INTERCEDE GROUP plc Preliminary Results for the Year Ended 31 March 2013

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INTERCEDE GROUP plc

Preliminary Results for the Year Ended 31 March 201
3


Intercede,
one of the world’s

leading software

providers
, today announces its
preliminary results for the year ended 31 March 20
1
3
.



SUMMARY


-

Resilient

financial performance

in
line with
February Trading Update
:




Sales
£6.7m (2012:
£
7.0m
)

include
North America
n sales
7%

higher at £4.8m (2012: £4.5m)
.




Admin expenses £7.5m (2012: £6.0m) reflect
plann
ed investment in infrastructure, technology
development
and sales capacity
.




Headcount increased to 80 at 31 March 2013 (2012: 70).





Loss

before tax
in line with expectations at

£0.
7
m (201
2
:
Profit before tax
£
0.9
m)
.





L
oss per share

1.2
p

(2012
:
Earnings per share
1.4p
)
.





C
ash
balance
s of £6.
8
m remain strong

a
t

31 March 2013

(20
1
2
: £
7
.0m
)
.


-

Won a major
homeland security project since the year end for a G8 government with a contract value likely
to exceed £1.5m in the year ended 31 March 2014 and £10.0m over a five year period.


-

Increase in the n
umber of digital identities under management by MyID
to
7
m

(2012: 5m)
.


-

New technology to manage virtual smartcards and the security of mobile devices

showcased in partnership
with Microsoft and GSMA.



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



“
I am pleased to report that Intercede is
making good progress towards the realization of its 2020 vision

as the market validate
s

that our commercial vision is an ‘
Idea whose Time has C
ome’.
For the last ten
years Intercede has
been building a solid technology and reference customer base in anticipation of
widespread adoption of digital identities for business and personal use.

During this period
Intercede has
built a

leader
ship position

in a highly selective market
.



“
In 2014
w
e plan to exploit this
established position

as the product life cycle moves
from early adoption
into
a

high
growth phase. This growth will be
inexorably
driven by the ubiquity of the Cloud, trusted
computing on smartphones and tablets, cyber security threats and the cost savings to be harvested
from on
-
line citizen service provision.
I am confident that
Intercede
will emerge as one of the successful
compe
titors in our sector
,

thereby adding significant shareholder value
.
”





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About Intercede

Intercede™ is a security software provider whose MyID® identity management platform enables
global

organisations and governments to create trusted digital identities for

employees and citizens on secure
devices such as smartcards, smartphones and tablets.



MyID® enables the protection of IP, assets, and digital
content, delivering trusted digital identities as the cornerstone of cyber security strategies for government,
defence, financial services and other industries.


The

Company operates in global markets (including the US, Europe and Middle East)

and works with large
international partners to deliver flexible digital identity solutions that are interoperable with oth
er existing
technologies and which are tailored

to customer needs.


The
w
orld’s largest governments, major corporations and mobile network operators
trust Intercede’s

deep
expertise to deliver effective solutions. The Company’s technology achieve
ments reflect a
significant
investment
in the
development

of intellectual property
, exemplary speed of deployment and adherence to international
standards including FIPS 201, where MyID® was the first electronic personalisation product to obtain
GSA

approval.

This trust is reflected in Intercede’s rate of repeat business with its customers, which typically runs at
70
-
80% of annual revenues.



Intercede has been developing ID management systems since
1992 and MyID® is currently deployed by end
customers located in 24 countries. The company is headquartered in the UK, listed on the London Stock
Exchange (AIM: IGP) and is ISO 9001 and TickIT certified.


For more information visit
http://www.intercede.com



ENQUIRIES


Intercede Group plc

Tel.

+44 (0)1455 558111

Richard Parris, Chairman & Chief Executive


Andrew Walker, Finance Director




FinnCap

Tel. + 44 (0)20 7
220

0500

S
tuart Andrews
/Rose Herbert, Corporate Finance


Joanna Weaving, Corporate
Broking




Pelham Bell Pottinger

Tel.

+44 (0)20 7861 3112

Archie Berens





















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Chairman’s Statement


Financial and Operational Highlights


Significant progress has been made this year in building a platform for a step change in
performance as the
market for identity management moves towards mass adoption. Highlights include:




Resilient

financial performance

o

Sales

£6.7m (2012: £7.0m)

include

North America
n sales 7% higher at £4.8m (2012: 4.5m)
.

o

Admin expenses £7.5m (2012: £6.0m) reflect
planned

investment in infrastructure, technology
development and sales capacity.

o

Headcount increased to 80 at 31 March 2013 (2012: 70).

o

Loss before tax £0.
7
m (2012: Profit before tax £0.9m)
.

o

L
oss per share 1.2p (
2012: Earnings per share 1.4p)
.

o

Cash
balance
s of £6.
8
m remain strong at

31 March 2013

(20
12
: £
7.0m
)
.




Large scale
homeland security

project

awarded by a multinational prime contractor on behalf of a
government agency in a G
8

Nation
; an i
nitial
order
for
£0.6m received April 2013

with a c
ontract value likely
to exceed £1.5m in the year ended 31 March 2014 and £10.0m over a five year period.




Increase in the number of digital identities
under management by MyID to
7m (2012: 5m).




New

corporate identity card projects
demonstrate viability of current product line.




Services

to support major

MyID system upgrades

across a range
of
international customers

ensure
longevity of existing customer base.




MyID a
s
Software as a Service (SaaS)
deployments continue

via
third

parties in support of anticipated market
demand.




Technology developments

o

Re
-
architecting of MyID infrastructure to support new platforms and to deliver new levels of user
experience
.

o

MyID extension
s

to manage virtual identity credentials on
Trust
ed

Platform Modules (
TPM
)

in
production
release

of Windows 8

Professional
.

o

Launch
of the first MyID Apps to iTunes
.

o

Launch

of the first MyID
Near Field Communications
(NFC)
Apps to GooglePlay for Androi
d phon
es
.




Corporate devel
o
p
ment
:
A
dditional office space and staff recruitment in the UK and US to support the next
phase of Intercede’s growth.



Results


In the year ended 31 March 201
3
, revenue
decreased

by
3%

from £6,
964,000

to £6,
727,000

at a gross margin
of
99.6% (2012:
98.4%
)
.


Good progress has been made growing our sales and delivery capabilities.
North American sales

have
increased to $7
.
6
m (201
2
: $
7.1
m) and

Intercede
has expanded its
office in Reston, Virginia, to support
further
growth
.


The
operating l
o
ss

for the period was £
764
,000 which compares to

a prior year operating profit of

£
829
,000
. As
at 31 March 201
3
, the Group had cash balances of £6,
770
,000

(
201
2
: £6,968,000)
.


During the year
,

Intercede
record
ed
a
loss

before
tax of £
673
,000 (201
2
:
P
rofit before tax
£
910
,000).
The
loss

reflects planned i
nvestment in our infrastructure, technology development and sales capacity.



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Company Vision


Since I wrote my Chairman’s Statement for last year’s Annual Report
,

the amount

of

digital

data in the world has
increased by at least 40%
,
the number of
internet
users has grown by 0.4 billion
, tablet computer sales have
overtaken laptops, the Samsung Galaxy has outsold the iPhone, North Korea launched a cyber attack on South
Korea,

social media has outpaced the mainstream news services in covering global events, the UK and US
governments have moved citizen services to ‘digitally by default’ and the Bitcoin phenomenon has provided a
window into the future of on
-
line
payment
. The boun
daries between the real world and cyberspace are becoming
more blurred

and the smooth running of the global village is increasingly dependent on adequate levels of
information security
.


Not only are we
all
now
digital consumers, we are also
becoming
digi
tal publishers uploading gigabytes of
multimedia content to the likes of Facebook and Instagram
.

F
urthermore,
we are also actors in a surveillance
society

leaving digital footprints wherever we tread
.

The Cloud provides the storage and distribution mechani
sm
and Big Data the means to query and analyse the records of our lives. This is a rich seam of information to be
mined and exploited by ourselves or others for years to come. In this brave new world of human experience the
need for digital security and pr
ivacy has become a popular concern. Both viewers and providers of content need
to be identified with appropriate levels of trust and confidence. This means digital rights management at an
individual level of granularity. We need to know if sources are trus
tworthy and to control who can view our most
cherished on
-
line memories

and intellectual property
. Content needs to be protected for its lifetime to avoid
embarrassment
,

abuse

or theft of v
a
lue
. This requires we all have trusted digital identities or personas to assert
who we are in cyber space and that we have consumer level access to cryptographic tools that can be used to
lock our content away from prying eyes. This is equally applicable in p
rivate, citizen or business life.


Issuing and managing digital identities including necessary encryption technology is Intercede’s business.


Intercede currently has 7 million digital identities actively managed by its MyID software. In my Chairman’s
S
ta
tement last year I stated that Intercede’s Vision is to have more than 100 million identities under
management by 2020. The Vision anticipates a 20
-
fold increase in volume from the 2012 base financial year will
yield a 10
-
fold increase in revenue
against

a

much smaller increase

in the cost base. This is a very attractive
business model. On the basis of this Vision, Intercede continues to invest to ensure the Company is best placed
to exploit this opportunity and to maximise medium and long term returns to s
hareholders.


Typically deployed as a back office infrastructure platform,
Intercede’s MyID

software manages the issuance of
digital identities
that are
used
to

authenticat
e

the access of
users

to

networks and services. This is a key cyber
security requirement with
significant

commercial upside across governments, large corporations and
telecommunications network operators.
O
ver the last
12

months
,

we have also seen our customers, including
governments, large corporations and telecommunications network operators, step change their dependency on
the use of digital channels for service delivery over the Cloud and on to mobile devices such as smartphon
es
and tablets. This is a new driver that has the potential to push the use of Intercede’s products into support
for
consumer devices

and the Internet of Things
.


The inevitability of digital identities being ubiquitous by 2020 has moved a step closer dur
ing the last 12 months
,

driven by consumer demand and new platforms eg support for virtual smart cards on Windows 8

and the
penetration of ARM’s Trusted Execution Engine into most smartphones
. The remaining roadblock to widespread
adoption is the complexit
y of the integration, the interoperability challenges and enforcement of security policies
necessary to deliver a transparent and convenient user experience. Amidst this maelstrom of technology, I am
pleased to report to shareholders that Intercede’s MyID
platform
solves
this problem

by acting

as

the ‘missing
link’ that can unlock the market for all.

I believe it is rare for a company of Intercede’s size to hold such a key
position in such a large potential market.



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To realise this potential,
Intercede wil
l
continue to
focus on two core drivers of business growth

as a foundation
for realising its 2020 Vision
:




Deepening our penetration of existing markets, where MyID has already been particularly applicable
;
and



Tapping into new technology
-
led trends
such as the Cloud and the Internet of Things
to protect and
expand our industry leadership
.




Key Performance Indicators




Last year we set a target of 100m user identities under MyID management by 2020.
I
n the last 12 months
we have
advanced from 5m to
7m users.





The level of exports remain
s
high at 88
% (201
2
: 8
9
%).




Sales in North America have increased by 7% and t
he proportion of revenue attributable to North American
customers has
further increased
to

72
%

(2012: 64%)
.
While this concentration has be
en challenging during
a year when budgets have been subject to substantial pressure and uncertainty, we remain confident that
the US is the largest and least fragmented market for our technology. In the longer term this market will
deliver the greatest ret
urns with the lowest cost of delivery.




The level of repeat business with existing customers remains high at
93
% (201
2
:
79
%) which reflects the
level of trust placed in MyID as a critical component of their IT security infrastructure.




The number of new
customers with revenues over £20,000 is 9 (2012: 8)

which
demonstrates that
MyID

remain
s

cutting edge and
meets

market needs.



Strategy


The
Group
’s 201
2
-
1
3

Business Goals
were

as follows
:




Corporate
d
evelopment

o

Continue to invest in sales and marketing

in order to increase the pipeline of opportunities
.

o

Be the partner of choice for provisioning digital identities to mobile devices.

o

Position MyID as the convergence platform of choice for the next generation of
physical access
control systems (PACS) as an

extension of our support of ICAM
.

o

Invest in
protection
of IP
.




Product and
i
nnovation

o

Exploitation of existing MyID product in maturing market
s
.

o

Development of new product to target the mob
ile device

market.

o

Development of a SaaS model and the positioning of MyID as a core technology to sell to
third

party SaaS providers supporting the PIV
-
I
and CIV
market
s
.

o

Close alignment with the release of M
icrosoft

Windows 8.



Intercede has delivered against these
objectives with solid p
rogress
. Examples include
:




Corporate
d
evelopment

o

Enhanced and enlarged sales and support teams to service growing market demand

for existing
product lines
.

o

Working in partnership with a North American Telco on a mutual mobile ID
strategy.

o

Formed a

partners
hip

with

Certipath
,

to deliver converged LACS and PACS solutions

(
CIV
-
in
-
a
-
Box
)
.

o

Increased levels of patent and trademark activity.



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

Product and
i
nnovation

o

Proved the value of the existing MyID platform by winning a

major
government

security project
.

o

D
emonstrate
d

new MyID mobile
platform

in partnership with GSMA (the trade body for mobile
telecoms operators)
on
the
GSMA booth at
the
GSMA
Mobile World Congress,
Barcelona,
February

2013
.

o

Received first MyID Mobile and Kiosk o
rders from US customers
.

o

MyID SaaS deployments continue via third parties in support of anticipated market demand.

o

Launched MyID

Windows 8 virtual smart card solution on the Microsoft booth at the RSA
Conference, February 2013.



The Group’s 201
3
-
1
4

Business Strategy

is as follows:




Corporate
d
evelopment

o

Position MyID as
the
credential management system of choice for high assurance networks
.


o

Exploit
global
leadership in P
IV solutions

market
.

o

Capture new major corporate accounts

in US and Europe
.


o

W
iden
sales channels to cover major players in the mobile telecoms industry
.

o

Progress

the Microsoft
partnership

to revenue

generation
.

o

Partner with Cloud service providers to deliver Identity in the Cloud using MyID
.




Product and
i
nnovation

o

Continue to re
-
engineer the existing MyID platform to improve scalability and supportability

in
anticipation of
a rapid expansion of market demand
.

o

Accelerate research and development in expanding the MyID platform to provision digital
identities into mobile devices
.

o

Expand
the MyID
mobile identity product suite to include client applications for

secure
communications
.

o

Expand the scope of MyID to also manage the identities of networked components as part of the
emergen
ce of the Internet of
T
hings. This expands the market size by at least one or two orders
of magnitude.



Intellectual Property


Intercede continues to invest to protect its intellectual property and trademarks.


The I
ntercede MyID product suite
is undergoing
continuous

development
and improvement
to support

new
hardware platforms, deliver heightened levels of user experience and e
nsure more resilience and security.



Dustin Ingalls,
Microsoft Group Program Manager for Windows Security and Identity, said:
“Most enterprise mobile computer platforms, available on the market today, ship with Trusted
Platform Modules (TPM) already installed. A key security benefit of Microsoft’s Windows 8
is its
ability to easily configure the TPM to do a number of operations including functioning as Virtual
Smart Cards (VSC). We believe that VSCs will change the way mobile computer users assert
their trusted identities in cyberspace; therefore, we collabor
ated closely with Intercede to ensure
that VSCs can be managed ‘out
-
of
-
the
-
box’ using the company’s MyID Identity and Credential
Management System. This means that Windows 8 customers have immediate access to an end
-
to
-
end solution for creating and managin
g the assured identities of employees and consumers. We
chose to work with Intercede because of MyID’s ease of deployment and advanced technical
features.”

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The Board continues to support ongoing investment in existing and new product capability to maximise the
potential of market leadership
, the value of its intellectual property

and to ensure Intercede is best

placed for

future exploitation.



Appointment of Non
-
Executive Director


We were very pleased to announce the appointment, on 1
5

April 2013, of Ian Drew as a Non
-
Executive Director
of the Company. Ian is currently Executive Vice President of Marketing and Business Development for ARM
Holdings plc. He brings a wealth of highly relevant experience of our markets and will be a valuabl
e addition to
our Board.



Outlook


In summary, o
ur pipeline of commercial opportunities
is likely to reach an inflexion point in 2014 as we continue

to deepen
the

penetration of markets where Intercede’s MyID product has become an industry standard.
In t
he

emerging markets of Cloud computing, managed services and mobile digital identities I believe we can
accelerate our growth profile
. The outlook is therefore
very

positive

and trending towards our 2020 Vision of
having 100 million digital identities mana
ged by MyID.




Richard Parris


Chairman & Chief Executive



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Business and Finance Review


Introduction


The past year has been challenging, but the Company has had the courage of its convictions to execute the
strategy determined by the Board and previously advised to shareholders. The costs associated with this
strategy have been incurred now but the benefi
ts, in terms of increased revenues and cashflow generation, are
anticipated to arise in future periods.



Business Development


Intercede has embarked upon a period of substantial investment in order to take advantage of the opportunities
provided by th
e advent of smart phones and global cyber security concerns
.


The main areas of selective investment are;




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



Increased
collaboration with major industry players such as Microsoft and ARM
.



The establishment of accredited PIV
-
I platforms with a number of new entrants to a market which is
forecast to involve in excess of 50 million identities.



The launch of the world’s first
secure email service based on TSCP specification (TSCP is the Trans
Global Secure Collaboration Program, a co
-
operative forum of leading aerospace
&

defence companies
and government agencies working together to develop an open standards

based security fram
ework).

Intercede is a member of the consortium involved in this initiative.



Sales and marketing to promote and protect the MyID name and technology and to build industry
relationships.


These activities have resulted in further growth in headcount and a c
ommensurate need for office and IT
infrastructure and equipment. The Company has substantially increased its office space to facilitate further
growth with the acquisition of a new office in Lutterworth close by the existing Head Office and by taking on
ad
ditional rental space in the Reston, US office.



Financial Results


Revenue for the year ended
31 March 2013 was £6,727,000 (2012: £6,964,000)

with no one project
representing more than 25% of total revenue (2012: 15%). Over the last four years, exports h
ave increased from
56% to 88% of total revenue.


Gross profit margins remain high, but the planned investment in additional resources outlined above has
resulted in a 2
4
% increase in administrative expenses from £6,023,000 to £7,467,000. With revenues
broadly
flat, this has resulted in a £764,000 operating loss (2012: £829,000 operating profit).


Staff costs continue to represent the main area of expense, representing 74% of total operating costs (2012:
77%).
Intercede had 80 employees and contractors a
s at 31 March 2013 (2012: 70)
.

The average number of
employees
and contractors increased from 68

to 77
year on year
.


Expenditure on research and development (R&D) activities totalled £2,328,000 (2012: £2,071,000). In
accordance with IFRS, the Board has co
ntinued to determine that all internal R&D costs incurred in the year are
expensed. No development expenditure has been capitalised as at 31 March 2013 (2012: £nil).


Finance income for the year was £91,000 (2012: £81,000) as the Group maintained cash and

interest bearing
short term deposits in excess of £6 million throughout the period notwithstanding increased levels of investment.




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A £101,000 taxation credit for the period (2012: £233,000 taxation charge) primarily reflects cash received
following th
e 2012 R&D claim. The Group is a beneficiary of the UK Government’s efforts to encourage
innovation by allowing 125% (2012: 100%) of qualifying R&D expenditure to be offset against taxable profits.


As at 31 March 2013, the Group has £
6
,
843
,000 (2012: £4,
091,000) of prior year tax losses available for carry
forward.


A loss for the year of £572,000 (2012: Profit of £677,000) resulted in a loss
per share
of 1.2
p
(2012: Earnings
per share 1.4p).



Funding


As at 31 March 20
13
, the Group had cash balances
totaling £
6,770
,000 (20
12
: £
6,968
,000).

The decrease in
cash balances principally reflects the acquisition of new UK office facilities that resulted in a total outflow of
£449,000 including set up costs. Cash generated from operations remained positive at
£35,000 (2012:
£862,000) notwithstanding the increased investment outlined above.


The Group has no debt and, following the 2010 Capital Reduction, is in a position to be able to commence the
payment of dividends as and when the Board considers this to be
appropriate.



Summary


When the Board determined its strategy for increased investment, it did so in expectation of a higher level of
ongoing sales from Intercede’s existing technology. This was not the case during the year ended 31 March 2013
against a
general backdrop of funding issues for both existing and potential new customers (government and
corporate alike) and consequent delays in project approval. Markets remain difficult, as illustrated by EU
austerity measures and US sequestration, but we are
better placed to successfully execute and achieve the
benefits of our strategy 12 months on.




Andrew Walker

Finance Director



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INTERCEDE GROUP plc


Consolidated Statement of Comprehensive Income for the year ended 31 March 201
3




Notes

201
3

2012



£’000

£’000

Continuing operations




Revenue

2

6,727

6,964

Cost of sales


(24)

(112)



__________

__________

Gross profit


6,703

6,852

Administrative expenses


(7,467)

(6,023)



__________

__________

Operating (loss)/profit


(764)

829





Finance income


91

81



__________

__________

(Loss)/profit before tax


(673)

910

Taxation

3

101

(233)



__________

__________

(Loss)/profit for the year


(572)

677



__________

__________


__________

__________


Total comprehensive (
expense
)/income attributable to owners of
the
parent
company


(572)

677



__________

__________


__________

__________


(Loss)/earnings per share (pence)

4




-

basic


(1.2p)

1.4p


-

diluted


(1.2p)

1.4p



__________

__________





There is no
other comprehensive income for the year.

The accompanying notes are an integral part of these financial statements.









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11

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INTERCEDE GROUP plc


Consolidated Balance Sheet at 31 March 201
3




Notes

201
3

2012



£’000

£’000

Non
-
current assets




Property, plant and equipment


644

183



__________

__________





Current assets




Trade and other receivables


991

1,311

Cash and cash equivalents


6,770

6,968



__________

__________



7,761

8,279



__________

__________





Total assets


8,405

8,462



__________

__________





Equity




Share capital

6

487

484

Share premium account


232

110

Other reserves


1,508

1,508

Retained earnings


3,530

3,930



__________

__________

Total equity


5,757

6,032



__________

__________





Current liabilities




Trade and other payables


998

910

Deferred revenue


1,650

1,520



__________

__________



2,648

2,430



__________

__________





Total equity and liabilities


8,405

8,462



__________

__________


The accompanying notes are
an integral part of these financial statements.












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15

INTERCEDE GROUP plc


Consolidated Statement of Changes in Equity for the year ended 31 March 201
3




Share

Share

Other

Retained

Total


capital

premium

reserves

earnings



£’000

£’000

£’000

£’000

£’000







At 31 March 2011

484

86

1,508

3,113

5,191

Issue of shares, net of costs (note 6)

-

24

-

-

24

Employee share option scheme charge

-

-

-

140

140

Total comprehensive income

-

-

-

677

677


_______

________

________

_______

_______

At
31 March 2012

484

110

1,508

3,930

6,032

Issue of shares, net of costs (note 6)

3

122

-

-

125

Employee share option scheme charge

-

-

-

172

172

Total comprehensive
expense

-

-

-

(572)

(572)


_______

________

________

_______

_______

At 31 March 2013

487

232

1,508

3,530

5,757


_
______

________

________

_______

_______








The accompanying notes are an integral part of these financial statements.



Page
13

of
15

INTERCEDE GROUP plc


Consolidated Cash Flow Statement for the year ended 31 March 201
3




201
3

2012


£’000

£’000




Cash flows from operating activities



Operating (loss)/profit

(764)

829

Depreciation

92

67

Employee share option scheme charge

172

140

Decrease/(increase)
in trade and other receivables


317

(461)

Increase
in trade and other
payables

218

287


__________

__________

Cash generated from operations

35

862

Taxation

101

47


__________

__________

Net cash generated from operating activities

136

909


__________

__________




Investing activities



Interest received

94

73

Purchases of property, plant and equipment

(553)

(84)


__________

__________

Net cash
used in
investing activities

(459)

(11)


__________

__________




Financing activities



P
roceeds

o
n

issue of shares

125

24


__________

__________

Net cash
generated
from financing activities

125

24


__________

__________




Net
(decrease)/
increase in cash and cash equivalents

(198)

922

Cash and cash equivalents at the beginning of the year

6,968

6,046


__________

__________

Cash and cash equivalents at

the end of the year

6,770

6,968


__________

__________



The accompanying notes are an integral part of these financial statements.



Page
14

of
15

INTERCEDE GROUP plc

Preliminary Results for the Year Ended 31 March
201
3


NOTES


1.

The financial information set out
in this announcement does not constitute the Group’s Statutory Accounts
for the years ended 31 March 201
2

or 201
3
, but is derived from those accounts. Statutory Accounts for
201
2

have been delivered to the Registrar of Companies and those for 201
3
, which h
ave 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 Comp
anies Act 2006.



The Annual General Meeting of the Company will be held at 11.00 am on Wednesday 2
5

September 201
3

at Lutterworth Hall. Copies of the full Stat
utory Accounts 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.

SE
GMENTAL REPORTING

All of the Group’s revenue, operating profits and net assets originate from operations in the United
Kingdom. The Directors consider that the activities of the Group constitute a single business segment.


The split of revenue by
geographical destination of the end customer can be analysed as follows:


2013

2012


£’000

£’000

啋

806

779

Rest of Europe

651

814

North America

4,823

4,450

Rest of World

447

921


__________

__________


6,727

6,964


__________

_________


3.

TAXATION


The tax
credit/(
charge
)

comprises:


2013

2012


£’000

£’000

䍵Cr敮琠y敡r
–

rh⁣潲灯o慴i潮⁴ x

-

-

Current year
–

rh⁤ f敲e敤⁴ x

-

(280)

Current year
–

rp⁣潲灯o慴i潮⁴ x

(13)

(12)

Prior year
–

rp⁣潲灯oa瑩on⁴ x

6

(11)

Research and
Development tax credits relating to prior years

108

70


__________

__________


101

(233)


__________

_________


The Group has unused tax losses of £
6
,
843
,000 (201
2
: £
4
,
09
1,000) and unrecognised deferred tax assets
of £
1,574
,000 calculated at the UK
corporation tax rate of 2
3
% that came into effect from 1 April 201
3

(201
2
:
£
982
,000 calculated at the previous UK corporation tax rate of 2
4
%).





Page
15

of
15

4.

(LOSS)/
EARNINGS PER ORDINARY SHARE

The calculations of
(loss)/
earnings per ordinary share are based on
the (loss)/profit 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 period.



2013

2012


£'000

£'000




(Loss)/p
rofit for the year

(572)

677


__________

__________





Number

Number




Weighted average number of shares
-

basic

48,613,172

48,367,939


-

diluted

50,228,664

49,662,277


__________

__________





Pence

Pence




(Loss)/e
arnings per share
-

basic

(1.2p)

1.4



-

diluted

(1.2p)

1.4


__________

__________






5.

DIVIDEND

The Directors do not recommend the payment of a dividend.

6.

SHARE CAPITAL


2013

2012


£’000

£’000

Authorised



481,861,616 ordinary shares of 1p each (2012: 481,861,616)


4,819

4,819


__________

__________

Issued and fully paid



48,735,005 ordinary shares of 1p each (2012: 48,428,005)

487

484


___________

__________


On 14 March 2012, certain employees exercised options totalling 63,000 ordinary shares at an exercise
price of 40.5p per share.

In June 2012, certain employees and a Director of the Company exercised options totalling 307,000
ordinary shares at an exercise price of 40.5p per share.