ago, they had been asked to bid on over 12 similar projects in the National ID space and I'm sure that number has increased further. Government contracts are always going to have uncertain timing (I think the Kuwait one was rebid several times and IGP weren't even involved in the first round), but when they come, they're large, recurring and provide a great annuity maintenance stream.

Given the H1 investment in headcount to support the move into the mobile space and the costs of supporting all these worldwide bids (IGP is now de facto on the requested list to bid), I'd expect H1 results to be nothing special and only marginally above breakeven. H2 however is shaping up to be a stormer and next year will be when it really gets interesting - assuming they haven't been bought by then.

[yump] 04/10/2011 07:54

Excellent.
(Yet again, if nothing wrong is announced, you have to assume there's nothing wrong until proved otherwise, or you can just abandon a good share on a hunch)

[aphrodites] 04/10/2011 07:48

Another new contract win announced worth over $1m with a long term annuity maintenance stream. Great news.

One must question why the share price retreated to 50p in the face of pending contract announcements and who the buyer of the shares was at the lowest level.

Whoever it was is irrelevant now as the share price looks ready to challenge new highs and draw in an interested buyer of IGP.

This is a sitting duck for a takeover and no wonder the directors wanted to fill their boots with such cheap share options!