TIDMIGP
RNS Number : 2256D
Intercede Group PLC
20 June 2023
20 June 2023
INTERCEDE GROUP plc
('Intercede', the 'Company' or the 'Group')
Preliminary Results for the year ended 31 March 2023
Intercede, a cybersecurity software company specialising in
digital identities, today announces its preliminary results for the
year ended 31 March 2023 ("FY23").
Headlines:
-- Record Group revenues at GBP12.1 million
-- Strong net profit of GBP1.3 million
-- Net cash generation from operating activities of GBP2.9 million
-- Basic EPS of 2.3p
-- Completion of maiden acquisition, Authlogics Ltd ("Authlogics") in October 2022
-- Integration of Authlogics on track
-- Continued investment in product and code including internal IT infrastructure
-- Clear strategic vision on M&A plans
-- Strong and unleveraged financial position
Financial Highlights
FY23 FY22 %
Change
GBP million GBP million
------------ --------
Revenue 12.1 9.9 22.2%
Gross profit 11.7 9.7 20.6%
Profit before Tax 0.6 0.3 100.0%
Net Profit 1.3 0.7 85.7%
EPS - basic 2.3p 1.3p 76.9%
EPS - diluted 2.2p 1.2p 83.3%
Gross Margin 97% 98% -1.0%
Net Margin 11% 7% 57.1%
Cash and cash equivalents 8.3 7.8 6.4%
Net cash from operating
activities 2.9 0.1 2800.0%
Deferred revenue 7.5 5.2 44.2%
Total Assets 17.4 12.9 34.9%
Total Equity 7.0 5.5 27.3%
------------ --------
Adjusted EBITDA 1.3 1.0 30%
Less:
Amortisation of intangibles 0.1 -
Depreciation of assets 0.1 0.1
Right-of-use depreciation 0.2 0.2
Acquisition costs 0.2 0.2
Employee Share/Unit incentive
& option plan charges - 0.1
Exceptional costs 0.1 -
Operating Profit 0.6 0.4 50.0%
------------
Revenue highlights for the year include:
-- Revenues for the year ended 31 March 2023 totalling GBP12.1
million were approximately 22% higher than last year (2022: GBP9.9
million) and a 13% increase on a constant currency basis
-- Multiple MyID PIV licence orders from the US Department of
State (DoS) for the MyID Identity Management System (IDMS) solution
totalling $1.6 million. The same agency also placed services orders
with a value totalling $0.3 million. Linked to this sale is a third
party embedded product which marginally impacted gross profit in
the year
-- Licence orders continued in the latter half of the year, with
sales to a telecommunications provider in the US, an energy company
in the EU, new deployments for the UK government, and further new
sales in UAE, Saudi Arabia and Oman
-- Several significant customers have chosen to upgrade their
existing MyID deployments including, but not limited to, a UK
Government department, a US central bank and a key US government
agency. A major US defence and consultancy contractor is upgrading
to MyID v12.6
-- A $0.2 million follow-on order of professional services for a
prestigious independent US Federal Agency that was won at the end
of the last financial year. The deployment will leverage
Intercede's technology partnership with Microsoft, by delivering
PKI credentials into Microsoft Intune managed smartphones enabling
sensitive data protection and secure access to agency systems
-- A follow-on MyID Enterprise order from a US Federal agency
tasked with intelligence and security services. Orders have been
received to date for 75,000 device licences.
Operating Highlights
-- Acquisition of Authlogics Ltd, a UK based company, with
annual recurring revenues (ARR) of GBP0.5 million. It brings Multi
Factor Authentication (MFA) and Password Security Management (PSM)
capabilities to the Intercede Group. Integration plans are on track
and a merged development road map enacted for FY24
-- Increased investment in key departments of the Group
including development & testing and product management
-- The M&A programme continues, focused on targets that add
recurring revenues and have a strong industry and product logic
-- A strategic review of the Group's IT infrastructure was
conducted in the year, and we has now commenced a deployment into
the Microsoft cloud with the aim of increasing resilience,
stability and scalability
-- Continued upgrades of MyID with v12.6 and v4.2 for Authlogics
MFA released at end of March 2023
-- The Group successfully maintained ISO 9001 and 27001
certification which now includes US operations.
Outlook
This has been an encouraging and successful year for the Group.
However, to maintain and sustain its current momentum, it needs to
continue to invest in its colleagues, IT Infrastructure, product
development and sales and marketing.
We embark in to FY24 with good visibility on the pipeline, known
and fully resourced internal critical investments and with a clear
road map on our acquisition strategy. As mentioned frequently, the
focus is on 'growth' and execution of strategic plans to deliver
it.
Board Changes
During the year Andrew Walker retired from the Board with the
appointment of Nitil Patel as his successor and new Chief Financial
Officer of Intercede. Royston Hoggarth, Non-Executive Director of
the Company succeeded Charles 'Chuck' Pol as the Group's Chairman.
Tina Whitley was appointed as an Independent Non-Executive
Director, bringing over 30 years' experience across the information
technology sector.
As also announced today, Chuck Pol and Rob Chandhok will step
down from the Board as Non-Executive Directors in due course. The
Board is delighted to welcome John Linwood as a new Non-Executive
Director. John brings with him considerable market knowledge and a
breadth and depth of skills and experience. Our thanks and best
wishes go to Chuck and Rob for their service to the Company.
Royston Hoggarth, Chairman, said:
"I would like to take this opportunity to thank all our
colleagues, customers, partners and stakeholders for their efforts
in helping deliver a successful and profitable result. Furthermore,
I extend my thanks to Klaas and his management team for their
leadership and invaluable assistance.
It has been a promising year of both financial and operational
progress and Intercede is now strongly positioned for further
growth. With the release of FIPS201-3, US federal agencies now have
a wider set of credential options, including PKI, FIDO, MFA as well
as passwords, and this bodes well for the Group. To be even more
successful, we need to remain disciplined in terms of how we
allocate our resources, our capital and execute on our investment
plans.
With the current macro-economic environment harder to assess and
navigate, the Group will continue to be vigilant on its liquidity
position and is well placed to make strategic acquisitions when the
opportunity arises."
ENQUIRIES
Intercede Group plc Tel. +44 (0)1455 558 111
Klaas van der Leest CEO
CFO
Nitil Patel
finnCap Ltd. Tel. +44 (0)20 7220 0500
Simon Hicks/Fergus Sullivan Corporate Finance
Tim Redfern/Charlotte Sutcliffe ECM
About Intercede
Intercede is a cybersecurity software company specialising in
digital identities, and its innovative solutions enable
organisations to protect themselves against the number one cause of
data breach: compromised user credentials.
The Intercede suite of products allows customers to choose the
level of security that best fits their needs, from Secure
Registration and ID Verification to Password Security Management,
One-Time Passwords, FIDO and PKI. Uniquely, Intercede provides the
entire set of authentication options from Passwords to PKI,
supporting customers on their journey to passwordless and stronger
authentication environments. In addition to developing and
supporting Intercede software, the Group offers professional
services and custom development capabilities as well as managing
the world's largest password breach database.
For over 20 years, global customers in government, aerospace and
defence, financial services, healthcare, telecommunications, cloud
services and information technology have trusted Intercede
solutions and expertise in protecting their mission critical data
and systems at the highest level of assurance.
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) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and
is disclosed in accordance with the company's obligations under
Article 17 of MAR.
The year in review
The Group entered FY23 with clear goals and a key strategic aim
of 'growth', both organically and inorganically. It has
successfully delivered on this, both in terms of revenue growth and
by completing our first acquisition. FY23 has been a volatile and
uncertain year in terms of geo-political instability and it is
therefore testament to the resilience of the Group that accelerated
revenue growth was delivered whilst also retaining a focus on cost
control.
Market Opportunity and Growth Strategy
Intercede's MyID platform is a leading credential management
system (CMS) and identification and verification (ID&V)
solution that integrates and manages a broad range of PKI (Public
Key Infrastructure) and FIDO (Faster Identity Online) technologies.
These are very attractive, but niche, market segments which meet
the needs of large organisations, such as Aerospace & Defence
contractors, and governments who are prepared to pay for military
grade security and can cope with the complex infrastructure.
For Intercede this is both a blessing, due to the potential for
large initial one-off licence orders and steady recurring Support
& Maintenance, but it can also present a challenge as the
timing of contract awards are invariably outside of Intercede's
control.
For the growth to be sustained Intercede needs to expand faster
and broaden MyID's functionality as it moves down the
authentication pyramid and increase its addressable market. This
lies at the heart of Phase Two of the turnaround plan.
After considering options such as partnering and further
internal development, the Board decided that an acquisition
approach would accelerate time-to-market as well as leveraging new
IP for existing clients and partners and extending the target
account market. On 10 October 2022 Intercede was pleased to
announce the acquisition of Authlogics, a Multi Factor
Authentication ('MFA') and Password Security Management ('PSM')
software vendor which enables the Group to offer its customers and
prospects solutions that span the entire authentication
pyramid.
Strategy
Intercede continues to focus on its '6C strategy', centred
around Colleagues, Customers, Channels, Code, Cash and more
recently, Corporate Development. In the Phase 2 of its turnaround,
the Group will actively explore buy-side M&A, taking time to
ensure the right strategic fit(s) to ensure scalability and
accelerated revenue growth.
1. Colleagues
It is no surprise that we start with Colleagues: they are the
main asset we have who in turn drive the other "Cs". The
cybersecurity employment sector has shown two distinct phases in
the financial year; in the earlier phase we experienced a temporary
increase in employee churn rates and in the latter, as larger
technology companies downsized and employment market cooled, we
have seen recruitment opportunities increase as well as staff who
had previously left wanting to rebound.
As stated in previous reports, Intercede's innovation roadmap
can leverage many years of internal development expertise and the
Group therefore places a high degree of focus on its colleague
strategy as it strives for market-leading staff retention.
As at 31 March 2023 colleagues totalled 94 (2022: 87), while the
average number of colleagues during the period was 91 (2022: 84).
The attrition rate (average number of leavers over the year as a
ratio of average headcount over the year) rose to 10% compared to
7% last year. The increase in attrition was not unexpected and was
factored into the Group's hiring strategy and pay and bonus policy.
Intercede and its Board understands the issues everyone is facing
with the cost-of-living crisis, has listened to the Employee
Working Group (EWG) and taken onboard feedback from its more recent
Employee Satisfaction Survey. The Group made a one-off payment of a
cost-of-living allowance in November 2022 and discretionarybonus
payments have been maintained for eligible colleagues.
2. Customers
The wins generated at the end of FY22 created momentum that has
carried into FY23 and resulted in revenue for FY23 that is 22%
higher than the prior year on a reported basis. In particular,
follow-on licence orders from existing customers have driven the
growth. Although the seven new customers signed up during the year
is broadly similar to last year (eleven new customers) the level of
attrition remains very low with renewal rates of 98% compared to
99% in the prior year.
3. Channels
Intercede continues to invest in its Connect Partner Programme
which deals with resellers as well as technology partners. Over the
period relationships were further strengthened which resulted in
new pipeline opportunities, partner campaigns and most importantly
driving the strong H1 revenue growth. As reported in the Customers
section above, licence sales have driven the overall revenue growth
compared to the prior period. Partner relationships play an
increasing role in these licence sales and generated 91% of all
licence software sales in FY23 (2022: 83%).
Our technology partners have confidence that as security
standards change, and new technologies become available, MyID, as a
product portfolio, is designed to cope with these changes both in
order to support newer devices and systems, but also to aid the
transition between them ensuring the ongoing security of system
access as technology changes are implemented.
Whilst the resellers are focused on delivering complete end to
end solutions to their clients, it is paramount that MyID has a
rich eco system of proven technology partners and integrations
which enables an out-of-the-box approach to many complex use
cases.
The addition of Authlogics's partner and channel footprint, with
no overlap with Intercede, further enhances the Group's geographic
reach as well as providing new cross and upsell opportunities.
4. Code
Code for Intercede's software products is written and managed by
a large in-house UK based team of expert and experienced software
designers, developers & testers, enabling Intercede to provide
market leading digital identity solutions at the level of security
our customers require. During this financial year, Intercede has
continued to invest in its product portfolio in accordance with its
core development principles:
-- To solve real world problems, meeting constantly evolving Customer and Partner needs
-- To create and maintain modern software products based upon market leading technology
-- To broaden the addressable market with new and competitive functionality
-- To deliver secure solutions enabling our customers to protect sensitive systems and data
MyID PSM
Intercede MyID PSM software enables customers still using
passwords to ensure that they are as secure as they can be, with
comprehensive user-friendly policies, intelligent password audits,
and continuous assessment against the world's largest database of
compromised credentials.
New features included:
-- Updating the password breach database to contain over 6
billion records currently, makes it the largest database of known
compromised passwords in the world. This enables our customers to
ensure passwords they are using are not known to be compromised as
part of an online password breach
-- Improved user experience in the self-service portal when a shared password is found
-- Live monitoring of public email address breaches
-- Support for self-service password reset directly from the user's desktop
MyID MFA
Intercede MyID MFA software enables customers to use stronger
authentication to anything from anywhere, by delivering modern
authentication, that is easy to use, deploy and manage.
New features included:
-- A mobile push notification app with best of breed ease of
use, supporting biometric authentication
-- Enhanced security and user experience with provision of
context-based information in the mobile app including a summary of
the system being accessed and location of the request
-- Modern protection against push fatigue, enhancing phishing-resistance
-- Support for offline logon from the mobile app
-- Provision of a real-time dashboard for web-based reporting from the management console
MyID CMS
Intercede MyID CMS software enables customers to issue and
manage high-assurance credentials including PKI and FIDO simply,
securely and at scale, enabling our customers to comply with
regulations and deploy phishing-resistant authentication to protect
their systems and data against breach.
New features included:
-- An installation assistant helping customer verify and
configure environments prior to the CMS deployment, reducing costs
and skill required for installation
-- Continued modernisation of the operator interface improving
the user experience resulting in increased operational efficiency
and reduced training times
-- An enhanced set of APIs and SDK provided with the product,
providing partner and customers with the tools they need to
integrate the CMS within a wider identity ecosystem
-- Additional batch operations, delivering operational efficiency for large customer deployments
-- Support for the latest US government FIPS 201-3 standard,
ensuring our customers remain compliant with federal government
security regulations
-- Enhanced integration with Microsoft Intune and VMWare
Airwatch MDMs (Mobile Device Management Systems) ensuring devices
are complaint with security policies in advance of delivering
credentials
-- Support for the latest FIDO device attestation standard,
ensuring the MyID CMS remains at the forefront of FIDO for the
enterprise solutions
-- Support for newer versions of partner technologies, including
Yubico, Keyfactor, Entrust, Thales, IDEMIA and Microsoft.
MyID ID&V
Intercede registration and identity verification software
enables customers to onboard users at the highest levels of
identity assurance, compliant with US FIPS 201 standards. The
solution is fully integrated with the MyID CMS for maximum security
and ease of deployment
New features included:
-- Modernising the user interface to be browser independent
-- Improving the user experience to reduce training costs and time to deployment
-- Supporting electronic validation of identity documents (e.g.
passport or driving licence), enhancing the security of the
onboarding process
-- Providing secure export of fingerprint data to enable simple
integration with external background identity checking
processes
From a strategic perspective, Intercede's initial aim is to
broaden the addressable market with new and competitive
functionality and the acquisition of Authlogics represents a leap
forward in this regard.
It is Intercede's intention to sell the acquired products
standalone and create a product portfolio offering customers high,
medium and low authentication depending on their needs and
circumstances. The development team has commenced integration of
the products so that a customer can manage any form of
authentication they need used under a 'single pane of glass' or
migrate users from one form of authentication to another.
In April 2023, Intercede was delighted to be named an overall
leader by KuppingerCole Analysts AG within their 2023 Secrets
Management Leadership Compass. Our MyID product was also praised
for its Product Leadership and the Innovation Leadership we bring
to the industry through feedback from our customer base. The full
report can be downloaded from the Intercede website at the
following address:
https://www.intercede.com/kuppingercole-secrets-management-report-download/
5. Cash
Treasury and cash management is a significant pillar and crucial
asset for the Group. It operates a tight working capital model and
aims to maintain sufficient head room to ensure operations can
continue in potentially difficult global macroeconomic
environments.
The Group's Daily Sales Outstanding (DSO) has improved from 67
days (2022) to 63 days (2023) which has helped to generate a
significantly improved cash inflow from operations during the
period.
The Group had gross cash balances of GBP8.3 million as at 31
March 2023 compared to GBP7.8 million held at 31 March 2022. This
is after a cash outflow following the acquisition of Authlogics in
October 2022 for an initial consideration of GBP2.0 million and
related acquisition costs expensed to the Income Statement of
GBP0.2 million.
6. Corporate Development
Corporate Development is a key strategic component to drive
incremental revenue growth, IP acceleration as well as market
access whilst efficiently utilising the Company's robust balance
sheet. Following an intensive market assessment over the last 12
months as well as the strategic intent of "moving down the
authentication pyramid", the Group was pleased to report its first
acquisition, Authlogics as announced in October 2022.
In the section '4. Code' above the acquisition of Authlogics was
described as enabling the Group to address the entire
authentication pyramid by giving customer access to a portfolio of
products depending on whether their users need high, medium or low
authentication. Depending on a client's specific use case,
Intercede can now offer an end-to-end solution, from Passwords to
PKI.
Whilst the immediate operational activities are now focused on a
seamless integration of Authlogics, the corporate development
activity has firmly maintained its pace and further targets are
being assessed against authentication side and remaining sides of
the pyramid t. he Group will maintain business as usual and
maintain diligence in its M&A approach.
Financial Review
Income Statement
Revenue and operating results
The Group's revenue from continuing operations increased by 22%
to GBP12.1 million (2022: GBP9.9 million) and gross profit
increased by 21% to GBP11.7 million (2022: GBP9.7 million). Gross
margin decreased slightly from 98% to 97% as a third-party product
was part of a significant licence sale in the year.
The Group's operating profit was GBP0.6 million (2022: GBP0.4
million), after non-cash depreciation charge for property, plant
and equipment in the year of GBP0.1million (2022: GBP0.1 million),
a right-of-use depreciation charge of GBP0.2 million (2022: GBP0.2
million) and amortisation costs of GBP0.1 million (2022: GBPnil).
Acquisition costs for the period were GBP0.2 million (2022: GBP0.2
million) with exceptional expense of GBP0.1 million (2022: GBPnil),
relating to exiting CFO expense overlapping incoming. Operating
expenses increased by 19% to GBP11.1 million (2022: GBP9.3
million).
T ight cost control continues to be a focus for the Group in
conjunction with considered project expenditure to support revenue
growth. Meanwhile the Group continues to recognise the achievements
of its staff with pay rises and performance-related rewards. Staff
costs represents the highest area of expense representing 81% of
total operating costs (2022: 84%). Intercede had 94 employees and
contractors as at 31 March 2023 (2022: 84). The average number of
employees and contractors during the period was 91 (2022: 84).
The statutory profit before tax for the period was GBP0.6
million (2022: GBP0.3 million) and profit for year was GBP1.3
million (2022: GBP0.7 million).
Taxation
The Group has a tax credit of GBP0.7 million for the year due to
amounts received from HMRC in respect of R&D claims, less US
corporation tax payable. (2022: tax credit of GBP0.4 million). The
Group has carried forward unused tax losses of GBP8.8 million.
Intercede makes an R&D Claim as part of its annual tax return
and can choose whether to carry taxable losses forward or to
request a cash repayment from the UK government.
Finance Income
Net finance income was GBP0.1 million (2022: expense of GBP0.1
million) reflecting increased interest income due to rate
rises.
Earnings per share
Earnings per share from continuing operations in the year was
2.3 pence for basic and 2.2 pence for diluted (2022: 1.3p pence for
basic and 1.2p diluted) and was based on the profit for the year of
GBP1.3 million (2022: GBP0.7 million) with a basic weighted average
number of shares in issue during the period of 57,939,548 (2022:
57,265,739 shares). For diluted the weighted average number of
shares in issue during the period was 60,595,485 (2022:
59,413,261).
Dividend
The Board is not proposing a dividend (2022: GBPnil).
Financial Position
Acquisition of Authlogics
In early October 2022, the Group acquired Authlogics Limited
("Authlogics"), a Multi Factor Authentication ('MFA') and Password
Security Management ('PSM') software vendor, for initial
consideration of GBP1.7 million (adjusted to GBP2.0 million after
repayment of debt held by AL) plus further deferred, conditional
and staged earnout payments estimated to be GBP0.5 million. The
Group has consolidated the results since acquisition under IFRS3,
applying the purchase method.
Assets
Non-current assets of GBP3.6 million comprise goodwill of GBP2.4
million (2022: GBPnil), identifiable intangibles of GBP0.8 million
(2022: GBPnil), property, plant and equipment of GBP0.1 million
(2022: GBP0.1 million) and IFRS 16 right-of-use assets of GBP0.2
million (2022: GBP0.4 million).
Trade and other receivables increased by GBP0.9 million to
GBP5.5 million (2022: GBP4.6 million) reflecting a higher level of
customer orders towards the end of the year.
Liabilities
Current liabilities increased by GBP2.7 million to GBP9.5
million (2022: GBP6.8 million) reflecting increased deferred
revenue at the year end of GBP7.0 million (2022: GBP5.0
million).
Non-Current liabilities increased by GBP0.3 million to GBP0.9
million (2022: GBP0.6 million), which also reflects increased
deferred revenue at the year end of GBP0.6 million (2022: GBP0.2
million). This reflects the inclusion of Authlogics which is able
to negotiate longer renewal terms with customers.
Contingent Consideration
Included in current and non-current liabilities are contingent
consideration amounts due on the acquisition of AL. These amounts
have been based on the reasonable estimates by management of
Authlogics achieving its recognised revenue targets for the
calendar year's ending June 2023 and June 2024. The Group's current
and non-current liabilities include GBP0.3 million and GBP0.2
million respectively for the contingent consideration
liabilities.
Capital and Reserves
Total equity increased to GBP7.0 million (2022: GBP5.5 million),
reflecting the profit for the year and shares issuance in September
2022. Accordingly the Accumulated deficit account for the year
decreased to GBP0.5 million (2022: GBP1.8 million).
Liquidity and capital resources
The Group remains in a good financial position, with gross cash
balances of GBP8.3 million as at 31 March 2023 compared to GBP7.8
million held at 31 March 2022. During the second half of the year,
there was a net cash outflow for investing activities of GBP2.2
million (2022: less than GBP0.1 million) mainly due to the GBP2.0
million acquisition of AL.
The net cash inflow from operating activities rose significantly
to GBP2.9 million (2022: GBP0.1 million) which reflects an
increased profit for the year, good management of working capital
movements and a bigger inflow from deferred revenue thanks to the
increase in support and maintenance. The increase of this recurring
revenue stream is underpinned by strong licence orders in the
year.
The Group had no debt at the year end (2022: GBPnil).
By order of the Board
Klaas van der Leest Nitil Patel
Chief Executive Officer Chief Financial Officer
19 June 2023
INTERCEDE GROUP plc
Consolidated Statement of Comprehensive Income for the year
ended 31 March 2023
2023 2022
GBP'000 GBP'000
Continuing operations
Revenue 12,110 9,925
Cost of sales (403) (198)
-------- -------
Gross profit 11,707 9,727
Operating expenses (11,136) (9,337)
-------- -------
Operating profit 571 390
Finance income 130 16
Finance costs (75) (83)
-------- -------
Profit before tax 626 323
Taxation 685 400
-------- -------
Profit for the year 1,311 723
-------- -------
Total comprehensive income attributable
to owners of the parent company 1,311 723
-------- -------
Earnings per share (pence)
- basic 2.3p 1.3p
- diluted 2.2p 1.2p
-------- -------
INTERCEDE GROUP plc
Consolidated Balance Sheet as at 31 March 2023
2023 2022
GBP'000 GBP'000
Non-current assets
Goodwill arising on acquisition 2,442 -
Other intangible assets 785 -
Property, plant and equipment 125 117
Right-of-use assets 262 431
-------- --------
3,614 548
-------- --------
Current assets
Trade and other receivables 5,489 4,598
Cash and cash equivalents 8,334 7,787
-------- --------
13,823 12,385
-------- --------
Total assets 17,437 12,933
-------- --------
Equity
Share capital 584 577
Share premium 5,430 5,268
Merger reserve 1,508 1,508
Accumulated deficit (492) (1,842)
-------- --------
Total equity 7,030 5,511
-------- --------
Non-current liabilities
Lease liabilities 204 388
Deferred Consideration 174 -
Deferred revenue 550 233
928 621
Current liabilities
Lease liabilities 261 368
Deferred consideration 313 -
Trade and other payables 1,918 1,464
Deferred revenue 6,987 4,969
-------- --------
9,479 6,801
-------- --------
Total liabilities 10,407 7,422
-------- --------
Total equity and liabilities 17,437 12,933
-------- --------
INTERCEDE GROUP plc
Consolidated Statement of Changes in Equity for the year ended
31 March 2023
Share Share Merger Accumulated Total
capital premium reserve deficit equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 April 2021 571 5,138 1,508 (2,471) 4,746
Purchase of own shares - - - (187) (187)
Issue of new shares 6 130 - - 136
Employee share option
plan charge - - - 67 67
Employee share incentive
plan charge - - - 26 26
Profit for the year and
total comprehensive income - - - 723 723
------- ------- ----------- -------
As at 31 March 2022 577 5,268 1,508 (1,842) 5,511
Purchase of own shares - - - (54) (54)
Issue of new shares 7 162 - - 169
Employee share option
plan charge - - - 50 50
Employee share incentive
plan charge - - - 43 43
Profit for the year and
total comprehensive income - - - 1,311 1,311
------- ------- ------- ----------- -------
As at 31 March 2023 584 5,430 1,508 (492) 7,030
------- ------- ------- ----------- -------
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
2023
2023 2022
GBP'000 GBP'000
Cash flows from operating activities
Profit for the year 1,311 723
Taxation (685) (400)
Finance income (130) (16)
Finance costs 75 83
Depreciation of property, plant & equipment 66 70
Depreciation of right-of-use assets 246 237
Exchange losses on foreign currency lease
liabilities 40 22
Employee share option plan charge 50 67
Employee share incentive plan charge 43 26
Employee unit incentive plan (credit) /
charge (51) 9
Employee unit incentive plan payment (3) -
Increase in trade and other receivables (831) (550)
Increase / (decrease) in trade and other
payables 334 (465)
Increase / (decrease) in deferred revenue 1,668 (26)
Cash generated / (used in) from operations 2,133 (220)
Finance income 116 13
Finance costs on leases (44) (83)
Tax received 574 400
------- -------
Net cash generated from operating activities 2,862 110
------- -------
Investing activities
Purchases of property, plant and equipment (70) (33)
Purchase of business (net of cash acquired) (2,009) -
------- -------
Cash used in investing activities (2,079) (33)
------- -------
Financing activities
Purchase of own shares (54) (187)
Proceeds from issue of ordinary share capital 169 136
Principal element of lease payments (409) (321)
Cash used in financing activities (294) (372)
------- -------
Net increase / (decrease) in cash and cash
equivalents 489 (295)
Cash and cash equivalents at the beginning
of the year 7,787 8,029
Exchange gains on cash and cash equivalents 58 53
------- -------
Cash and cash equivalents at the end of
the year 8,334 7,787
------- -------
INTERCEDE GROUP plc
Preliminary Results for the Year Ended 31 March 2023
NOTES
1. While the financial information included in this annual
financial results announcement has been prepared in accordance with
UK adopted international accounting standards (IFRS) and with those
parts of the Companies Act 2006 applicable to companies reporting
under IFRS, this announcement does not contain sufficient
information to comply therewith. The financial information set out
in this announcement does not constitute the Group's Statutory
Accounts for the years ended 31 March 2023 or 2022. Statutory
Accounts for 2022 have been delivered to the Registrar of Companies
and those for 2023, 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 on Wednesday 21
September 2023. 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.
Going concern assessment
Reported profit in each of the last five years have been
underpinned by increasing recurring revenues and a continued high
level of cash balances. The Directors have reviewed forecasts for
the years ended 31 March 2024 and 31 March 2025 and concluded that
the Group is expected to have sufficient cash to enable it to meet
its liabilities, as and when they fall due, for a period of at
least 12 months from the date of signing these financial
statements. Accordingly, they believe it is appropriate to prepare
the financial statements on a going concern basis under the
historical cost convention
2. REVENUE
All of the Group's revenue, operating profits and net assets
originate from operations in the UK. 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:
2023 2022
GBP'000 GBP'000
UK 539 119
Rest of Europe 906 992
Americas 9,879 7,801
Rest of World 786 1,013
------- -------
12,110 9,925
------- -------
3. OPERATING PROFIT
Operating profit is stated after charging / (crediting):
2023 2022
GBP'000 GBP'000
Staff costs 9,027 7,819
Foreign exchange (gain) / loss (19) 31
Depreciation of property, plant and equipment 66 70
Depreciation of right-of-use buildings 226 210
Depreciation of right-of-use equipment 20 27
Amortisation 83 -
Included in the staff costs above is research and development
expenditure totalling GBP3,053,000 (2022: GBP2,953,000).
4. TAXATION
The tax credit comprises: 2023 2022
GBP'000 GBP'000
Current year - UK corporation tax - -
Current year - US corporation tax (30) (33)
Research and development tax credits relating
to prior years 604 433
Deferred tax on separately identifiable
acquired intangibles 111 -
------- -------
Taxation 685 400
------- -------
The Group has unused tax losses of GBP9,777,000 (2022:
GBP10,446,000) and unrecognised deferred tax assets of GBP2,444,000
(2022: GBP2,612,000) calculated at the corporation tax rate of 25%
(2022: 25%), being the enacted rate at which the deferred tax
assets would unwind, were they to be recognised. Intercede makes an
R&D Claim as part of its annual tax return and can choose
whether to carry taxable losses forward or to request a cash
repayment from the UK government.
5. EARNINGS PER SHARE
The calculations of earnings per ordinary share are based on the
profit for the financial year and the weighted average number of
ordinary shares in issue during each year.
2023 2022
GBP'000 GBP'000
Profit for the year 1,311 723
---------- ----------
Number Number
Weighted average number of shares - basic 57,939,548 57,265,739
- diluted 60,595,485 59,413,261
---------- ----------
Pence Pence
Earnings per share - basic 2.3p 1.3p
- diluted 2.2p 1.2p
---------- ----------
The weighted average number of shares used in the calculation of
basic and diluted earnings per share for each year were calculated
as follows:
2023 2022
Number Number
Issued ordinary shares at start of year 57,743,357 57,143,357
Effect of treasury shares (131,645) (112,412)
Effect of issue of ordinary share capital 327,836 234,794
---------- ----------
Weighted average number of shares - basic 57,939,548 57,265,739
---------- ----------
Add back effect of treasury shares 131,645 112,412
Effect of share options in issue 2,524,292 2,035,110
Weighted average number of shares - diluted 60,595,485 59,413,261
---------- ----------
Please see note 7 for details of issues of ordinary share
capital.
6. DIVID
The Directors do not recommend the payment of a dividend.
7. SHARE CAPITAL
2023 2022
GBP'000 GBP'000
Authorised
481,861,616 ordinary shares of 1p each (2022:
481,861,616) 4,819 4,819
------- -------
Issued and fully paid
58,363,357 ordinary shares of 1p each (2022:
57,743,357) 584 577
------- -------
The increase in issued and fully paid ordinary shares of 1p each
represents the issue of 620,000 shares to facilitate the exercise
of options by a Director in September 2022.
As at 31 March 2023, the Company had 131,645 ordinary shares
held in treasury (2022: 131,645). During the year no options were
exercised using treasury shares (2022: 67,500) and the Company
purchased no ordinary shares (2022: 157,000 were purchased for a
consideration of GBP155,000 to facilitate the exercise of options
by senior managers during that year).
8. INTANGIBLE ASSETS
Acquired intangible Goodwill Total
assets
GBP'000 GBP'000 GBP'000
Cost
At 1 April 2021 - - -
Businesses acquired - - -
------------------- -------- -------
At 1 April 2022 - - -
Businesses acquired 868 2,442 3,310
------------------- -------- -------
At 31 March 2023 868 2,442 3,310
------------------- -------- -------
Amortisation
At 1 April 2021 - - -
Charge for the year - - -
At 1 April 2022 - - -
Charge for the year 83 - 83
------------------- -------- -------
At 31 March 2023 83 - 83
------------------- -------- -------
Carrying amount
At 31 March 2023 785 2,442 3,227
------------------- -------- -------
At 31 March 2022 - - -
------------------- -------- -------
Acquired intangible assets are made up of the separately
identified intangibles acquired with the purchase of Authlogics Ltd
in October 2022. See note 9 for further detail.
9. BUSINESS ACQUIRED - AUTHLOGICS LTD
On 7 October 2022, the Group acquired 100% of the equity of
Authlogics Ltd ("Authlogics"), a UK-based business.
Authlogics, which is based in Bracknell and was founded in June
2015, is a Multi Factor Authentication ('MFA') and Password
Security Management ('PSM') software vendor and the only business
to cover all three key authentication segments (password security
management, password breach database and multi factor
authentication) with a seamless integrated solution.
The acquisition of Authlogics enables the Group to deliver on
the strategic vision of addressing the entire authentication
pyramid, beyond its current position in the Public Key
Infrastructure Credential Management System ('PKI CMS') segment.
The addition of the Authlogics products will allow the Intercede
Group to support its customers and prospects wherever they are in
their authentication journey and enlarges the addressable
market.
The details of the business combination are as follows:
GBP'000
Fair value of consideration:
Amount settled in cash 1,708
Contingent consideration (subject to achievement
of revenue growth targets over three years) 456
-------
Total consideration 2,164
-------
Identifiable net liabilities (recognised at fair
value):
Other intangibles 868
Property, plant and equipment 4
Trade and other receivables 119
Cash 39
Total assets 1,030
-------
Trade and other payables (190)
Deferred revenue (current) (387)
Deferred revenue (non-current) (280)
Deferred tax liability (net of related deferred tax
asset) (111)
Amounts owed to parent company (340)
-------
Total liabilities (1,308)
-------
Net liabilities (278)
-------
Goodwill on acquisition 2,442
-------
Consideration settled in cash 1,708
Debt repaid 340
Cash and cash equivalents acquired (39)
-------
Net cash outflow on acquisition 2,009
-------
9. BUSINESS ACQUIRED - AUTHLOGICS LTD (CONTINUED)
Consideration transferred
The acquisition of Authlogics was settled in cash amounting to
GBP1,708,000. Acquisition related costs amounting to GBP227,000
were expensed. Debt owed by Authlogics of GBP340,000 was discharged
on acquisition.
Identifiable net liabilities
The fair value of identifiable net liabilities acquired as part
of the business combination amounted to GBP278,000, with a gross
contractual amount also being GBP278,000. As of the acquisition
date, the Group expected to pay the full balance of the contractual
cashflow.
Separable intangible assets
One separable intangible asset was identified at acquisition,
being the acquired customer relationships. The acquired customer
list was valued by assessing a discounted cashflow based on
expected customer attrition rates and using the Group discount
factor of 11.6%. The useful life has been estimated at 5 years.
Goodwill
Goodwill is primarily related to the core growth expectations
that are expected from combining Authlogics and Intercede's
technologies and upselling this to existing customers.
Authlogics contribution to the Group results
Authlogics generated a loss of GBP117,000 for the period from 7
October 2022 to the reporting date. Revenue for the period to 31
March 2023 was GBP261,000. In its financial year ending 30 June
2022, Authlogics' sales were approximately GBP406,000 with loss
before tax of GBP260,000 and net liabilities (including cash)
amounting to GBP716,000. If the businesses had been consolidated
during that period, approximately GBP200,000 would have been added
to Group sales per annum.
END
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END
FR NKCBQDBKBFAD
(END) Dow Jones Newswires
June 20, 2023 02:00 ET (06:00 GMT)
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