3 March 2017
INTERCEDE GROUP plc
('Intercede', the ‘Company' or the ‘Group')
Following the Company’s announcement on 5 January 2017 of the receipt of a record $3.0m order, the order book as of 2 March 2017 indicates that, unless further orders are received that can be recognised as revenue in the current period, the revenue outturn for the financial year ending 31 March 2017 will be approximately £8.0m. A further £2.0m of new orders remain in the current period pipeline which includes US government and defence contractor customers.
The Company is working diligently to close these orders. However, the US Presidential Budget Proposal issued on 27 February 2017 made a commitment to radically increase military and infrastructure expenditure during the term of the new administration. This commitment has raised considerable and unexpected uncertainty for the short term budget allocations across the Company’s target customer base in the US.
There remains a risk that a proportion of the outstanding orders forecast for closure in the current period will be delayed into the next financial year. The consequent impact on revenue is likely to result in losses for the year to 31 March 2017 being higher than management expectations. In this case, gross cash balances (excluding £4.5m convertible loan notes) are forecast to be approximately £6.0m as at 31 March 2017.
Intercede believes that the impact of the Presidential Budget will be short term in nature. Cybersecurity remains a vital component of US IT strategy and a Presidential Executive Order on Cybersecurity is expected shortly. Contemporaneously, New York State Cybersecurity Regulations for Financial Services Companies 23 NYCRR 500 became effective on 1 March 2017. In the medium to long term, the regulatory trend towards higher levels of cybersecurity will significantly increase budgets. As a result, it is highly probable that this could produce a step change in the Company’s revenue potential within the US government and US regulated financial services markets.
Richard Parris, Chairman & CEO of Intercede, commented
“Following the Presidential Budget Proposal, the Board has taken a conservative view of its immediate pipeline. While we remain confident that these orders will flow to revenue, there can be no certainty that this will occur within the current financial year. This timing issue does not in any way detract from the Board’s confidence in the Company’s prospects. Intercede is developing products and services which directly address the emerging need for higher levels of cybersecurity. In the next 12 months, European and US regulation will require a range of agencies and organisations to put this in place. Intercede is already well advanced in its plans to benefit from this trend, utilising the £4.5m (net) funds raised in January 2017 to invest in new applications for our leading software and to expand into new markets. Intercede is reducing its dependence on single geographies and sectors which will position the Company well for what promises to be a period of potential growth.”
Intercede Group plc Tel. +44 (0)1455 558 111
Richard Parris, Chairman & Chief Executive
Andrew Walker, Finance Director
finnCap Tel. +44 (0)20 7220 0500
Stuart Andrews, Corporate Finance
Simon Hicks, Corporate Finance
Capital Access Group Tel. +44 (0)203 7633405
Intercede is a software and service company specializing in identity, credential management and secure mobility. Its solutions create a foundation of trust between connected people, devices and apps and combine expertise with innovation to provide world-class cybersecurity. Intercede has been delivering solutions to high profile customers, from the US and UK governments to some of the world’s largest corporations, telecommunications providers and information technology firms, for over 20 years. Intercede’s product portfolio includes MyID, an identity and credential management system that assigns trusted digital identities to employees citizens and machines. In 2015, Intercede launched MyTAM, enabling trusted applications to be loaded into a mobile device’s Trusted Execution Environment (TEE), providing hardware-level security for Android apps. In 2016, Intercede launched RapID, a secure, easy to implement authentication service for mobile apps and cloud services to completely eliminate the need for passwords.
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.