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IGP Intercede Group Plc

110.00
-0.50 (-0.45%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Intercede Group Plc LSE:IGP London Ordinary Share GB0003287249 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -0.50 -0.45% 110.00 108.00 112.00 110.50 110.00 110.50 49,467 08:27:35
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Security Systems Service 12.11M 1.31M 0.0225 48.89 64.05M

Intercede Group PLC Final Results (5686Q)

07/06/2018 7:00am

UK Regulatory


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TIDMIGP

RNS Number : 5686Q

Intercede Group PLC

07 June 2018

7 June 2018

INTERCEDE GROUP plc

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

Preliminary Results for the Year Ended 31 March 2018

Intercede, the leading specialist in digital identity, credential management and secure mobility, today announces its preliminary results for the year ended 31 March 2018.

Financial Highlights

-- Revenues of GBP9.2m (2017: GBP8.3m), an 11% increase compared to last year. This reflects a strong end to the year and growth in Intercede's core markets of government, defence contractors and large, highly secure corporate enterprises.

   --      Loss for the year of GBP3.8m (2017: loss of GBP3.9m). 

-- A cost-cutting exercise removed significant costs from the business without impacting operational capability. Intercede started the new financial year with an operating cost run rate that is more than 20% lower (approximately GBP3m per annum) than at this point last year.

-- Gross cash balances of GBP2.3m at 31 March 2018 (2017: GBP6.9m). The impact of significant orders received in the last two months of the year resulted in increased gross cash balances of GBP4.7m as at 30 April 2018.

Operating Highlights

-- Significant first half contract wins include an award from a major US Aerospace & Defence contractor and a sale to a large UK defence organization. In additional there were initial MyID license sales to the largest US military shipbuilding company and to one of the world's largest diversified natural resource companies.

-- The second half of the year saw the sale of a mobile national identity solution to a Middle Eastern country and a license order from another major US healthcare provider.

-- The mobile national identity solution sale incorporates Intercede's MyID mobile authentication technology to allow citizens to generate a digital identity on their smart phone via a government app. Intercede's accredited technology, and continued work with a range of Mobile Device Managers (MDMs), means it is well placed to meet the markets' demand for mobile authentication solutions.

-- Following second half cost reductions, the number of employees and contractors as at 31 March 2018 has been reduced to 98 (2017: 121).

-- New Chief Executive and reorganized management team appointed to return Intercede to profitability.

Chuck Pol, Chairman, said:

"The new leadership team are fully focused on building on recent successes and are committed to improving standards, enhanced operating performance and the conversion of recent product development into meaningful revenue generation and growth.

The investment in the MyID platform puts Intercede in a strong position to provide the market with reliable Digital Trust. This is demonstrated by the large orders that were received in the last two months of the year. Following the second half restructuring, the cost base has been brought back in line with future revenue forecasts and the Board are confident that Intercede will grow and return to profit within the next two years."

Contact

 
 Intercede Group plc   Tel. + 44 (0)1455 558111 
 Klaas van der Leest   Chief Executive 
 Andrew Walker         Finance Director 
 FinnCap               Tel. + 44 (0)20 7220 0500 
 Stuart Andrews        Corporate Finance 
 Simon Hicks           Corporate Finance 
 

About Intercede

Intercede is a cybersecurity company specialising in digital identities, derived credentials and access control, enabling digital trust in a mobile world.

Headquartered in the UK, with offices in the US, we believe in a connected world in which people and technology are free to exchange information securely, and complex insecure passwords become a thing of the past.

Our vision is to make the highest levels of cybersecurity available to organizations and consumers alike, solving complexity and scalability issues by managing high volumes of digital credentials.

We have been delivering trusted solutions to high profile customers for over 20 years. Our team of experts has deployed millions of identities to governments, most of the largest aerospace and defence corporations, and major financial services and healthcare organizations, as well as leading telecommunications, cloud services and information technology firms, providing industry-leading employee and customer credential management systems.

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.

The following sections are extracted from the Company's forthcoming Annual Report and contain 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/5686Q_1-2018-6-6.pdf

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

INTERCEDE GROUP plc

Preliminary Results for the Year Ended 31 March 2018

CHAIRMAN'S STATEMENT

The last financial year was another difficult period for Intercede, following a challenging 2016/2017. The Board remains confident in the Company, its products and the potential to be a leading player in the fast-evolving cybersecurity market.

Following review, the Board agreed to make several changes and brought in a new Chief Executive and reorganized the management team. The new leadership team are fully focused on building on recent successes and are committed to improving standards, enhanced operating performance and the conversion of recent product development into meaningful revenue generation and growth.

Strategy & Partnerships

At the heart of Intercede's strategy remains its market leading product MyID. With over 80 blue chip deployments worldwide and a number of important contract wins that have been added in the last 12 months, MyID continues to be the solution of choice for major public key infrastructure (PKI) system deployments. Intercede is working closely with some of the leading industry IT majors and looking to form more partnerships, from which a commercial relationship could result in a significant increase in sales revenues.

Results

Revenue for the year was GBP9.2m (2017: GBP8.3m), which represents an 11% increase on the previous year. This revenue generation has predominantly come from existing customers in Intercede's core markets of government, defence contractors and large, highly secure corporate enterprises. Against a backdrop of continued investment in technology, the Group made a loss for the year of GBP3.8m in the year ended 31 March 2018 (2017: GBP3.9m).

In the second half of the year, a cost-cutting review removed significant costs from the business without impacting our operational capability. The Group has started the new financial year with an operating cost run rate that is more than 20% lower (approximately GBP3m per annum) than at this point last year.

Board Changes

The founder of Intercede, Richard Parris, ceased his roles as Chairman & Chief Executive and became a Non-Executive Director of the Company on 28 March 2018. I would like to thank Richard for his many years of service to Intercede. His vision and hard work have helped make the Company what it is today.

Jayne Murphy ceased her role as Operations Director on 19 April 2018. I thank Jayne for her professionalism and hard work during her many years of service to Intercede.

I was appointed as Non-Executive Chairman on 28 March 2018 and Klaas van der Leest was appointed as Chief Executive on 10 April 2018.

I have been on the Intercede Board since 1 June 2017 as the Company's Senior Independent Non-Executive Director. Prior to this I was Chairperson of Vodafone Americas, a role held since 2013 and in which I led the development of applications for the Internet of Things ("IoT"). I joined Vodafone Americas as President of its Global Enterprise division where I built a US-wide mobile business focused exclusively on Enterprises. I have also held senior roles at BT Americas including Chief Operating Officer and President. On leaving BT in 2008, I was President of BT Global Financial Services and was responsible for BT's relationships with the top 40 global investment banks.

Klaas is an experienced executive with extensive sales, marketing, business development and general management experience in IT and IT services. He has significant international knowledge and experience as a result of various roles with remits across EMEA, Asia-Pac and North America. Klaas has worked for a number of large and small, quoted and privately owned organizations in market leading and turnaround situations including CA Technologies, Intelecom UK, Amulet Hotkey, Global Crossing, Attenda and Logica. He has proven expertise in the development and execution of national and international sales growth, 'go to market' initiatives and customer focused expansion strategies.

Outlook

Cyber-threats, whether driven by individuals, organizations or nation states are increasing in sophistication and the economic and reputational cost is growing exponentially. Intercede's MyID continues to enable our customers to eliminate reliance on the use of potentially insecure passwords for secure authentication. In doing so, they become increasingly resistant to social engineering and other cyber-attacks based on compromising employee (or end customer) login details.

The investment in new formats and components of MyID puts Intercede in a strong position to provide the market with reliable Digital Trust. Intercede experienced a strong end to the financial year which included the receipt of a large US Federal Government license order on 28 March 2018. License orders relating to this deployment have historically been received every 12 months or so and therefore the revenue for the years ending 31 March 2019 and 2020 is particularly sensitive to the timing of future orders. Following reviews, the cost base has been brought back in line with future revenue forecasts and the Board are confident that Intercede will grow and return to profit within the next two years.

Chuck Pol

Chairman

7 June 2018

INTERCEDE GROUP plc

Preliminary Results for the Year Ended 31 March 2018

STRATEGIC REPORT

Introduction

Intercede is a cybersecurity 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 it can now be delivered via the Cloud, mobile and web applications 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 recognised 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 has 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.

Operational Review

It has been a year of major change. As well as the Board and senior management changes already highlighted in the Chairman's Statement, actions have been taken to reduce the cost base and there is a renewed focus on the MyID platform at the core of Intercede's strategy.

Customers and partners recognize Intercede's leading expertise in cryptographic key management, which form market leading solutions that cannot be readily duplicated by the industry majors themselves. To widen the market into which Intercede can sell its products MyID can be deployed in various formats; namely on-premise, cloud-based and via web and mobile applications. One of the cornerstones of the Group's strategy is to utilize the various formats and components of our MyID technology to provide a solution tailored to the user; be they a government, an employee or the enterprise's end customer.

An exciting example of this in action is the recent sale of a MyID solution to a Middle Eastern country to issue mobile government identities to its citizens. This solution incorporates Intercede's mobile application authentication technology to allow citizens to easily and securely generate a digital identity on their smart phone via a government app. Using Intercede's MyID software, the digital identity can then be used for accessing a mobile eco-system of government services, healthcare, banking and e-commerce. This solution catapults them to being a world-leading nation for the mobile-first delivery of digital services.

There is also demand for Intercede's mobile authentication technology from existing US Federal agency customers. Intercede continues to work with a range of Mobile Device Managers (MDMs), including AirWatch, MobileIron, Citrix and Blackberry to extend the PIV program to issue derived credentials to a federal user's smartphone, tablet or laptop. Intercede's MyID was the first derived PIV Credential solution to receive an Authority to Operate (ATO) for a US Federal agency. It is pleasing to note that the pipeline for the next financial year contains a number of derived proof of concept opportunities for various US Federal agencies.

Markets and Products

Intercede's solutions are deployed in many market sectors for a variety of customers from governments to defence contractors and large enterprises. MyID is particularly well known within US Federal agencies as Intercede were one of the first to issue and manage FIPS-201 compliant PIV credentials to cards and derived PIV credentials to mobile devices.

Intercede works with some of the largest organizations 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 Technology Partners include:

Devices - AET, Athena (NXP), Gemalto, Giesecke & Devrient, IDEMIA (Oberthur), SafeNet, SafeNet AT, TCOS, TicTok, Yubico

PKI - DigiCert (Symantec), EJBCA (PrimeKey), Entrust, Microsoft, Verizon (Unicert)

Mobile - Google/Android, Apple/iOS, AirWatch, Citrix, MobileIron, Blackberry, Certrify

Card Printers - DataCard (Entrust), DIGID, Fargo (HID), Get Group, Magicard, Zebra

Customers and partners value MyID because it is highly configurable and feature-rich and interfaces with a broad range of third party technologies that make up a PKI infrastructure. Intercede's product strategy continues to be working with partners where possible to sell MyID to an end user as part of an end-to-end PKI solution. The Group sells its products through a global network of authorised partners. They vary in size from large international consultancies and cybersecurity companies to local system integrators and value added resellers.

It is important to make MyID customisable so it can be easily integrated into a partner's solution but this can be achieved by giving the partner the toolkit to do it themselves, rather than Intercede continually changing the core MyID product to address each individual solution. This modular approach means Intercede only produces core formats of MyID (on-premise, Cloud, mobile etc), which become modules around which a partner can customise their solution using either a simple API (Application Programming Interface) or an SDK (Software Development Kit).

Trading Results

Revenues for the year ended 31 March 2018 totalled GBP9,204,000, an 11% increase on the previous year's revenues of GBP8,286,000. Although orders from US Federal agencies have been slower than expected, it is pleasing to see growth in newer markets and revenues generated in the second half of the year represent a high for the Group.

As previous reported, the first half of the year saw significant contract wins including an award from a major US Aerospace & Defence contractor, to manage digital identities for 130,000 devices, and a sale to a large UK defence organization. In additional there were initial MyID license sales to the largest US military shipbuilding company and to one of the world's largest diversified natural resource companies. Although both of these initial sales were small, they will help to drive future revenue growth as successful implementation should lead to follow-on orders for tens of thousands of licenses.

The second half of the year saw improvement, with significant revenue generated from existing customers as well as new customers. This includes the aforementioned sale to allow a Middle Eastern country to issue mobile national identities to its citizens. For Intercede, this is a strategically important project that exploits many of the new technologies Intercede has developed over the past few years. This Middle Eastern country is a top tier reference customer for other nations to follow and, through Intercede's network of partners, the target is to replicate this solution in multiple geographic territories. In additional to this win, Intercede secured a license order with another major healthcare provider, converted a pilot deployment with a large European bank into a full deployment and secured an initial proof of concept sale in respect of the 2020 US Census. All of these wins are expected to generate incremental revenue in the next financial year.

Regional Sales

 
           GBPm                         North America   Rest of World 
           2014                                   6.0             3.8 
           2015                                   4.5             4.3 
           2016                                   8.7             2.3 
           2017                                   6.4             1.9 
           2018                                   6.5             2.7 
 The US represents Intercede's largest market with 
  sales to North America making up 71% of total 
  sales during FY 2018. 
 
 

Revenue Breakdown

 
                           Professional        Software 
     GBPm     S&M              Services        Licenses     Other 
     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 
     2018     4.4                   1.4             3.4       0.0 
 
 The last five years has seen progressive growth 
  in recurring Support & Maintenance (S&M) revenues 
  due to a cumulative increase in customers. Software 
  license revenues from the traditional MyID business 
  tend to be lumpy. Professional services is slightly 
  down on last year partly due to large license 
  orders received in the second half of the year 
  that are expected to be implemented in the next 
  financial year. Intercede is also encouraging 
  new customers to stick to core product configurations, 
  thereby reducing the need to implement costly 
  customisations. 
 

In the second half of the year, a cost-cutting review removed significant costs from the business without impacting our operational capability. This year contains exceptional one-off costs connected with the savings, such as Settlement Agreement costs, which are primarily responsible for a 6% increase in operating expenses from GBP12,891,000 to GBP13,669,000. The Group has started the new financial year with an operating cost run rate that is more than 20% lower (approximately GBP3m per annum) than at this point last year.

The increase in revenues is largely offset by the increase in operating expenses, leading to a GBP4,506,000 operating loss (2017: GBP4,721,000 operating loss).

Revenue, Opex, Profit/Loss & Cash

 
       GBPm           Revenue       OpEx             Profit/Loss   Cash 
       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 
       2018               9.2       13.7                    -3.8    2.3 
 The substantial increase in operating expenses 
  (OpEx) over the last five years primarily reflects 
  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 2018 year end cash does 
  not include the impact of significant orders received 
  in the last two months of the year with gross 
  cash balances as at 30 April 2018 increasing to 
  GBP4.7m. 
 
 

Staff costs continue to represent the main area of expense, representing 76% of total operating expenses (2017: 78%). The average number of employees and contractors was 119, down from the previous year's average of 125. However, as a result of the second half cost reductions referred to above, the number of employees and contractors as at 31 March 2018 had been reduced to 98 (2017: 121).

Employees

 
                 Average Employees        Year end Employees 
    2014                        90                       103 
    2015                       113                       119 
    2016                       125                       126 
    2017                       125                       121 
    2018                       119                        98 
 Intercede employ one of the largest teams with 
  cryptographic key management experience and expertise 
  anywhere in the world. 
 

Expenditure on research and development (R&D) activities totaled GBP3,736,000 (2017: GBP3,994,000), approximately 57% of which related to the areas of strategic investment outlined above (2017: 62%). 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 2018 (2017: GBPnil).

Research & Development (R&D)

 
                                                      R&D Tax Credit (in 
         GBPm                       R&D Expenditure             arrears) 
         2014                                   2.9                  0.4 
         2015                                   3.6                  0.4 
         2016                                   3.9                  0.9 
         2017                                   4.0                  0.9 
         2018                                   3.7                  1.1 
 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. 
 
 

The net finance cost for the year was GBP442,000 (2017: GBP57,000). This reflects a full year of interest payable on the convertible loan notes that were issued in January 2017 and a partial year of interest payable on the additional GBP510,000 convertible loan notes that were issued, under the same instrument, on 25 August 2017.

A GBP1,118,000 taxation credit in the period (2017: GBP888,000 taxation credit) primarily reflects cash received following the 2017 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 GBP3,830,000 (2017: loss of GBP3,890,000) resulted in a basic and fully diluted loss per share of 7.6p (2016: loss per share 8.0p).

Financial Position

The Group's cash position at 31 March 2018 was GBP2,272,000 (2017: GBP6,891,000), but it is worth noting that the year end cash position does not include the impact of significant orders received in the last two months of the year. As at 30 April 2018, gross cash balances totalled GBP4.7m.

The cost-cutting review has enabled the Group to exit one of its UK properties, which has been put up for sale and is expected to realise a net receipt of GBP0.4m during the new financial year.

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)

 
                        2014    2015   2016    2017   2018 
 
 Sales growth            45%   (10%)    25%   (25%)    11% 
 Export sales            91%     85%    96%     95%    94% 
 North American 
  sales                  61%     51%    79%     77%    71% 
 New deployments 
  with revenues over 
  GBP20,000               10       6      6       8     10 
 

Principal Risks and Uncertainties

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

-- 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.

-- 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.

-- 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

Klaas van der Leest Andrew Walker

Chief Executive Finance Director

7 June 2018 7 June 2018

Consolidated Statement of Comprehensive Income for the year ended 31 March 2018

 
                                               2018      2017 
                                            GBP'000   GBP'000 
Continuing operations 
Revenue                                       9,204     8,286 
Cost of sales                                  (41)     (116) 
                                           --------  -------- 
 
Gross profit                                  9,163     8,170 
Operating expenses                         (13,669)  (12,891) 
                                           --------  -------- 
 
Operating loss                              (4,506)   (4,721) 
 
Finance income                                   10        13 
Finance costs                                 (452)      (70) 
                                           --------  -------- 
 
Loss before tax                             (4,948)   (4,778) 
Taxation                                      1,118       888 
                                           --------  -------- 
 
Loss for the year                           (3,830)   (3,890) 
                                           --------  -------- 
 
Total comprehensive expense attributable 
 to owners of the parent company            (3,830)   (3,890) 
                                           --------  -------- 
 
Loss per share (pence) 
 - basic                                     (7.6)p    (8.0)p 
 - diluted                                   (7.6)p    (8.0)p 
                                           --------  -------- 
 
 

Consolidated Balance Sheet as at 31 March 2018

 
                                    2018     2017 
                                 GBP'000  GBP'000 
Non-current assets 
Property, plant and equipment        195      695 
                                 -------  ------- 
 
Current assets 
Assets held for sale                 373        - 
Trade and other receivables        4,709    1,280 
Cash and cash equivalents          2,272    6,891 
                                 -------  ------- 
                                   7,354    8,171 
                                 -------  ------- 
 
Total assets                       7,549    8,866 
                                 -------  ------- 
 
Equity 
Share capital                        505      499 
Share premium                        673      673 
Equity reserve                        66       60 
Merger reserve                     1,508    1,508 
Accumulated deficit              (5,719)  (2,354) 
                                 -------  ------- 
Total equity                     (2,967)      386 
                                 -------  ------- 
 
Non-current liabilities 
Convertible loan notes             4,670    4,124 
Deferred revenue                     324      141 
                                   4,994    4,265 
 
Current liabilities 
Trade and other payables           1,857    1,390 
Deferred revenue                   3,665    2,825 
                                 -------  ------- 
                                   5,522    4,215 
                                 -------  ------- 
 
Total liabilities                 10,516    8,480 
                                 -------  ------- 
 
  Total equity and liabilities     7,549    8,866 
                                 -------  ------- 
 

Consolidated Statement of Changes in Equity for the year ended 31 March 2018

 
                                    Share    Share   Equity   Merger  Accumulated    Total 
                                  capital  premium  reserve  reserve      deficit   equity 
                                  GBP'000  GBP'000  GBP'000  GBP'000      GBP'000  GBP'000 
 
As at 1 April 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 
Purchase of own shares                  -        -        -        -        (147)    (147) 
Employee share option 
 plan charge                            -        -        -        -         (19)     (19) 
Employee share incentive 
 plan charge                            -        -        -        -          493      493 
Issue of new shares                     6        -        -        -            -        6 
Re-issuance of treasury 
 shares                                 -        -        -        -          138      138 
Equity component of convertible 
 loan notes                             -        -        6        -            -        6 
Loss for the year and 
 total comprehensive expense            -        -        -        -      (3,830)  (3,830) 
                                  -------  -------  -------  -------  -----------  ------- 
 
As at 31 March 2018                   505      673       66    1,508      (5,719)  (2,967) 
                                  -------  -------  -------  -------  -----------  ------- 
 

All amounts included in the table above are attributable to owners of the parent company.

Consolidated Cash Flow Statement for the year ended 31 March 2018

 
                                                     2018         2017 
                                                  GBP'000      GBP'000 
Cash flows from operating activities 
Operating loss                                    (4,506)      (4,721) 
Depreciation                                          156          194 
Loss on disposal of property, plant and 
 equipment                                              -           48 
Employee share option plan (credit)/charge           (19)           60 
Employee share incentive plan charge                  493          488 
Employee unit incentive plan charge/(credit)            2         (20) 
Employee unit incentive plan payment                  (8)         (28) 
Increase in trade and other receivables           (3,340)        (364) 
Increase/(decrease) in trade and other payables       434        (417) 
Increase in deferred revenue                        1,023          820 
 
Cash used in operations                           (5,765)      (3,940) 
Finance income                                         13           14 
Finance costs on convertible loan notes             (344)            - 
Taxation                                            1,118          888 
                                                  -------      ------- 
 
Net cash used in operating activities             (4,978)      (3,038) 
                                                  -------      ------- 
 
 
Investing activities 
Purchases of property, plant and equipment           (29)         (73) 
                                                  -------      ------- 
 
Cash used in investing activities                    (29)         (73) 
                                                  -------      ------- 
 
 
Financing activities 
Purchase of own shares                              (141)        (143) 
Proceeds from issue of ordinary share capital           -          453 
Proceeds from re-issuance of treasury shares          138            - 
Proceeds from issue of convertible loan 
 notes                                                510        4,495 
Convertible loan note issue costs                    (27)        (321) 
                                                  -------      ------- 
 
Cash generated from financing activities              480        4,484 
                                                  -------      ------- 
 
 
Net (decrease)/increase in cash and cash 
 equivalents                                      (4,527)        1,373 
Cash and cash equivalents at the beginning 
 of the year                                        6,891        5,289 
 Exchange (losses)/gains on cash and cash 
  equivalents                                        (92)          229 
                                                  -------      ------- 
 
Cash and cash equivalents at the end of 
 the year                                           2,272        6,891 
                                                  -------      ------- 
 
 

Preliminary Results for the Year Ended 31 March 2018

NOTES

1. The financial information set out in this announcement does not constitute the Group's Statutory Accounts for the years ended 31 March 2018 or 2017, but is derived from those accounts. Statutory Accounts for 2017 have been delivered to the Registrar of Companies and those for 2018, 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 19 September 2018 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 losses and net liabilities 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:

 
                    2018     2017 
                 GBP'000  GBP'000 
UK                   533      403 
Rest of Europe       963      960 
North America      6,506    6,367 
Rest of World      1,202      556 
                 -------  ------- 
 
                   9,204    8,286 
                 -------  ------- 
 
 
   3.      OPERATING LOSS 

Operating loss is stated after charging/(crediting):

 
                                                   2018     2017 
                                                GBP'000  GBP'000 
Staff costs                                       9,868   10,049 
Settlement Agreement costs                          190        - 
Compensation for loss of office paid to 
 directors and key management                       334        - 
Foreign exchange loss/(gain)                        155    (165) 
Depreciation of property, plant and equipment       156      194 
Operating lease rentals                             397      390 
Cost of sales                                        41      116 
Other expenses                                    2,569    2,423 
                                                -------  ------- 
 
                                                 13,710   13,007 
                                                -------  ------- 
 
 

Included in the costs above is research and development expenditure totalling GBP3,736,000 (2017: GBP3,994,000).

   4.      TAXATION 
 
The tax credit comprises:                          2018     2017 
                                                GBP'000  GBP'000 
Current year - UK corporation tax                     -        - 
Current year - US corporation tax                  (30)     (34) 
Research and development tax credits relating 
 to prior years                                   1,148      922 
                                                -------  ------- 
 
Taxation                                          1,118      888 
                                                -------  ------- 
 
 

The Group has unused tax losses of GBP13,854,000 (2017: GBP11,773,000) and unrecognised deferred tax assets of GBP2,355,000 (2017: GBP2,001,000) calculated at the UK corporation tax rate of 17% (2017: 17%).

   5.      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.

 
                                                                            2018        2017 
                                                                         GBP'000     GBP'000 
Loss for the year                                                        (3,830)     (3,890) 
                                                                      ----------  ---------- 
 
 
                                                                          Number      Number 
 
Weighted average number of shares - basic                             50,212,714  48,835,080 
                                                          - diluted   50,212,714  48,835,080 
                                                                      ----------  ---------- 
 
 
                                                                           Pence       Pence 
Loss per share - basic                                                    (7.6)p      (8.0)p 
                       - diluted                                          (7.6)p      (8.0)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:

 
                                                    2018        2017 
                                                  Number      Number 
 
Issued ordinary shares at start of year       49,903,143  48,735,005 
Effect of treasury shares                      (115,623)   (294,000) 
Effect of issue of ordinary share capital        425,194     394,075 
                                              ----------  ---------- 
 
Weighted average number of shares - basic     50,212,714  48,835,080 
                                              ----------  ---------- 
 
 
Add back effect of treasury shares                   N/A         N/A 
Effect of share options in issue                     N/A         N/A 
Effect of convertible loan notes in issue            N/A         N/A 
                                              ----------  ---------- 
 
Weighted average number of shares - diluted   50,212,714  48,835,080 
                                              ----------  ---------- 
 
 
   6.      DIVIDEND 

The Directors do not recommend the payment of a dividend.

   7.      ASSETS HELD FOR SALE 

An office based in the UK is presented as an asset held for sale following the commitment of the Group, on 23 February 2018, to a plan to sell the property. Efforts to sell the asset have commenced and a sale is anticipated within the next 12 months.

The asset has been reclassified from Property, plant and equipment into Current assets at its carrying value of GBP373,000. This is estimated to be lower than its fair value less costs to sell, so no impairment loss is required.

   8.      SHARE CAPITAL 
 
                                                   2018     2017 
                                                GBP'000  GBP'000 
Authorised 
481,861,616 ordinary shares of 1p each (2017: 
 481,861,616)                                     4,819    4,819 
                                                -------  ------- 
 
Issued and fully paid 
50,523,926 ordinary shares of 1p each (2017: 
 49,903,143)                                        505      499 
                                                -------  ------- 
 

The increase in issued and fully paid ordinary shares of 1p each represents the issue of 620,783 shares on 25 July 2017 to facilitate the July 2017 Free Share award.

As at 31 March 2018, the Company had 41,645 ordinary shares held in treasury (2017: 294,000). During the year, the Company re-issued 252,355 treasury shares to a director and a senior manager.

   9.      Convertible loan notes 
 
                                                  2018     2017 
                                               GBP'000  GBP'000 
Non-current 
8% Convertible loan notes (29 December 2021)     4,670    4,124 
                                               -------  ------- 
 
 

Borrowings are repayable as follows:

 
                                2018     2017 
                             GBP'000  GBP'000 
Between two and five years     4,670    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.

On 25 August 2017 the Company issued GBP510,000 convertible loan notes under the same convertible loan note instrument.

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

 
                                                  2018     2017 
                                               GBP'000  GBP'000 
Nominal value of convertible loan note issue     5,005    4,495 
Issue costs                                      (348)    (321) 
Equity component at date of issue                 (66)     (60) 
                                               -------  ------- 
Liability component at date of issue             4,591    4,114 
Effective interest rate adjustment                  79       10 
                                               -------  ------- 
 
Liability component at 31 March                  4,670    4,124 
                                               -------  ------- 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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