Intercede Group plc
Annual Report & Accounts
2023
2
Annual Report and Accounts Summary Highlights
Revenue
FY23
£12.1m
22% Growth
FY22 £9.9m
EBITDA Growth
FY23
£1.3m
30% Growth
FY22 £1m
Gross Profit
Cash and Cash Equivalents
FY23
at 31 March 2023
£11.7m
20.6% Growth
FY22 £9.7m
£8.3m
6.4% Growth
FY22 £7.8m
Net Profit
Net Cash Generation
FY23
FY23
£1.3m
85.7% Growth
FY22 £0.7m
£2.9m
2800% Growth
FY22 £0.1m
Net Margin Growth
Research and Development Costs
FY23
11%
57.1% Growth
FY22 7%
FY23
£3.1m
3.3% Growth
FY22 £3.0m
3
Annual Report and Accounts
CONTENTS
STRATEGIC REPORT
Chairman’s Statement
Mission
Headlines & Highlights
Key Performance Indicators
Group Profile
Case Studies
Strategic Report
Financial Review
Engaging with Stakeholders
Managing Risks and Uncertainties
GOVERNANCE
Board of Directors
Corporate Governance Report
Report of the Audit Committee
Report of the Remuneration Committee
Director’s Report
Independent Auditor’s Report
FINANCIAL REVIEW
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the Consolidated Financial Statements
Company Balance Sheet
Company Statement of Changes in Equity
Notes to the Company Financial Statements
Notice of Annual General Meeting
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Annual Report and Accounts
Dear Shareholders,
Following on from the successful delivery of Phase One (Sustainability) the Group has now embarked
on Phase Two. The main objective, that we are focussed on in this phase, is growth: both organic and
inorganic. The Group grew at its fastest pace with revenues of £12.1 million and adjusted EBITDA of £1.3
million. Basic earnings per share grew from 1.3p to 2.3p and the Group had a cash balance of £8.3 million
following an outflow of approximately £2.2 million (including acquisition costs charged to the Income
Statement) on the acquisition of Authlogics in October 2022.
The Group has made progress on several fronts in FY23. Software licence income was £2.3 million in the
year with v12.6 of MyID released at end of the final quarter along with Authlogics’s v4.2. Repeatable and
recurring revenues continue to be a key focus for the Group and grew impressively to £2.5 million of
professional services and £7.3 million of support and maintenance.
We continue to invest in our people and development of our products. The markets we operate remain
strong and there are major opportunities for the Group to pursue. These fundamentals will reinforce
consistent growth going forward and it is therefore very pleasing to note the software licence income
growth.
Scalability and Growth
Our current largest market is the USA and we will continue to invest in people and infrastructure to
ensure we can reap the benefits of the opportunities we pursue here. The good news is that we see
growth in other parts of the world as well, especially in UK, EMEA and APAC regions.
To enable the Group to scale, the Board continues to follow the ‘6 Cs’ strategy (updated later in the
Strategic Report) and focused on what it believes are the foundations of a modern, forward-looking
software company:
•
•
•
•
Strong quality product development,
A diverse, well-motivated and incentivised group of colleagues,
A diverse and engaged Board and
Elevating the importance of Environment, Social and Governance (ESG), with a new committee being
set up in FY24.
We believe that by demonstrating to our clients, channels, technology partners and colleagues that we
are truly committed to delivering on an ESG agenda we are embedding best practice that will deliver
immense long-term value.
Acquisition Strategy
We successfully completed the Group’s first acquisition in October 2022 by purchasing Authlogics, a
leading Multi Factor Authentication (MFA)/ Password Security Manager (PSM) provider. The integration is
on track and product road maps have been adapted to bring the various offerings of Intercede’s solutions
under a single platform.
Meanwhile, the Group continues to assess a pipeline of potential acquisitions that either fit our strategy
of expanding our addressable cybersecurity market, especially in the zero-trust sector, or add scale to our
business through additional customers that bring recurring support and maintenance or subscription
contracts.
In the current climate, it does take time to identify such opportunities, and the Group will maintain its
disciplined approach to pricing and due diligence. Our M&A pipeline is healthy, and we are confident we
will find success in securing businesses that will create enhanced shareholder value.
5
Annual Report and Accounts Colleagues, Stakeholders and Board Changes
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.
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. Tina Whitley was appointed as an Independent
Non-Executive Director, bringing over 30 years’ experience across the information technology sector and I
succeeded Charles (Chuck) Pol as the new Chair of the Group.
On 20th June we announced that 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.
Outlook
It has been a promising year of both financial and operational progress and Intercede is now very well
positioned for further growth. To be even more successful, we need to remain disciplined in terms of how
we allocate our resources, our capital and execute 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.
Royston Hoggarth
Chairman
19 June 2023
“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 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.”
6
Annual Report and Accounts OUR MISSION
Intercede is a cybersecurity software company
specialising in digital identities, for over 20 years. Global
customers in government, aerospace and defence,
financial services, healthcare, telecommunications,
cloud services and information technology have trusted
Intercede solutions’ expertise in protecting their data
and systems at the highest level of assurance.
It is our mission to help organisations protect themselves
against data breaches by deploying secure digital
identities simply, securely and at scale.
Our ongoing success is built on:
• Developing innovative, robust cyber security solutions
that are shaped around the needs of our customers
and their end users
• Adding value to our technology and commercial
partners through a proactive, collaborative approach
•
Maintaining an engaging and rewarding workplace for
our colleagues that drives innovation
•
Delivering sustained growth for our investors
OUR VISION
Our vision is to enable our customers to protect their
systems and information by providing a suite of software
products that are easy to use and deliver the highest
levels of security.
777
Annual Report and AccountsAnnual Report and AccountsAnnual Report and Accounts Headlines
•
•
•
•
•
•
•
•
•
Record Group revenues at £12.1 million
Strong net profit of £1.3 million
Net cash generation from operating activities of £2.9 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
Revenue
Gross profit
Profit before Tax
Net Profit
EPS - basic
EPS - diluted
Gross Margin
Net Margin
Cash and cash equivalents
Net cash from operating activities
Deferred revenue
Total Assets
Total Equity
Adjusted EBITDA
Less:
Amortisation of intangibles
Depreciation of assets
Right of use depreciation
Acquisition costs
Employee Share/Unit incentive & option plan charges
Exceptional costs
Operating Profit
FY23
£
million
12.1
11.7
0.6
1.3
2.3p
2.2p
97.0%
11.0%
8.3
2.9
7.5
17.4
7.0
1.3
0.1
0.1
0.2
0.2
-
0.1
0.6
8
FY22
£
million
9.9
9.7
0.3
0.7
1.3p
1.2p
98.0%
7.0%
7.8
0.1
5.2
12.9
5.5
1.0
-
0.1
0.2
0.2
0.1
-
0.4
% Change
22.2%
20.6%
100.0%
85.7%
-1.0%
57.1%
6.4%
2800.0%
44.2%
34.9%
27.3%
30.0%
50.0%
Annual Report and Accounts Revenue highlights for the year include:
•
Revenues for the year ended 31 March 2023 totalling £12.1 million were approximately 22% higher than last
year (2022: £9.9 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 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 £0.5 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, focussed 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 it 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 23
The Group successfully maintained ISO 9001 and 27001 certification which now includes US operations.
9
Annual Report and Accounts Key Performance Indicators
Regional Revenue
The US continues to represent
Intercede’s largest market with
the Americas making up 82%
of total revenues during 2023
(2022 79%). Key markets for
Intercede in Europe and the
Middle East have either grown
or maintained revenue from
previous years and with the
addition of Authlogics we see
opportunities in EMEA coming
online.
The last five years has seen
progressive growth in recurring
Support & Maintenance
(S&M) revenues due to an
increase in deployments and
a loyal customer base that is
resilient to churn. Software
Licences revenue increased
in the year and will have a
beneficial impact in FY24.
Further, Professional Services
revenue grew reflecting
customer appetite to upgrade
to the latest release to take
advantage of new features of
MyID. This, in combination
with a low rate of churn, is
evidence that the quality of the
MyID solution is Indisputable.
Higher Operating expenses
(OpEx) in FY23 primarily
reflected strategic investment
in product development to
continue the expansion of
MyID, forecasted increased
salary expense and new
additions, commission
payments with higher licence
sales and general overheads
relating to property costs. As
a percentage OpEx was 92% of
revenue (2022: 94%).
£14m
£12m
£10m
£8m
£6m
£4m
£2m
£0m
£14m
£12m
£10m
£8m
£6m
£4m
£2m
£0m
£14m
£12m
£10m
£8m
£6m
£4m
£2m
£0m
-£2m
-£4m
2019
2020
2021
2022
2023
Americas
ROW
Revenue Breakdown
2019
2020
2021
2022
2023
S&M
Professional Services
Software Licenses
Revenue, OpEx & Profit/Loss
2019
2020
2021
2022
2023
Revenue
OpEx
Profit/Loss
10
Annual Report and Accounts £10m
£8m
£6m
£4m
£2m
£0m
-£2m
-£4m
-£6m
140
120
100
80
60
40
20
0
l
s
e
e
y
o
p
m
E
f
o
r
e
b
m
u
N
Following the successful early
conversion and redemption
of all convertible loan notes
(CLNs) in February 2021,
Intercede is debt free with a
much strengthened financial
position, providing a strong
foundation for Phase Two of
the Group’s turnaround plan.
Employee numbers have
stabilised and started to
selectively increase again
following the tight cost control
that was applied as part of
Phase One of the Group
turnaround plan.
Expenditure on research and
development (R&D) activities
totalled £3.1 million (2022: £3.0
million). 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 during the year
(2022: £nil).
£4m
£3m
£2m
£1m
£0m
Net Cash/(Borrowing)
2019
2020
2021
2022
2023
Year end cash
CLN debt
Net cash/(borrowing)
Employees
2019
2020
2021
2022
2023
Average employees
Year end employees
Research & Development (R&D)
2019
2020
2021
2022
2023
R&D Expenditure
R&D Tax Credit (in arrears)
11
Annual Report and Accounts
Group Profile:
Intercede is a cybersecurity software company specialising in digital identities, its innovative solutions
enable organisations to protect themselves against the number one cause of data breach: compromised
user credentials.
For over 20 years, global customers in government, aerospace and defence, financial services, healthcare,
telecommunications, cloud services and information technology have trusted Intercede solutions’
expertise to protect their mission critical data and systems at the highest level of assurance.
Products
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.
Authentication Pyramid
Stronger Authentication from Passwords to PKI
12
Annual Report and Accounts Our recent acquisition of Authlogics in October 2022, a leading authentication specialist operating in authentication
pyramid levels such as Passwords, Mobile apps, OTP and MFA, allows the Intercede suite of products to be divided
into four main areas, Password Security Management, Multi-Factor Authentication, Registration and ID Verification
and Credential Management. All four sections are being integrated to provide a solution allowing customers to
manage the full range of authentication options from Passwords through to PKI from a single pane of glass offering
our customers cost and time savings. Customers will also be able to purchase each product as a standalone offering.
Password Security Management: MyID PSM
Powered by the world’s largest actively managed Password Breach database with over 6 billion
records, our MyID Password Security Management product allows companies to enforce strict
password policy compliance, near real time breached password detection and mitigation, and
perform security audits of passwords currently in use.
Multi Factor Authentication: MyID MFA
Our MyID MFA solution is easy to implement and rapid to deploy. It offers passwordless and
deviceless authentication, supports cloud and on-prem and can work 100% offline. It supports push
capabilities which have been developed to be push bombing/MFA fatigue resistant.
Registration and ID Verification: MyID ID&V
MyID® provides several Registration and ID Verification capabilities including Biographic data
capture, fingerprint capture, facial biometric capture, ID document validation, background checks
and one to many biometric matching for high assurance user enrolment complaint with US
government standards.
Credential Management: MyID CMS
MyID CMS is the world’s most complete credential management system on the market today.
We partner with leading companies with FIDO and PKI devices to offer a best of breed product
that is technology independent. We are integrated with multiple HSMs, CA, Smart Cards, Virtual
Smart Cards and leading USB tokens such as Yubico, IDEMIA, Thales and Giesecke & Devrient.
MyID specialises in end-to-end lifecycle management of all credentials, Key Management, Issuance
Policies (able to offer central and local issuances) and full audit and reporting. MyID is the premier
CMS to offer full lifecycle management of the entire Yubikey Family whether for PKI or FIDO.
Intercede Capabilities
Password Security
Management
Multi-Factor
Authentication
Compromised password
check
FIDO
Hardware OTP
Credential Management
Issuance Policy
Central and Local issuance
Lifecycle Management
Password Policy
Push Notifications app
Audit and Reporting
Policy enforcement
Software OTP
Deviceless PIN Grip OTP
OTP over SMS
Key Management
PKI Integration
Registration and ID
Verification
Biographic data capture
Fingerprint Capture
Facial biometric Capture
ID Document validation
Background checks
1:many biometric
matching
13
Annual Report and Accounts Selected Customers
Product Leadership
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/.
1414
Annual Report and AccountsAnnual Report and Accounts Technology Partners
Intercede is technology agnostic allowing our customers to select the right technology integrations to meet their
desired project outcomes. Intercede partners with many of the leading providers of USB Tokens, Smart Cards,
Virtual Smart Cards, Hardware Security Modules, Certificate Authorities, Image and Fingerprint capture such
as Yubico, Thales, Entrust, HID, Microsoft and Digicert. Ensuring Intercede can roll-out Digital Identity projects
efficiently and smoothly as well as being able to integrate into all major IAM providers such as ForgeRock, SailPoint,
Okta and Microsoft.
Integration and Reseller Partners
Through our Connect Partner Programme, Intercede have partnered with the leading Integration and Reseller
partners in the Industry such as Amiviz, Certipath, Cryptas, Guidehouse, Shifra and Widepoint. These partners allow
us to compete for an increasing number of opportunities every year and are positioning Intercede solutions as the
product suite for Governments and large & medium sized enterprises.
1515
Annual Report and AccountsAnnual Report and Accounts Case Study 1
BeyondTrust US Privileged Access Management company looks to
Authlogics for password compliance and security
THE CHALLENGE
THE BENEFITS
BeyondTrust wanted to find a password management
•
Quick and easy on-boarding of personnel, even
solution for its internal IT infrastructure that could
with 500 new BeyondTrust employees
be deployed company wide. Crucially, the solution
•
Centralised and highly scalable Active Directory
needed to adhere to the latest NIST SP 800-63B Digital
domain controller
Identity Guidelines and be non-intrusive to the end-
users as well as work solely through Microsoft Active
Directory domain controller rather than the endpoints.
•
Complete confidence in users having fully
compliant passwords that are not compromised
•
No need for help-desk intervention and little
THE SOLUTION
maintenance
The answer was Authlogics Password Security
•
An essential element in safeguarding employees,
Management (PSM) software, providing a simple
infrastructure and assets
and comprehensive way to ensure that all passwords
comply with the latest regulations and
that they haven’t already been
compromised.
Today, when a BeyondTrust
employee attempts to reset
their password, they do so
use an intuitive online self-
service portal. When they
propose a new password
it is automatically and
instantly assessed for
adherence with the NIST
standard. Simultaneously, it
is cross-referenced against the
Authlogics Password Breach Database
- a continuously growing cloud-based
blacklist of over 7 billion credentials which have
been breached, including over 2 billion passwords.
CUSTOMER FEEDBACK
“With PSM, we can have absolute employees working anywhere in the world, are using fully compliant
passwords that have not been compromised, whether through direct hacks, phishing or malware.”
Michael Abadeer, Senior Security Engineer - BeyondTrust
1616
Annual Report and AccountsAnnual Report and Accounts Case Study 2
Access to secure facilities using the Transportation Worker
Identification Credential (TWIC)
THE CUSTOMER
The Transportation Security Administration (TSA),
a component of the United States Department
of Homeland Security (DHS) is the federal agency
responsible for security in all modes of transportation.
The Transportation Worker Identification
Credential (TWIC®), is required by the
Maritime Transportation Security
Act for workers who need access
to secure areas of the nation’s
maritime facilities and vessels.
THE CHALLENGE
TSA needed to issue a tamper-
resistant biometric credential
to maritime workers requiring
access to secure port facilities
and vessels. To obtain a TWIC,
an applicant must provide
biographic and biometric
(fingerprint) information, sit for a
digital photograph, and successfully
pass a security threat assessment
conducted by TSA. A key customer
requirement was to follow US Government
Homeland Security Presidential Directive 12 (HSPD12)
standards to achieve interoperability and implement
best practice security processes. Requirements
included:
•
•
•
•
•
•
•
Use of FIPS 201 (PIV) technology and processes
Combined centralised production with local card
activation
Over 160 distributed enrolment and activation
centres throughout the US
Integration with central card personalisation
bureau for secure printing
Fingerprint verification of applicant prior to card
activation
Integration with central identity management
infrastructure
Multi-application card combining contact and
contactless technology
•
Strong authentication of operators and non-
repudiation of operator actions
THE MYID SOLUTION
MyID® is passed registration data from the IDMS and
formats it into a card personalisation request;
this is forwarded to the personalisation
bureau. Printed cards are locked and
sent to activation locations. The
receipt of a card batch is used
to trigger a notification to the
applicant that their card is ready
for activation. The applicant
visits an activation location,
places their card into a MyID
activation station and follows
a simple self-service workflow
that requires biometric
verification before the card is
unlocked, personalised with
certificates, and activated for use.
MyID now manages millions of
identities for the scheme.
SOLUTION BENEFITS
•
•
•
•
•
•
•
•
Fully FIPS 201 accredited solution
Production of PIV compatible credentials
Smart card PKI security for operator actions
Biometric authentication of applicants for high
security
Multi server deployment for high availability
Load balanced deployment for high volume
throughput
Simple web-based workflows for maximum ease of
use
Monitoring of card production status from a single
console
• Bureau high security printing combined with on-
card key generation for maximum security.
1717
Annual Report and AccountsAnnual Report and Accounts 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 as
referenced earlier in Group profile.
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 discretionary bonus payments have been
maintained for eligible colleagues.
1818
Annual Report and AccountsAnnual Report and Accounts 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.
1919
Annual Report and AccountsAnnual Report and Accounts 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
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
2020
Annual Report and AccountsAnnual Report and Accounts 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.
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
2121
Annual Report and AccountsAnnual Report and Accounts 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. The Group’s product leadership was recognised by a recent KuppingerCole report as referenced
earlier.
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 £8.3 million as at 31 March 2023 compared to £7.8 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 £2.0 million and related acquisition costs expensed to the Income Statement of £0.2 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. The Group will maintain business as usual and
maintain diligence in its M&A approach.
2222
Annual Report and AccountsAnnual Report and Accounts Financial Review
Income Statement
Revenue and operating results
The Group’s revenue from continuing operations increased by 22% to £12.1 million (2022: £9.9 million) and gross
profit increased by 21% to £11.7 million (2022: £9.7 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 £0.6 million (2022: £0.4 million), after non-cash depreciation charge for property,
plant and equipment in the year of £0.1million (2022: £0.1 million), a right-of-use depreciation charge of £0.2 million
(2022: £0.2 million) and amortisation costs of £0.1 million (2022: £nil). Acquisition costs for the period were £0.2
million (2022: £0.2 million) with exceptional expense of £0.1 million (2022: £nil), relating to exiting CFO expense
overlapping incoming. Operating expenses increased by 19% to £11.1 million (2022: £9.3 million).
Tight 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 £0.6 million (2022: £0.3 million) and profit for year was £1.3 million
(2022: £0.7 million).
Taxation
The Group has a tax credit of £0.7 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 £0.4 million). The Group has carried forward unused tax losses of
£8.8 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 £0.1 million (2022: expense of £0.1 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 £1.3 million (2022: £0.7 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: £nil).
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 £1.7 million (adjusted to £2.0
million after repayment of debt held by Authlogics) plus further deferred, conditional and staged earnout payments
estimated to be £0.5 million. The Group has consolidated the results since acquisition under IFRS3, applying the
purchase method.
2323
Annual Report and AccountsAnnual Report and Accounts Assets
Non-current assets of £3.6 million comprise goodwill of £2.4 million (2022: £nil), identifiable intangibles of £0.8
million (2022: £nil), property, plant and equipment of £0.1 million (2022: £0.1 million) and IFRS 16 right of use assets of
£0.2 million (2022: £0.4 million).
Trade and other receivables increased by £0.9 million to £5.5 million (2022: £4.6 million) reflecting a higher level of
customer orders towards the end of the year.
Liabilities
Current liabilities increased by £2.7 million to £9.5 million (2022: £6.8 million) reflecting increased deferred revenue at
the year end of £7.0 million (2022: £5.0 million).
Non-Current liabilities increased by £0.3 million to £0.9 million (2022: £0.6 million), which also reflects increased
deferred revenue at the year end of £0.6 million (2022: £0.2 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
Authlogics. 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 £0.3 million and £0.2 million respectively for the contingent consideration liabilities.
Capital and Reserves
Total equity increased to £7.0 million (2022: £5.5 million), reflecting the profit for the year and shares issuance in
September 2022. Accordingly the Accumulated deficit account for the year decreased to £0.5 million (2022: £1.8
million).
Liquidity and capital resources
The Group remains in a good financial position, with gross cash balances of £8.3 million as at 31 March 2023
compared to £7.8 million held at 31 March 2022. During the second half of the year, there was a net cash outflow
for investing activities of £2.2 million (2022: less than £0.1 million) mainly due to the £2.0 million acquisition of
Authlogics.
The net cash inflow from operating activities rose significantly to £2.9 million (2022: £0.1 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: £nil).
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 earlier, the focus is on growth and execution
of strategic plans to deliver it.
By order of the Board
Klaas van der Leest
Chief Executive Officer
19 June 2023
Nitil Patel
Chief Financial Officer
2424
Annual Report and AccountsAnnual Report and Accounts
Engaging with our key Stakeholders
Section 172 of the Companies Act 2006 requires Directors to consider the interests of stakeholders as part of their
decision-making process.
This Statement should be read together with the Strategic Report (see pages 18 to 22) and the governance section.
Examples of how the Board engages with stakeholders are explained throughout this Annual Report and below:
• Consider the likely consequences of decisions in the long term
•
•
•
•
•
The interests of the Group’s employees
The need to foster the Group’s business relationships with suppliers, customers and others
The impact of the Group’s operations on the community and environment
The desirability of the Group to maintain a reputation for high standards of business conduct; and
The need to act fairly between shareholders of the Company.
We are doing this by:
a. Following on from the successful delivery of Phase One (Sustainability) the Group has now embarked on Phase
Two with overarching themes of scalability and consistent revenue growth. The expanded 6C strategy provides
a strong foundation for growth particularly winning new customers and growing recurring revenue streams
from existing customer relationships. The inclusion of Corporate Development to make the 5C strategy into a 6C
strategy also addresses growth through a focus on acquiring quality companies with the right strategic fit(s) to
ensure scalability and accelerated revenue growth.
b. We engaged with colleagues during the year via a comprehensive and detailed survey, initiated a Company wide
Kick Off (CKO) in April 2022 and the Group originated a cost-of-living payment during the year to all employees.
Further, the Group is using technology to enhance the employee engagement in the Group via online
collaboration, appraisal and training modules.
c. Customers and Channel partners are focal point of the Group’s 6C strategy as discussed in detail within the
Strategic Report on pages 18 to 22.
d. We recognise our impact on our local community and the environment with the aim of developing an enhanced
ESG strategy for FY24 onwards. Concern for the environment and promoting greater sustainability are important
considerations for the Group and how we conduct business. We aim to offset any negative environmental impact
of our activities through initiatives such as:
•
•
•
•
•
Operate an electric vehicle car scheme to help colleagues access brand new zero emission electric vehicles
Monitor utilisation of our property portfolio to minimise our energy use with LED lighting and maximise
utilisation by consolidating or relocating to smaller offices as required
Promotion of recycling and waste reduction programmes and where IT equipment cannot be recycled, we
track products which may need safe disposal in the future
Engage with community and charity initiatives. We maintained our support for the local food bank during
the year
We have already purchased 200 saplings with 160 of these planted in the UK and 40 in the US, which will
offset approximately 0.6 tonnes of CO2 per tree over the coming 40 years.
e. In addition to lending full support to the maintenance of the Group’s ISO 9001 & ISO 27001 status, the Group
deploys an extensive policy and process environment with a dedicated principal technical consultant.
f.
The Directors meet shareholders frequently via online and in person meetings to listen and take on feedback,
including balancing financial growth strategies with returns on those investments. We have strengthened our
governance and increased our Board diversity in the year.
The Directors are fully aware of their duty to promote the success of the Group, for the benefit of all stakeholders, in
accordance with Section 172 of the Companies Act 2006.
2525
Annual Report and AccountsAnnual Report and Accounts Managing risks and uncertainties
Principal Risks and Uncertainties
Like all businesses, Intercede operates in an environment that is not free from risks or uncertainties. The nature
and complexity of the services the Group provides can present technical challenges that carry a certain element
of commercial risk, and it is naturally exposed to external market, geopolitical and compliance related risks that
are not necessarily within its control. Intercede works diligently to identify, monitor and mitigate known risks and
uncertainties, as best it can.
Sector and Market Risk
•
The Group operates in a vastly complex and competitive technological environment so the business will be
negatively affected if it does not enhance its product offerings and/or respond effectively to technological
change. Intercede’s main market currently is in the US Federal environment which is the largest for its PKI/CMS
offering and is subject to timing and award delays.
This risk is mitigated by ongoing investment in research and development, enhanced product road map with
constant account and client management. The Group also releases quarterly updates to its flagship MyID CMS
product.
Impact
4 out of 9
Medium
Global Environment
•
The Group conducts business globally, both geographically and by sector, so there is a risk that territory and
global macro-economic conditions (including the impact of the Ukraine conflict) may result in one or more of
these markets being adversely affected and the revenues of the business impacted accordingly. With inflationary
increases the ability to pass on price increases can be limited depending on the market, competitor pricing
strategies and clients.
This risk is mitigated as best the Group can, both through the long-term nature of customer relationships
and the diversification that results from operating in multiple markets as well as the increased focus on
cyber security. Furthermore, the addition of Authlogics expands this diversification. Against a backdrop of the
geopolitical situation in Ukraine, the Group is experiencing increased demand from certain non US countries as a
result of security posture alignment with the US.
Impact
6 out of 9
Medium
Business Continuity and IT Infrastructure
•
Management has assessed the requirements and ‘fit for purpose’ capabilities of the Group’s business continuity
and disaster recovery plans together with its current IT infrastructure. The risk has been evaluated as high.
The risk is planned to be mitigated over the next 12-24 month period with the migration of the majority of the IT
infrastructure into the cloud. This will enable increased resilience and enhanced business continuity capabilities.
Impact
9 out of 9
High
2626
Annual Report and AccountsAnnual Report and Accounts
Regulatory Environment
•
Technology companies are exposed to constant changes to regulations, intellectual property infringement
and piracy. Although changes can be positive, others can be negative which could impact on the Group’s
performance and outlook.
The Group mitigates this by market knowledge, enhanced collaboration with our clients, suppliers and partners.
It has yearly Client Advisory Board meetings in the US and Europe and follow proposed regulatory changes
closely.
The Group rigorously defends its intellectual property in the primary jurisdictions within which it operates.
Impact
4 out of 9
Medium
People
•
The Group’s performance is largely dependent on the experience and expertise of its employees. The loss or lack
of key personnel or ability to recruit 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, attractive benefits, career progression and staff engagement to retain and
attract key personnel.
Impact
4 out of 9
Medium
M&A and Integration
• All M&A transactions carry a significant level of risk and uncertainty with an impact that could be far reaching
and ultimately costly if not managed correctly.
To mitigate this the Group operates a strict criteria of assessment, high level of quality due diligence and vigorous
and detailed integration plans.
Impact
4 out of 9
Medium
2727
Annual Report and AccountsAnnual Report and Accounts
Board of Directors
Royston Hoggarth - Non-Executive Chairman
Royston Hoggarth is currently Chair of Intercede PLC, Cirrus Response Limited and
Stellar Omada Limited. He is a non-Executive Director of Cellhire Limited, an advisor to
the NEC Corporation and NEC Software Services Limited. He is also Chair of England
Hockey.
He has held a range of Executive and Board Director roles with Private Equity backed,
bank backed and publicly listed companies including IBM, Logica PLC, Cable & Wireless
PLC, BT PLC, Hays PLC, Bluefin Solutions Limited, Northgate PS Limited, Xchanging
Limited, Arkessa Limited and Innovation Group Limited. He was also a Venture Partner
at Wellington Partners.
He was appointed a Non-Executive Director of Intercede on 5 August 2002.
Tina Whitley - Non-Executive Director
Tina is the Chief Executive Officer of NEC Software Solutions UK and is responsible for
the Group’s overall strategic development and operation. She joined NEC in 2016 having
previously been at the Capita Group for 7 years and was the MD of the SIMS, Higher
Education and Libraries businesses on departure to NEC.
A proven and inspirational business leader with extensive experience across the
Information Technology sector. She has directly overseen teams across all disciplines,
including sales, marketing, procurement, operations, product management, technical
services, HR and finance.
She is passionate about the customer experience, building excellent relationships and
ensuring exemplary delivery. Developing people and building teams is key and she
manages operations rigorously, identifying high performers, stretching their capabilities
effectively improving the Group’s overall performance. This approach has proven to be
successful in both the UK and Internationally including multi-cultural environments
across Europe, the Middle East, Africa and India. She was appointed a Non-Executive
Director of Intercede on 1 July 2022.
Charles ‘Chuck’ Pol - Non-Executive Director
Chuck Pol served as Chairperson and President of Vodafone Americas from 2013 to 2017,
during which time he built both a fixed and mobile capability, whilst also helping to
develop a business model and applications for the Internet of Things (“IoT”).
Prior to Vodafone Americas, Chuck held senior roles at BT Americas including Chief
Operating Officer and President. On leaving BT in 2008, Chuck was President of BT
Global Financial Services where he was responsible for BT’s relationships with the top
40 global investment banks.
He was appointed a Non-Executive Director of Intercede on 1 June 2017 and has taken
on the role of Non-Executive Chairman from 28 March 2018 until July of 2022.
2828
Annual Report and AccountsAnnual Report and Accounts Jacques Tredoux - Non-Executive Director
Jacques Tredoux is the Chief Executive of Tredoux Capital Limited, a company authorised
by the Financial Conduct Authority to provide corporate finance advisory services. Prior to
establishing Tredoux Capital Limited, he was the Chief Executive Officer of the Credo Group
(UK) Limited, a group of companies in London that provides wealth management services.
Members of the Credo Group have provided corporate finance and fundraising assistance
to the company since before its admission to AIM. Jacques qualified as a lawyer in 1988 in
South Africa, and practiced at Edward Nathan & Friedland Inc and Clifford Chance.
He was appointed a Non-Executive Director of Intercede on 31 March 2006.
Rob Chandhok - Non-Executive Director
Rob Chandhok has more than 20 years’ experience in senior commercial technology and
internet services roles.
Rob has served in senior leadership roles in consumer electronics companies and in start-
ups related to the internet of things. Prior to this, he performed a series of senior leadership
roles at Qualcomm where he led new technology initiatives and managed relationships with
the world’s largest software companies.
He was appointed a Non-Executive Director of Intercede on 14 June 2019.
Klaas van der Leest - Chief Executive Officer
Klaas van der Leest 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
organisations 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.
Klaas has a master’s degree from the Cranfield School of Management. He also is a
Chartered Marketer as well as a Fellow of the Chartered Institute of Marketing. He was
appointed Chief Executive of Intercede on 10 April 2018.
Nitil Patel - Chief Financial Officer
Nitil has been a CFO and a plc board member since 2001. Recently he was the interim
CFO at D4t4 Solutions plc (2021), which helps global enterprises derive value via
Celebrus, the company’s flagship first party product suite. From 2016 to 2020, he was the
CFO at Dods Group plc (now renamed Merit Group plc), a leading technology company
specialising in data, business intelligence and media delivering content to more than
fifty countries across six continents.
Before Merit, Nitil was CFO of multi-media content creator Ten Alps plc (rebranded
Zinc Media plc) from 2001 to 2016. During this time, Nitil managed three divisions of the
group, driving growth both organically and through strategic acquisitions. He was a key
member of the team from the very start of Ten Alps in 1999 as Finance Director and was
responsible for its listing on AIM in 2001.
Nitil is a fellow of the Institute of Chartered Accountants in England and Wales. He was
appointed Chief Financial Officer of Intercede on 27 July 2022.
2929
Annual Report and AccountsAnnual Report and Accounts Introduction to Corporate Governance from the Chairman
Dear Shareholders,
We are always aiming to enhance our governance, reporting and
visibility of the Group, adhering to agreed codes that address the
needs of the Group. I am, therefore, pleased to report on the corporate
governance procedures undertaken by Intercede for the year ending
March 2023.
The role of the Board is to provide good governance, succinct and
timely advice and create an environment for business success. High
standards of corporate governance for delivering long-term success
to the Group is recognised and the Board notes its role in setting
the culture, values and ethics of the Group and communicating this
internally and externally. We set this out formally in our Section 172
Statement on page 25.
Meeting regularly and having monthly calls enables the Board to
monitor and promote a healthy and diverse corporate culture. As
mentioned earlier, adherence to codes and governance rules enables
the Group to foster this environment. The Group complies with
AIM Rule 26 which requires disclosure of a recognised corporate
governance code, how it applies it, any departures and suitability for
the Group.
The Board has adopted the Quoted Companies Alliance Corporate
Governance Code 2018 (“QCA Code”) whose set of principles for
governance are ideally suited for the Group in relation to the size,
resource and its current development stage.
By order of the Board
Royston Hoggarth
Non-executive Chairman
19 June 2023
30
Annual Report and Accounts In the year, the Board has constructively and
proactively challenged management on Group
strategies, proposals, operating performance and key
decisions, as part of its ongoing work to assess and
safeguard the position and prospects of the Group.
The QCA Code requires the Board to have an
appropriate balance between Executive and Non-
Executive Directors. At the start of the year the Board
contained a majority of non-executive directors with
two deemed independent, and all male.
The board changes made in the year have increased
independence and diversity. It now comprises two
Executive Directors and five Non-Executive Directors,
three of whom are considered to be independent. All
of the Directors have extensive business experience
and submit themselves for re-election at least every
three years. Details of the breadth of their skills and
experience can be found in the Board of Directors
section on pages 28 to 29.
In discharging its duties, the Board has established
three committees: the Audit Committee, the
Remuneration Committee and the Nominations
Committee. The structure of the Board Committees is
as follows:
Audit Committee – Tina Whitley is the Chair of the
Audit Committee given her recent and relevant
financial experience as a Chief Executive and non-
executive director role.
Jacques Tredoux is also a member of the Audit
Committee and Royston Hoggarth will be invited by
the Chair as and when requested.
Remuneration Committee – Charles Pol is the
Chairman of the Remuneration Committee which also
comprises Royston Hoggarth, Jacques Tredoux and
Tina Whitley.
Nominations Committee – Charles Pol is the Chairman
of the Nominations Committee which also comprises
Royston Hoggarth, Jacques Tredoux, Klaas van der Leest
and Nitil Patel.
Corporate Governance Report
The business of the Group is ultimately managed by
the Board of Directors of Intercede Group plc, who
are responsible for running the Group for the benefit
of its shareholders in accordance with their fiduciary
and statutory duties. The Board is cognisant of the
important responsibilities they have in respect of
Corporate Governance and shaping the culture to be
consistent with the objectives, strategy and business
model outlined in the Strategic Report on pages 18 to
22.
Intercede is committed to conducting its business
fairly, impartially, in an ethical and proper manner,
and in full compliance with all laws and regulations. In
conducting the business, integrity is the foundation
of all company relationships, including those with
employees, customers, suppliers and communities.
The Group has adopted the Quoted Companies
Alliance (QCA) Corporate Governance Code for small
and mid-size quoted companies (revised in April 2018
to meet the new requirements of AIM Rule 26). A
detailed statement of the Group’s compliance against
the code is provided on Intercede’s website: https://
www.intercede.com/company/investor-relations/
corporate-governance/.
The Board of Directors
The Board is led by the Chairman, Royston Hoggarth,
who is responsible for the Group’s corporate
governance arrangements and who ensures that all
members of the Board are able to contribute to Board
discussions and decision-making, transparently and
openly. All Directors acknowledge their collective
responsibility and legal obligation to promote the best
interests of the Group.
The effectiveness of the Board is kept under review
by the Chairman who regularly solicits feedback
on Board effectiveness from institutional and other
shareholders. Feedback from such meetings is that
investors remain generally supportive of the Group’s
strategy and approach. The Company gives high
priority to communications with current and potential
future shareholders by means of an active investor
relations programme. The principal communication
with private investors is through the website
(intercede.com) and the provision of Annual and
Interim Reports. All shareholders will receive at least
21 clear days’ notice of the Annual General Meeting at
which the Directors will be present and available for
questions.
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Annual Report and AccountsAnnual Report and AccountsAnnual Report and Accounts Board meetings
Audit Committee
Remuneration
Committee
Nomination
Committee
Executive Directors
Possible Attended Possible Attended Possible Attended Possible Attended
Klaas Van der Leest
Nitil Patel (appointed 27 July
2022)
Andrew Walker (resigned 27
July 2022)
Non-Executive Directors
Rob Chandhok
Royston Hoggarth
Charles ‘Chuck’ Pol
Jacques Tredoux
Tina Whitley (appointed 1
July 2022)
4
3
1
4
4
4
4
3
4
3
1
2
4
4
2
3
1
1
1
-
2
1
2
1
1
1
1
-
2
1
-
1
-
-
-
-
2
2
2
1
-
-
-
-
2
2
1
1
1
1
-
-
1
1
1
-
-
-
-
-
1
1
1
-
The performance of the Board is evaluated on a
regular basis to achieve continuous improvement.
Following a challenging period in recent financial
years, the Board made a number of changes to get
the Group back to sustainable revenue growth and
profitability. The combined impact of increased
revenues and action taken to reduce the cost base
has resulted in a return to profit, which represents
a significant turnaround from the losses incurred in
previous years.
The Group has a strategic plan to expand the business
and generate shareholder value, which forms the
basis of Phase Two of Intercede’s turnaround. In
essence, this is a 6C ‘back to basics’ strategy centred
around Colleagues, Customers, Channels, Code, Cash
and Corporate Development (see pages 18 to 22 for
an update on the execution of this strategy). The 6C
strategy is kept under review by and evolves under the
guidance of the Board.
Risk Management Review
Group-wide risk management is ultimately the
responsibility of the Board (supported by the Audit
Committee) and is overseen operationally by the Chief
Operating Officer and Chief Financial Officer.
Operational risk management is embedded in the
Group’s business processes, which are set down in
writing in the policies and procedures that make
up the Group’s quality management system (QMS)
and are periodically reviewed by external quality
compliance auditors.
The Board places a significant emphasis on the Group’s
reputation for quality and, in addition to lending full
support to the maintenance of the Group’s ISO 9001,
ISO 27001 status and Group Risk Register, and takes
reputational matters into account in its decision-
making. This is part of our ongoing commitment
to providing the highest levels of protection for the
confidentiality, integrity and availability of not only our
data, but also that of customers and business partners
stored on our networks.
The Group’s key risks (operational and otherwise) are
recorded in a Group Risk Register and those risks
together with their respective mitigants, controls and
corrective actions are reviewed regularly by the Board.
Risk is a standing agenda item for the Board and senior
managers are required to review, identify and report
risks on an ongoing basis. Key risks to the Group are set
out in the Strategic Report on pages 18 to 22 .
3232
Annual Report and AccountsAnnual Report and Accounts show 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. For this reason, they
continue to adopt the going concern basis in preparing
the financial statements.
Royston Hoggarth
Chairman
19 June 2023
Group Organisation
The Board meets regularly, and is responsible for the
overall Group strategy, acquisition and divestment
policy, approval of major capital expenditure projects
and consideration of significant financing matters.
It monitors the key business risks and reviews the
strategic direction of the Group, its codes of conduct,
forward projections and progress towards their
achievement.
The day-to-day running of the Group’s business is
delegated by the Board to the Executive Directors led
by the Chief Executive. The Executive Directors have
established a management and reporting framework
across the Group, supported by an Executive
Management Team (EMT). The EMT comprises of the
Executive Directors together with the Chief Operating
Officer, the Chief Product Officer and the Chief
Technology Officer.
Clear channels are in place for information and
proposals to flow up from the Group’s various
operating units to the EMT and the Board and
for information and decisions to flow back down.
Key Performance indicators are reported monthly,
providing visibility and accountability across the
business leading to better software and services for
customers, allowing effective risk management, and
ensuring the Group retains its quality accreditations.
In addition to the EMT there is also an Operating
Management Team (OMT) comprising of senior
managers executing and implementing the strategies
of the Group.
Financial Reporting
The Board has overall responsibility for the Group’s
system of internal financial control and for reviewing
its effectiveness. The purpose of the system of control
is to manage rather than eliminate the risk of failure
to achieve business objectives and can only provide
reasonable, but not absolute, assurance against
misstatement or loss.
There is a comprehensive planning system, including
regular periodic forecasts which are presented to
and approved by the Board. The performance of the
Group is reported monthly and compared to the latest
forecast and the prior year.
Going Concern
The Directors, have a reasonable expectation that the
Group has adequate resources to continue in operational
existence for the foreseeable future. As outlined in note
1, this expectation follows a review of forecasts for the
years ended 31 March 2024 and 31 March 2025, which
3333
Annual Report and AccountsAnnual Report and Accounts AUDIT COMMITTEE REPORT
During the year the Audit Committee discharged its responsibilities by reviewing and monitoring the following
areas:
•
•
The risk and control environment;
The integrity of the financial statements of the Group;
• Announcements relating to financial performance;
• Whether the Group has followed appropriate accounting standards and made appropriate estimates and
judgments, taking into account the views of the external auditors;
•
The clarity of disclosure in the Group’s Annual Report and the audited Consolidated Financial Statements;
• Delegated power from the Board to agree fees for external auditors; and.
•
The need to satisfy itself on the independence and objectivity of the external auditors.
For the year ended 31 March 2023 (‘FY23’), there was one Audit Committee meeting attended by Royston Hoggarth
and Chuck Pol and another by Tina Whitley and Royston Hoggarth. Many of the Audit Committee matters listed
above are addressed at quarterly board meetings, particularly around the review of risks and controls.
The significant issues considered by the Committee in relation to the FY23 Financial statements, and how these
were addressed, were:
• External audit - The Audit Committee monitors the Group’s relationship with the external auditor, Cooper Parry
Group Limited (‘Cooper Parry’), to ensure that external independence and objectivity has been maintained and
will continue to review and challenge the work undertaken to ensure the effectiveness of the audit process.
This is the first year that Cooper Parry has provided audit services to the Group and the Audit Committee looks
forward to building a strong and productive working relationship with Cooper Parry.
• Risk management and internal control - The Committee is responsible for advising the Board on risk exposure
and the review of internal controls that are in place to mitigate risk. Principal risks and uncertainties facing the
business are presented on pages 26 to 27. The internal control environment continues to evolve and develop as
the Group grows and considers integration of potential acquisitions, with a particular focus on the automation of
processes and introduction of new technology to enhance control and communication across the Group.
• Going concern – As part of the going concern assessment, the Board reviewed forecasts for the years ended
31 March 2024 and 31 March 2025 and concluded that the Group has sufficient cash to continue in operational
existence for the foreseeable future. The Committee also notes that the Group continues to monitor cash
balances weekly for working capital and corporate development funding requirements and that annual
recurring revenues from Support & Maintenance, plus repeatable Professional Services revenues, now largely
cover annual fixed costs. This is a firm foundation that allows the Group to remain profitable, even in leaner
years. The complete conversion and redemption of all convertible loan notes has left the Group with a stronger
balance sheet and no debt.
Tina Whitley
Chair
Audit Committee
19 June 2023
3434
Annual Report and AccountsAnnual Report and Accounts REPORT OF THE REMUNERATION COMMITTEE
As a company listed on AIM, Intercede Group plc is not required to present a Report of the Remuneration
Committee. A number of voluntary disclosures have been made which are not subject to audit. The matters set out
below are nevertheless relevant to understanding the activities of the Remuneration Committee and remuneration
of the Company’s Directors.
The Remuneration Committee is composed entirely of non-executive directors. None of the Committee members
has any personal interest in the matters to be decided. The Chief Executive is invited to attend committee meetings
but is not present during discussions relating to his own remuneration.
Remuneration Policy
The remuneration packages for executive directors are intended to incentivise them to meet the financial and
strategic objectives of the Group. The policy is to pay individual directors a salary at market levels for comparable
jobs recognising the size of the Group and the business sector in which it operates. The main components are base
salary, an annual bonus plan, pension contributions, share options and long-term incentives plans. Note 4 to the
financial statements provides details of the remuneration paid and payable in respect of the year ended 31 March
2023.
Recruitment
The Nominations Committee is responsible for leading the process for Board appointments and making
recommendations to the Board.
Service Contracts
The executive directors have service contracts that are terminable by either party giving either 6 or 12 months’
notice to the other. The non-executive directors’ service contracts are terminable on one month’s notice by either
party with the exception of R Hoggarth whose service contract is terminable on three months’ notice by either
party.
Loss of office payments
In the event of early termination, all of the Directors’ contracts provide for compensation up to a maximum of basic
salary plus benefits for the notice period.
Pension Arrangements
The Group makes pension contributions to money purchase schemes in respect of both of the executive directors.
Share Options including Growth Share Schemes
The Group aims to align the interests of the executive directors with the interest of the long-term shareholders.
The Remuneration Committee has discretion to make option grants to executive directors and other staff, subject
to the applicable scheme rules, and to determine appropriate performance conditions. The share option plans are
subject to rules and limits approved by shareholders in general meeting. Any exercise is subject to satisfaction of the
specified performance conditions.
Share Incentive Plan (SIP)
Following the introduction of a Share Incentive Plan for all UK employees during the year ended 31 March 2014, a
similar plan was introduced for all US employees during the year ended 31 March 2015. Full details are provided in
note 16 of the Consolidated Financial Statements.
Consultation with shareholders
The Remuneration Committee is committed to an ongoing dialogue with shareholders and seeks the views of
significant shareholders when any major changes are being made to remuneration arrangements, especially in
regard to Long Term Incentive Plans (LTIPs). The Committee takes into account the views of significant shareholders
when formulating and implementing the policy.
3535
Annual Report and AccountsAnnual Report and Accounts Chairman and Non- Executive Director fees
Key to the Group is to ensure ability to attract and recruit high quality Chairman and Non-Executive Directors to
help deliver on the Group strategy in the interest of the shareholders.
A basic fee is set for normal duties, commensurate with fees paid for similar roles in other similar companies, taking
account of the time commitment, responsibilities, and committee position(s).
Non-Executive Directors are not eligible for pensions, incentives, bonus or any similar payments other than normal
out-of-pocket expenses incurred on behalf of the business. Compensation for loss of office is not payable to Non-
Executive Directors and payments are monthly or quarterly.
Share Price
As at 31 March 2023, the market price of the shares of the Company was 62.5p (mid-market price). The share price
fluctuated between a high of 77p and a low of 38.0p during the year ended 31 March 2023.
Charles ‘Chuck’ Pol
Chair
Remuneration Committee
19 June 2023
3636
Annual Report and AccountsAnnual Report and Accounts DIRECTOR’S REPORT
For the year ended 31 March 2023
The Directors present their Annual Report and the audited financial statements of the Group and the Company for
the year ended 31 March 2023.
Principal Activities
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 Company
The Company is a holding company which was set up to facilitate the admission of the Group onto the AIM (IGP)
section of the London Stock Exchange.
Review of Operations and Future Developments
The review of operations and future developments is omitted from the Directors’ Report as it is included in the
Strategic Report on pages 18 to 22.
Results and Dividends
The audited accounts for the year ended 31 March 2023 are set out on pages 48 to 75. The Group’s profit for the year
was £1.3 million (2022: £0.7 million). The Directors do not recommend the payment of a dividend (2022: £nil).
Directors and their Interests
Details of the present Directors, all who served throughout the year, are provided on pages 28 to 29. In accordance
with the Company’s Articles of Association, Tina Whitley, Nitil Patel and Rob Chandhok will offer themselves for re-
election at the forthcoming Annual General Meeting.
The interests of the Directors serving at the end of their year, and their immediate families, in the shares of the
Company are set out below:
C Pol
R Chandhok
R Hoggarth
J Tredoux *
K van der Leest **
T Whitley
N Patel **
Ordinary Shares
31 March 2023
31 March 2022
133,037
-
375,214
16,437,860
816,800
-
30,768
133,037
-
168,721
16,437,860
63,406
-
-
* J Tredoux is interested in 1,463,216 shares which are registered in the name of Pershing Nominees Limited which
is a nominee of Angus Investment Holdings Limited (“Angus”). Angus is controlled by The South Hills Trust. As at 31
March 2023, Jacques Tredoux was also interested in 14,974,644 shares indirectly held by The Azalia Trust. Jacques
Tredoux and/or his wife and children are members of the class of discretionary beneficiaries of The South Hills Trust
and The Azalia Trust.
** K van der Leest and N Patel hold 28,694 and 15,288 shares via the SIP employee scheme, respectively.
None of the Directors had any material interest in any other contract or arrangement made by the Company during
the year with the exception of those referred to in note 16 of the Consolidated Financial Statements.
3737
Annual Report and AccountsAnnual Report and Accounts Director Share Options
Klaas van der Leest
Plan
EMI
EMI
Nitil Patel
Plan
EMI
Growth Share Scheme
Date of Grant
No. of Shares
Exercise Price
Dates Exercisable
19 October 2018
130,000
10 October 2022
500,000
27p
38p
19 October 2021 to
18 October 2028
10 October 2025 to
9 October 2032
Date of Grant
No. of Shares
Exercise Price
Dates Exercisable
10 October 2022
500,000
38p
10 October 2025 to
9 October 2032
Director
Date of Grant
Growth Shares
Awarded
Maximum Ordinary Shares Available
under the Growth Share Scheme
Klaas van der Leest
10 October 2022
300
1,785,705
Full details of the Growth Share Scheme can be found in note 16 of the Consolidated Financial Statements.
Directors’ Indemnity
As permitted by the Articles of Association, the Directors have the benefit of an indemnity which is a qualifying
third-party indemnity provision as defined by Section 234 of the Companies Act 2006. The indemnity was in force
throughout the last financial year and is currently in force. The Company also maintains insurance cover for the
Directors and key personnel against liabilities which may be incurred by them while carrying out their duties.
Substantial Shareholders
As at 17 May 2023, the following had notified the Company of disclosable interests in 3% or more of the Company’s
issued share capital:
Azalia Trust
Liontrust Asset Management
Canaccord Genuity Wealth Management
Anjar International
Palm Limited
Herald Investment Management
Mr Richard A Parris
Premier Miton Investors
Intercede Share Incentive Plan
Hargreaves Lansdown, stockbrokers (EO)
No of Shares
14,974,644
3,740,582
3,376,083
3,171,631
3,147,436
3,140,184
2,655,706
2,252,497
1,940,745
1,893,903
%
25.7%
6.4%
5.8%
5.4%
5.4%
5.4%
4.6%
3.9%
3.3%
3.2%
3838
Annual Report and AccountsAnnual Report and Accounts The Intercede Share Incentive Plan shareholding (“SIP”) has been set up for UK employees (including directors). In
accordance with AIM Rule 26, as at 17 May 2023 the percentage of the Company’s issued share capital that is not in
public hands is 34.0%. This constitutes treasury shares, shares held by the trustees of Intercede’s SIP, shares held by
the directors and their immediate families, and any shareholdings greater than 10%.
Research and Development Expenditure
The Group continues to invest in an ongoing programme of research and development. The total cost of
development during the year ended 31 March 2023 was £3.1 million (2022: £3.0 million) which has been written off as
incurred.
Intellectual Property (IP)
The Group’s revenues are primarily derived from licensing its proprietary MyID product. Intercede Limited owns the
copyright for this product. The Group relies on trademark laws and the law of passing off, or its equivalent in non-
UK countries, to protect the trademarks which it uses. Intercede Limited is the proprietor or applicant of certain
trademarks in important markets. The Group also endeavours to protect its intellectual property through the filing
of patent applications where appropriate.
Since the acquisition of Authlogics in October 2022, the Group has added to its portfolio of IP via Secure Registration
and ID Verification capabilities to Password Security Management and One-Time Password functionality. Authlogics
generates income through subscription of its offering based on multi-year contracts.
Board Changes
During the period 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.
Employees
The Group operates an equal opportunities employment policy. Employees are kept informed of the performance
and objectives of the Group through a combination of regular formal and informal meetings. It is the Group’s policy
to provide, where possible, employment opportunities for disabled people and to care for people who become
disabled whilst in the Group’s employment.
Environment, Social and Governance (ESG)
The Group’s policy regarding the environment is to ensure that we understand and effectively manage the actual
and potential environmental impact of our activities. Our operations are conducted such that we comply with
all legal requirements relating to the environment in all areas where we carry out our business. During the year
covered by this report, the Group has not incurred any fines or penalties or been investigated for any breach of
environmental regulations.
A new ESG committee has been formed, with a specific objective to enhance the Group’s ESG impact and assess
reporting requirements for the financial year ending 31 March 2024.
Share option schemes
The Company operates share option Schemes which are open to employees. The three current Schemes are the
Intercede Employee Share Options ‘SIP’ Scheme, the Intercede EMI Share Options Scheme, and the Intercede Long
Term Incentive Plan. Details of the share options are laid out within note 16 to the accounts.
System of risk management and internal control
In accordance with the Companies Act s414 c(11) information in relation to the business and risks is shown in the
Strategic Report. The Board is responsible for maintaining a risk management and internal control system and for
managing principal risks faced by the Group. Such a system is designed to manage rather than eliminate business
risks and can only provide reasonable and not absolute assurance against material mistreatment or loss.
Supplier Payment Policy
It is Group policy to pay amounts due from suppliers according to the agreed terms of payment upon receipt of a
valid invoice and accurate. The Group does not follow a code on standard payment practice. At 31 March 2023 the
Company had 30 days (2022: 38 days) of outstanding liabilities to creditors.
3939
Annual Report and AccountsAnnual Report and Accounts Treasury policy
The Group’s operations are now funded by cash reserves. The policy of the Group is continued strict management
and control of cashflows and utilising a market rate of interest on its balances. Maintaining good bank relationships
is key for the Group and it does so across a range of suppliers.
The Group also has exposure to foreign currency rate fluctuations and assess hedging contracts to enable stability in
income with a given fixed rate. To date the Group has not entered into any hedging contracts.
Financial instruments
The Group’s financial risk management objectives and policies are discussed within note 14 to the accounts.
Political and Charitable contributions
The Group made no political contributions during the year (2022: £nil), and charitable donations of £724 (2022: £581).
Share Capital
Details of changes to the Company’s share capital during the period, including the issue and repurchase of shares,
are provided in note 12 to the Consolidated Financial Statements.
Directors’ Confirmations
In the case of each director in office at the date the Directors’ Report is approved:
• So far as the Director is aware, there is no relevant audit information of which the Group and Company’s auditor
is unaware; and
•
They have taken all the steps that they ought to have taken as a Director in order to make themselves aware
of any relevant audit information and to establish that the Group and Company’s auditor is aware of that
information.
Annual General Meeting
The 23rd Annual General Meeting of the Company will be held on Thursday 21 September 2023. The Notice of the
Annual General Meeting can be found on page 76.
Website publication
The Directors are responsible for ensuring the Annual Report and the financial statements are made available on a
website. Financial statements are published on the Company’s website in accordance with legislation in the United
Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in
other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the Directors.
The Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein.
Independent Auditor
A resolution to re-appoint Cooper Parry Group Limited as the Company’s auditor will be proposed at the
forthcoming Annual General Meeting.
By order of the Board
Nitil Patel
Chief Financial Officer and Company Secretary
19 June 2023
4040
Annual Report and AccountsAnnual Report and Accounts Directors’ Responsibilities
The directors are responsible for preparing the annual report and financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors have elected to prepare the Group financial statements in accordance with UK adopted international
accounting standards, and the Company financial statements in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law
the directors must not approve the financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. The
directors are also required to prepare the financial statements in accordance with the rules of the London Stock
Exchange for companies trading securities on the Alternative Investment Market (AIM).
In preparing these financial statements, the directors are required to:
• Select suitable accounting policies and then apply them consistently;
• Make judgements and accounting estimates that are reasonable and prudent;
• State whether the Group accounts have been prepared in accordance with UK adopted international accounting
standards, and the Parent Company accounts have been prepared under UK GAAP, subject to any material
departures disclosed and explained in the financial statements; and
• Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group
and the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group
and the Company and enable them to ensure that the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding the assets of the Group and the Company and
hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Website publication
The directors are responsible for ensuring the annual report and the financial statements are made available on a
website. Financial statements are published on the Company’s website in accordance with legislation in the United
Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in
other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the directors.
The directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein.
By order of the Board
Klaas van der Leest
Chief Executive Officer
19 June 2023
4141
Annual Report and AccountsAnnual Report and Accounts Independent auditor’s report to the members of
Intercede Group plc
Opinion
We have audited the financial statements of Intercede Group plc (the ‘parent company’) and its subsidiaries (the
‘group’) for the year ended 31 March 2023 which comprise the Consolidated Statement of Comprehensive Income,
the Consolidated and Company Balance Sheets, the Consolidated and Company Statements of Changes in Equity,
the Consolidated Cash Flow Statement and the related notes to the financial statements, including a summary of
significant accounting policies.
The financial reporting framework that has been applied in the preparation of the group financial statements is
applicable law and UK adopted international accounting standards. The financial reporting framework that has
been applied in the preparation of the parent company financial statements is applicable law and United Kingdom
Accounting Standards including Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (United
Kingdom Generally Accepted Accounting Practice).
In our opinion:
•
•
•
The financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs
as at 31 March 2023 and of the group’s profit for the year then ended;
The group financial statements have been properly prepared in accordance with UK adopted international
accounting standards;
The parent company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
•
The financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the
financial statements section of our report. We are independent of the group and parent company in accordance
with the ethical requirements that are relevant to our audit of the financial statements in the UK, including
the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Our approach to the audit
We adopted a risk-based audit approach. We gained a detailed understanding of the group’s business, the
environment it operates in and the risks it faces.
The key elements of our audit approach were as follows:
In order to assess the risks identified, the engagement team performed an evaluation of identified components
and to determine the planned audit responses based on a measure of materiality, calculated by considering the
significance of components as a percentage of the group’s total revenue and profit before taxation and the group’s
total assets.
From this, we determined the significance of each component to the group as a whole and devised our planned
audit response. In order to address the audit risks described in the Key audit matters section which were identified
during our planning process, we performed a full-scope audit of the financial statements of the parent company,
Intercede Group plc, and all of the group’s UK trading subsidiaries, providing 100% coverage of revenues and profit
before tax for these components. The operations that were subject to full-scope audit procedures made up 100% of
consolidated revenues and 83% of consolidated profit after tax. Entities subject to specific scope review procedures
made up 0% of the consolidated revenue and 17% of consolidated profit after tax. We applied analytical procedures
to the Balance Sheets and Income Statements of the entity comprising the remaining operations of the group,
focusing on applicable risks identified as above, and its significance to the group’s balances.
4242
Annual Report and AccountsAnnual Report and Accounts Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial statements of the current year and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on the
overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Risk Description
Revenue recognition:
As detailed in note 1 to the financial statements,
Significant Accounting Policies, the Group’s revenue is
generated from a number of streams, as follows:
•
•
•
Software licences;
Professional services; and
Support and maintenance.
Given the material nature of revenue and the variety of
methods it is generated through, the appropriateness
of revenue recognition and management’s application
of the Group’s revenue recognition accounting policies
represents a key risk area of significant judgement in
the financial statements.
Our response to the risk
We have assessed accounting policies for consistency
and appropriateness with the financial reporting
framework and in particular that revenue was
recognised when performance obligations were
fulfilled. In addition, we reviewed for the consistency
of application as well as the basis of any recognition
estimates.
We have obtained an understanding of processes
through which the businesses initiate, record, process
and report revenue transactions.
We performed walkthroughs of the processes as set
out by management, to ensure controls appropriate
to the size and nature of operations are designed and
implemented correctly throughout the transaction
cycle.
We tested a sample of transactions from each revenue
stream to confirm that revenue has been recognised
in accordance with the accounting policies and
performance obligations for recognition have been met.
These have been vouched to invoice, signed contracts,
sales quotes and purchase orders and nominal posting.
A complete listing of journals posted to revenue
nominal codes has been obtained. We have tested
unexpected manual adjustments to supporting
evidence on a sample basis.
We performed cut-off procedures to test transactions
around the year end and verified a sample of revenue
to originating documentation to provide evidence that
transactions were recorded in the correct year.
4343
Annual Report and AccountsAnnual Report and Accounts Risk Description
Our response to the risk
Carrying value and impairment of goodwill:
The Group has a significant goodwill balance. The
Group’s assessment of carrying value requires
significant judgement, in particular regarding cash
flows, growth rates, discount rates and sensitivity
assumptions.
Acquisition of Authlogics Ltd
On 7 October 2022, Intercede Ltd purchased the
share capital of Authlogics Ltd, which comprised cash
consideration, repayment of debt and contingent
consideration.
Judgement is applied by management in assessing
the fair value of the assets and liabilities acquired in
the business combination, including any intangibles in
accordance with IFRS 13 Fair Value Measurement.
Management have applied a number of key
judgements and estimates in order to account for
this acquisition in accordance with IFRS 3 Business
Combinations.
We challenged the assumptions used in the
impairment model for goodwill, which is described in
note 8 to the financial statements.
We considered historical trading performance by
comparing recent growth rates of both revenue and
operating profit.
We assessed the appropriateness of the assumptions
concerning growth rates and inputs to the discount
rates against latest market expectations.
We performed sensitivity analysis to determine whether
an impairment would be required if costs increase at a
higher than forecast rate.
We have obtained and reviewed management’s
acquisition accounting working papers to verify the
treatment of the acquisition in accordance with IFRS 3
Business Combinations.
We verified all accounting entries to purchase and
other agreements and bank statements.
We challenged management’s judgements in relation
to fair value adjustments and recognition of intangible
assets.
We reviewed the financial statements disclosures in
relation to the acquisition.
We found the approach to accounting for the
acquisition, including judgements made around the
recognition and valuation of acquired assets and
liabilities, to be acceptable.
Our application of materiality
We apply the concept of materiality in planning and performing our audit, in determining the nature, timing and
extent of our audit procedures, in evaluating the effect of any identified misstatements, and in forming our audit
opinion.
The materiality for the group financial statements as a whole was set at £121,000. This has been determined with
reference to the benchmark of the group’s revenue which we consider to be an appropriate measure for a group of
companies such as these. Materiality represents 1% of group revenue. Performance materiality has been set at 80%
of group materiality.
The materiality for the parent company financial statements as a whole was set at £108,750 and performance
materiality represents 80% of materiality. This has been determined with reference to the parent company’s net
assets, which we consider to be an appropriate measure for a holding company with investments in trading
subsidiaries. Materiality represents 1% of net assets as presented on the face of the parent company’s Statement of
Financial Position.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
4444
Annual Report and AccountsAnnual Report and Accounts Our evaluation of the directors’ assessment of the entity’s ability to continue to adopt the going concern basis of
accounting included:
• Reviewing management’s cash flow forecasts for a period of at least 12 months from the date of approval of
these financial statements;
• Challenging management on key assumptions included in their forecast scenarios;
• Considering the potential impact of various scenarios on the forecasts;
• Reviewing results post year end to the date of approval of these financial statements and assessing them against
original budgets; and
• Reviewing management’s disclosures in the financial statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the group’s ability to continue as a going
concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
Other information
The other information comprises the information included in the annual report, other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information included in
the annual report. Our opinion on the financial statements does not cover the other information and, except to
the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears
to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we
are required to determine whether there is a material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
The information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
The strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report or the
directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires
us to report to you if, in our opinion:
•
Adequate accounting records have not been kept, or returns adequate for our audit have not been received from
branches not visited by us; or
•
The parent company financial statements are not in agreement with the accounting records and returns; or
• Certain disclosures of directors’ remuneration specified by law are not made; or
• We have not received all the information and explanations we require for our audit.
4545
Annual Report and AccountsAnnual Report and Accounts Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 41, the directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for
such internal control as the directors determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the
directors are responsible for assessing the group’s and the parent company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these financial statements irregularities, including fraud,
are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud, is detailed below.
Our assessment focused on key laws and regulations the company has to comply with and areas of the financial
statements we assessed as being more susceptible to misstatement. These key laws and regulations included
but were not limited to compliance with the Companies Act 2006, AIM listing rules, UK adopted international
accounting standards, United Kingdom Generally Accepted Accounting Practice (UK GAAP) and relevant tax
legislation.
We are not responsible for preventing irregularities and cannot be expected to detect non-compliance with all laws
and regulations. Our approach to detecting irregularities included, but was not limited to, the following:
• Obtaining an understanding of the legal and regulatory framework applicable to the entity and how the entity is
complying with that framework;
• Obtaining an understanding of the entity’s policies and procedures and how the entity has complied with these,
through discussions and sample testing of controls;
• Obtaining an understanding of the entity’s risk assessment process, including the risk of fraud;
• Designing our audit procedures to respond to our risk assessment;
• Performing audit testing over the risk of management override of controls, including testing of journal entries
and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside
the normal course of business; and
• Reviewing accounting estimates for bias specifically those in relation to goodwill and deferred tax assets.
Whilst considering how our audit work addressed the detection of irregularities, we also consider the likelihood of
detection based on our approach.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including
those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk
increases the more that compliance with law or regulation is removed from the events and transactions reflected
in the financial statements, as we will be less likely to become aware of non-compliance. The risk is also greater
regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery,
collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s
report.
4646
Annual Report and AccountsAnnual Report and Accounts Use of our report
This report is made solely to the parent company’s members, as a body, in accordance with Chapter 3 of Part 16
of the Companies Act 2006. Our audit work has been undertaken so that we might state to the parent company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the parent company
and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have
formed.
Melanie Hopwell (Senior Statutory Auditor)
For and on behalf of Cooper Parry Group Limited
Statutory Auditor
Sky View
Argosy Road
East Midlands Airport
Caste Donington
Derby
DE74 2SA
Date: 19 June 2023
4747
Annual Report and AccountsAnnual Report and Accounts Consolidated Statement of Comprehensive Income
For the year ended 31 March 2023
Continuing operations
Revenue
Cost of sales
Gross profit
Operating expenses
Operating profit
Finance income
Finance costs
Profit before tax
Taxation
Profit for the year
Total comprehensive income attributable to owners of the parent
company
Earnings per share (pence)
- basic
- diluted
Notes
2023
£’000
2022
£’000
2
3
5
5
6
7
12,110
(403)
11,707
9,925
(198)
9,727
(11,136)
(9,337)
571
130
(75)
626
685
1,311
1,311
2.3p
2.2p
390
16
(83)
323
400
723
723
1.3p
1.2p
The accompanying notes on pages 52 to 69 are an integral part of these financial statements.
4848
Annual Report and AccountsAnnual Report and Accounts Consolidated Balance Sheet
As at 31 March 2023
Non-current assets
Goodwill arising on acquisition
Other intangible assets
Property, plant and equipment
Right-of-use assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity
Share capital
Share premium
Merger reserve
Accumulated deficit
Total equity
Non-current liabilities
Lease liabilities
Contingent consideration
Deferred revenue
Current liabilities
Lease liabilities
Contingent consideration
Trade and other payables
Deferred revenue
Total liabilities
Total Equity and liabilities
Note
8
8
9(a)
9(b)
11
12
9(b)
18
9(b)
18
13
2023
£’000
2,442
785
125
262
3,614
5,489
8,334
13,823
17,437
584
5,430
1,508
(492)
7,030
204
174
550
928
261
313
1,918
6,987
9,479
10,407
17,437
2022
£’000
-
-
117
431
548
4,598
7,787
12,385
12,933
577
5,268
1,508
(1,842)
5,511
388
-
233
621
368
-
1,464
4,969
6,801
7,422
12,933
The financial statements on pages 48 to 69 were authorised for issue by the Board of Directors on 19 June 2023 and
were signed on its behalf by:
K van der Leest
N Patel
Director
Director
The accompanying notes on pages 52 to 69 are an integral part of these financial statements.
4949
Annual Report and AccountsAnnual Report and Accounts
Consolidated Statement of Changes in Equity
For the year ended 31 March 2023
At 1 April 2021
Purchase of own shares
Issue of new shares (note 12)
Employee share option plan charge (note 16)
Employee share incentive plan charge (note 16)
Profit for the year and total comprehensive income
At 31 March 2022
Purchase of own shares
Issue of new shares (note 12)
Employee share option plan charge (note 16)
Employee share incentive plan charge (note 16)
Profit for the year and total comprehensive income
Share
capital
£’000
Share
Premium
£’000
Merger
Reserve
£’000
Accumulated
deficit
£’000
Total
equity
£’000
571
5,138
1,508
(2,471)
4,746
-
6
-
-
-
-
130
-
-
-
-
-
-
-
-
577
5,268
1,508
-
7
-
-
-
-
162
-
-
-
-
-
-
-
-
(187)
(187)
-
67
26
136
67
26
723
723
(1,842)
(54)
-
50
43
5,511
(54)
169
50
43
1,311
1,311
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.
Share capital: Nominal value of shares issued.
Share premium: Amount subscribed for share capital in excess of the nominal value.
Merger reserve: Created on the issue of shares on acquisition of its subsidiary accounted for in line with
merger accounting principles.
Accumulated deficit: All other net losses not recognised elsewhere.
The accompanying notes on pages 52 to 69 are an integral part of these financial statements.
5050
Annual Report and AccountsAnnual Report and Accounts Consolidated Cash Flow Statement
For the year ended 31 March 2023
Note
2023
£’000
2022
£’000
Cash flows from operating activities
Profit for the year
Taxation
Finance income
Finance costs
Depreciation of property, plant & equipment
Depreciation of right-of-use assets
Amortisation
Exchange losses on foreign currency lease liabilities
Employee share option plan charge
Employee share incentive plan charge
Employee unit incentive plan (credit) / charge
Employee unit incentive plan payment
Increase in trade and other receivables
Increase / (decrease) in trade and other payables
Increase / (decrease) in deferred revenue
Cash generated / (used in) from operations
Finance income
Finance costs on leases
Tax received
Net cash generated from operating activities
Investing activities
Purchases of property, plant and equipment
Purchase of business (net of cash acquired)
Cash used in investing activities
Financing activities
Purchase of own shares
Proceeds from issue of ordinary share capital
Principal element of lease payments
Cash used in financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Exchange gains on cash and cash equivalents
1,311
(685)
(130)
75
66
246
83
40
50
43
(51)
(3)
(831)
334
1,668
2,216
116
(44)
574
2,862
(70)
(2,009)
(2,079)
(54)
169
(409)
(294)
489
7,787
58
723
(400)
(16)
83
70
237
-
22
67
26
9
-
(550)
(465)
(26)
(220)
13
(83)
400
110
(33)
-
(33)
(187)
136
(321)
(372)
(295)
8,029
53
18
Cash and cash equivalents at the end of the year
8,334
7,787
The total cash outflow for leases is £453,000 (2022: £404,000).
The accompanying notes on pages 52 to 69 are an integral part of these financial statements.
5151
Annual Report and AccountsAnnual Report and Accounts
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
1. Accounting policies
The principal accounting policies applied in the preparation
of these consolidated financial statements are set out below.
These policies have been consistently applied to all of the
years presented, unless otherwise stated.
General Information
Intercede Group plc (‘the Company’) and its subsidiaries
(together ‘the Group’) is a leading independent developer
and supplier of identity and credential management
software. The Company is a public limited company limited
by shares, which is listed on the AIM section of the London
Stock Exchange and is incorporated and domiciled in
England. The address of its registered office is Lutterworth
Hall, St. Mary’s Road, Lutterworth, Leicestershire, LE17 4PS.
The registered number of the company is 04101977.
Basis of preparation
The consolidated financial statements of Intercede Group plc
are drawn up to 31 March each year and have 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. As
detailed in the Directors’ Report, the Directors continue to
adopt the going concern basis on preparing the financial
statements.
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.
Critical accounting estimates and judgements
The preparation of financial statements in accordance with
IFRS requires management to make judgements, estimates
and assumptions that affect the application of policies and
reported amounts of assets, liabilities, income and expenses.
The estimates and associated assumptions are based upon
historical experience and various other factors that are
believed to be reasonable under the circumstances, the
results of which form the basis of making judgements about
carrying values of assets and liabilities that are not readily
available from other sources. Actual results may differ from
these estimates. The accounting estimates that have the
most risk of causing a material adjustment to the amounts
recognised in the financial statements are the judgements
and estimates relating to:
Judgements:
• Research & Development (R&D) costs – in accordance with
the IFRS recognition criteria outlined elsewhere within
the research and development costs policy, the Board
has determined that all internal R&D costs incurred in
the year are expensed. No development expenditure has
been capitalised as at 31 March 2023 (2022: £nil). In general,
the Group’s R&D activities are closely interrelated and it
is not until the technical feasibility of a product can be
determined with reasonable certainty that development
costs are considered for capitalisation. In addition,
intangible assets are not recognised unless it is reasonably
certain that the resultant products will generate future
economic benefits in excess of the amounts capitalised.
• The Group is a beneficiary of the UK Government’s efforts
to encourage innovation by allowing 130% of qualifying
R&D to be offset against taxable profits. 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.
• Carrying value of goodwill - The Group determines
whether goodwill is impaired on an annual basis. This
requires an estimation of the value in use of the cash-
generating units to which the goodwill is allocated.
Estimating the value in use requires the Group to make an
estimate of the expected future cash flows from the cash
generating units and also to choose a suitable discount
rate in order to calculate the present value of those cash
flows. Further details are given in note 8.
Estimates:
• A deferred tax asset has not been recognised against the
backdrop of substantial R&D investment leading to taxable
losses and unused tax losses brought forward. To get to
the point where the Group has a taxable profit and is in a
position to utilise trading losses brought forward, either: a)
the level of qualifying R&D expenditure is reduced by 88%;
and b) the level of accounting profit is over seven times
higher.
The Company has elected to prepare its entity financial
statements in accordance with Financial Reporting Standard
101 Reduced Disclosure Framework (FRS 101) and these are
separately presented on pages 70 to 75.
Basis of consolidation
The Group financial statements include the results of the
Company and its subsidiary undertakings. The results of
subsidiaries acquired or disposed of during the year are
included/excluded from the date of acquisition or disposal
respectively.
The financial statements of the Company and its subsidiary
undertakings are prepared for the same reporting year
as the Group, using consistent accounting policies and
in accordance with local Generally Accepted Accounting
5252
Annual Report and AccountsAnnual Report and Accounts Principles. All intercompany balances and transactions,
including unrealised profits arising from inter-group
transactions, have been eliminated in full.
Foreign currencies
The consolidated financial statements are presented
in pounds sterling, which is the Group’s functional and
presentational currency, rounded to the nearest thousand.
Transactions in foreign currencies by individual entities are
recorded using the rate of exchange ruling at the date of the
transaction. Monetary assets and liabilities denominated in
foreign currencies are translated using the rate of exchange
ruling at the balance sheet date and the gains or losses on
translation are included in the statement of comprehensive
income.
Revenue recognition
Revenue, which excludes sales between Group companies
and trade discounts, represents the invoiced value of goods
and services net of value added tax to end users, partners
and resellers. Where services are provided via resellers and
partners, the satisfaction of the performance obligations
are determined by reference to the end users, with the
transaction price being the amount which is directly under
the control of the Group. The Group’s revenue recognition
polices are detailed below:
Software licence sales (goods) – Revenue is recognised at a
point in time once the customer has access to the licence.
This is on the basis that the customer cannot return the
licence or ask for it to be transferred to another party and the
Group is under no obligation to provide a refund.
Software as a service (SAAS) sales – This revenue stream has
separate performance obligations in respect of the licence
element and the support and maintenance element. The
recognition of licence revenue is at a point in time, for which
the enforceable contract term is typically twelve months,
whereas support and maintenance revenue is recognised
evenly over the time during which the service is provided.
Software as a service (SAAS) subscriptions - Revenue for the
provision of authentication and data protection services to
customers, is recognised evenly over the time during which
the subscription is provided.
Professional services – Revenue is recognised over time as
costs are incurred.
Support and maintenance services – Fees are invoiced at the
beginning of the period to which they relate and are initially
recorded as deferred revenue. Revenue is then recognised
evenly over the time during which the service is provided.
Segmental reporting
A geographical segment is engaged in providing products or
services within a particular economic environment and may
be subject to risks and returns that are different from those
of segments operating in other economic environments.
A business segment is a group of assets and operations
engaged in providing products or services that are subject
to risks and returns that are different from those of other
business segments.
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 across all areas of revenue
constitute a single business segment. This conclusion is
consistent with the nature of information that is presented to
the Board of Directors of the Company, which is considered
to be the Chief Operating Decision Maker (CODM) for the
purposes of IFRS 8.
Research and development costs
Expenditure incurred on research and product development
and testing is charged to the statement of comprehensive
income in the period in which it is incurred, unless
the development expenditure meets the criteria for
capitalisation. Where the development expenditure
meets the criteria for capitalisation, development costs are
capitalised and amortised over the period of expected future
sales of the related projects with impairment reviews being
carried out at least annually. The asset is carried at cost less
any accumulated amortisation and impairment losses.
Business combinations
Acquisitions of subsidiaries and businesses are accounted
for using the purchase method. The consideration for
each acquisition is measured at the aggregate of the fair
value (at the date of exchange) of assets given, liabilities
incurred or assumed, equity instruments issued and cash
paid by the Group in exchange for control of the acquiree.
Acquisition-related costs are recognised in the statement of
comprehensive income as incurred.
Where a business combination is achieved in stages, the
Group’s previously held interests in the acquired entity are
re-measured to fair value at the acquisition date.
The acquiree’s identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under
IFRS 3 “Business Combinations” are recognised at their fair
value at the acquisition date.
Goodwill
Goodwill represents the difference between the cost of the
acquisition and the fair value of the net identifiable assets
acquired. Goodwill has an indefinite expected useful life and
is not amortised but is tested annually for impairment.
Goodwill is recognised as an intangible asset in the
consolidated balance sheet. Goodwill therefore includes non-
identified intangible assets including business processes,
buyer-specific synergies, know-how and workforce-related
industry-specific knowledge and technical skills. Negative
goodwill arising on acquisitions would be recognised
directly in the consolidated income statement. On closure
or disposal of an acquired business, goodwill would be taken
5353
Annual Report and AccountsAnnual Report and Accounts Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
into account in determining the profit or loss on closure or
disposal.
Intangible assets acquired as part of a business
combination
For acquisitions, the Group recognises intangible assets
separately from goodwill provided they are separable
or arise from contractual or other legal rights and their
fair value can be measured reliably. Intangible assets are
initially recognised at fair value, which is regarded as their
cost. Intangible assets are subsequently held at cost less
accumulated amortisation and impairment losses. Where
intangible assets have finite lives, their cost is amortised
on a straight-line basis over those lives. The assets’ residual
values and useful lives are reviewed at each reporting date
and adjusted if appropriate. The carrying values of intangible
assets are reviewed for impairment when events or changes
in circumstances indicate that the carrying value may not be
recoverable.
Property, plant and equipment
Property, plant and equipment is stated at historical cost
less accumulated depreciation and any impairment losses.
Historical cost includes all expenditure that is directly
attributable to the acquisition of the assets. Subsequent
costs are included in the asset’s carrying amount or
recognised as a separate asset, as appropriate, only when
the costs provide enhancement, it is probable that future
economic benefits associated from the item will flow to the
Group and the cost of the enhancement can be measured
reliably. All other repair and maintenance costs are charged
to the statement of comprehensive income during the
financial period in which they are incurred.
Depreciation is provided to write off the cost less the
estimated residual value of property (excluding freehold
land), plant and equipment over their estimated useful
economic lives by equal annual instalments using the
following rates:
Leasehold improvements
Fixtures and fittings
Remaining period
of the lease
15% per annum
Computer and office equipment
25% per annum
Impairment of tangible and intangible assets
The carrying amount of the Group’s assets is reviewed at
each balance sheet date to determine whether there is any
indication of impairment. If any such indication exists, the
assets’ recoverable amount is estimated.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value. If the
recoverable amount of an asset is estimated to be less than
its carrying amount, the carrying amount is reduced to its
recoverable amount with the impairment loss recognised as
an operating expense immediately.
Where an impairment loss subsequently reverses, the
carrying amount of the asset is increased to the revised
estimate of its recoverable amount, but so that the increased
carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss
been recognised for the asset in prior years. A reversal of an
impairment loss is recognised as income immediately.
Leased assets
At the inception of a contract the Group assesses whether
the contract is, or contains, a lease. A lease is present
where the contract conveys, over a period of time, the
right to control the use of an identified asset in exchange
for consideration. Where a lease is identified the Group
recognises a right-of-use asset and a corresponding lease
liability, except for short-term leases (defined as leases with
a lease term of 12 months or less) and leases of low value
assets.
The lease liability is initially measured at the present value
of the future lease payments discounted at the interest
rate implicit in the lease or, if that cannot be readily
determined, at the Group’s incremental borrowing rate
at that point in time. The lease liability is re-measured for
modifications to lease payments due to changes in an index
or rate or where the lease contract is modified and is not
accounted for as a separate lease. When the lease liability
is re-measured an equivalent adjustment is made to the
right-of-use asset. Where the lease liability is denominated
in a foreign currency it is re-translated at the balance sheet
date and gains or losses are included in the statement of
comprehensive income.
A right-of-use asset comprises the initial measurement
of the corresponding lease liability and is subsequently
measured at cost less accumulated depreciation. Right-of-
use assets are depreciated over the shorter of the lease term
and the estimated useful economic life.
Trade and other receivables
Trade and other receivables are initially recognised at
amortised cost. The amortised cost of trade receivables is
calculated as original invoice amount adjusted over time for
foreign exchange adjustments and any loss allowance. The
Group measures loss allowances for Expected Credit Losses
(ECL) on trade receivables using the simplified approach
and the loss allowance is measured at the estimate of
the lifetime expected credit losses. When determining
whether the credit risk of a trade receivable has increased
significantly since initial recognition, and when estimating
ECLs, the Group considers reasonable and supportable
information that is relevant and available without undue
cost or effort. This includes both quantitative and qualitative
information and analysis based on the Group’s historical
experience.
5454
Annual Report and AccountsAnnual Report and Accounts
The Group operates a Unit Incentive Plan to provide similar
benefits for all US employees. The plan provides phantom
shares or units, equivalent in value to shares in the Company,
and the plan is cash-settled. The fair value is assessed at
each period end based on the market value of the shares at
this time and is charged to the statement of comprehensive
income over the remaining vesting period.
Taxation
The tax expense or credit represents the sum of current
and deferred tax. UK corporation tax is provided at amounts
expected to be paid (or recovered) and the current tax
charge is calculated on the basis of the tax laws enacted or
substantively enacted at the balance sheet date. Deferred
tax is recognised using the balance sheet liability method for
all temporary differences, unless specifically exempt, at the
tax rates that have been enacted or substantively enacted at
the balance sheet date.
A deferred tax asset represents the amount of income
taxes recoverable in future periods in respect of deductible
temporary differences, the carry forward of unused tax losses
and the carry forward of unused tax credits. Deferred tax
assets are only recognised to the extent that it is more likely
than not that taxable profits will be available against which
deductible temporary differences can be utilised.
Adoption of new accounting standards
The Group has applied the following standards and
amendments for the first time for the annual reporting
period commencing on 1 April 2022: 2018-2020 annual
improvements cycle, IAS 16 amendments regarding
proceeds before intended use, IAS 37 amendments
regarding onerous contracts and IFRS 3 amendments
updating a reference to the Conceptual Framework. None
of the amendments had a material impact on the Group’s
financial statements for the year ended 31 March 2023.
At the balance sheet date there are a number of new
standards and amendments to existing standards in
issue but not effective. The Group intends to adopt these
standards when they become effective, none of which are
expected to have a material impact on the Group.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in
hand and short-term deposits. The Group does not have
bank overdraft facilities.
Trade and other payables
Trade payables are obligations to pay for goods or services
that have been acquired in the ordinary course of business
from suppliers. Accounts payable are classified as current
liabilities if payment is due within one year or less. If not,
they are presented as non-current liabilities, and discounted
accordingly.
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the
effective interest method, unless the effect is immaterial.
Pension costs
The Group operates a defined contribution pension scheme
via an independent provider. Contributions are charged to
the statement of comprehensive income as incurred.
Share-based payments
The Group measures the cost of equity-settled transactions
with employees by reference to the fair value of the
equity instruments at the date on which they are granted.
Estimating fair values requires determination of the
most appropriate valuation model for a grant of equity
instruments, which is dependent on the terms of the grant.
This also requires determining the most appropriate inputs
to the valuation model including the expected life of the
option, volatility and dividend yield and making assumptions
about them. The assumptions and models used are
disclosed in note 16.
Where share options are awarded to employees, the fair
value of share-based compensation at the date of grant for
equity-settled plans granted to employees after 7 November
2002 is charged to the statement of comprehensive income
over the expected vesting period with a corresponding
amount recognised as an increase in equity. Non-market
vesting conditions are taken into account by adjusting the
number of equity instruments expected to vest at each
balance sheet date so that, ultimately, the cumulative
amount recognised over the vesting period is based on
the number of options that eventually vest. Market vesting
conditions are factored into the fair value of the options
granted. As long as all other vesting conditions are satisfied,
a charge is made irrespective of whether the market vesting
conditions are satisfied. The cumulative expense is not
adjusted for failure to achieve a market vesting condition.
Where the terms and conditions of options are modified
before they vest, the increase in the fair value of the options,
measured immediately before and after the modification,
is also charged to the statement of comprehensive income
over the remaining vesting period.
5555
Annual Report and AccountsAnnual Report and Accounts Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
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:
UK
Rest of Europe
Americas
Rest of World
Analysis of revenue is as follows:
Software licences
Professional services
Support and maintenance
2023
£’000
539
906
9,879
786
12,110
2023
£’000
2,268
2,526
7,316
12,110
2022
£’000
119
992
7,801
1,013
9,925
2022
£’000
1,049
2,210
6,666
9,925
Two end customers made up more than 10% of the Group’s revenue, contributing £4,385,000 (2022: one end customer
contributing £2,535,000). Revenue of £4,994,000 (2022: £4,847,000) has been recognised that was included in the deferred
revenue liability balances at the beginning of the year. The Group’s deferred revenue liabilities typically arise from support and
maintenance services for which revenue is recognised evenly over the maintenance period. Where the contract term is longer
than 12 months it is shown in non-current liabilities totalling £550,000 (2022: £233,000). The maturity of non-current deferred
revenue liabilities is £316,000 due within 1-2 years (2022: £212,000) and £234,000 due within 2-5 years (2022: £21,000).
3. Operating profit
Operating profit is stated after charging / (crediting):
Staff costs (note 4)
Foreign exchange (gain) / loss
Depreciation of property, plant and equipment
Depreciation of right-of-use buildings
Depreciation of right-of-use equipment
Amortisation
2023
£’000
9,027
2022
£’000
7,819
(19)
66
226
20
83
31
70
210
27
-
Included in the staff costs above is research and development expenditure totalling £3,053,000 (2022: £2,953,000).
The analysis of auditor’s remuneration is as follows:
Fees payable for the audit of the parent company and consolidated financial statements
Fees payable for the audit of the Company’s subsidiaries, pursuant to legislation
Tax services
2023
£’000
2022
£’000
57
18
3
78
50
6
-
56
5656
Annual Report and AccountsAnnual Report and Accounts 4. Staff Costs
The average monthly number of employees and contractors of the Group (including Executive Directors) was:
Technical
Sales and marketing
Administration
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Other pension costs
Employee share option plan charge (note 16)
Employee share and unit incentive plan (credit)/charge (note 16)
2023
2022
Number
Number
67
12
12
91
2023
£’000
7,764
939
286
50
(12)
62
12
10
84
2022
£’000
6,628
826
269
67
29
9,027
7,819
Pension contributions totalling £46,000 (2022: £46,000) are included within year end trade and other payables.
Directors’ remuneration
The aggregate remuneration of the Directors was as follows:
Emoluments
Social security costs
Company contributions to defined contribution pension scheme
Directors’ share option plan charge
Directors’ share and unit incentive plan charge
2023
£’000
908
110
13
42
(54)
1,019
2022
£’000
705
87
11
47
4
854
Directors emoluments
Executive Directors:
K van der Leest
A Walker (resigned 27.07.22)
N Patel (appointed 27.07.22)
Non-Executive Directors:
C Pol
R Hoggarth
R Chandhok
T Whitley (appointed 01.07.22)
Fees paid to related parties
Salary and
fees 2023
£’000
Bonus
2023
£’000
Benefit in
kind 2023
£’000
Pension
contributions 2023
£’000
Total
2023
£’000
Total
2022
£’000
230
61
152
46
25
25
19
558
25
254
-
70
-
-
-
-
324
-
-
-
1
-
-
-
-
1
-
2
3
8
-
-
-
-
13
-
486
64
231
46
25
25
19
896
25
328
226
-
88
25
24
-
691
25
Fees paid to related parties comprise amounts paid to Tredoux Capital Limited under an arrangement to provide the Group with
the services of J Tredoux as a Non-Executive Director. J Tredoux is a Director of Tredoux Capital Limited.
Details of the Directors’ share options are set out in the Directors’ Report on pages 37 to 38.
5757
Annual Report and AccountsAnnual Report and Accounts Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
5. Finance income and costs
Finance income
Interest income on short term bank deposits
Finance costs
Unwinding discount applied to contingent consideration
Interest in respect of lease liabilities
6. Taxation
The tax credit comprises:
Current year – UK corporation tax
Current year – US corporation tax
Research and development tax credits relating to prior years
Deferred tax on separately identifiable acquired intangibles
Taxation
2023
£’000
2022
£’000
130
16
(31)
(44)
(75)
-
(83)
(83)
2023
£’000
2022
£’000
-
(30)
604
111
685
-
(33)
433
-
400
The difference between the tax credit shown above and the amount calculated by applying the standard rate of UK corporation
tax to the profit before tax is as follows:
Profit before tax
Tax calculated at UK corporation tax rate of 19% (2022: 19%)
Enhanced research and development tax deduction
Research and development tax credits relating to prior years
Total fixed asset differences
Expenses not deductible for tax purposes
Deferred tax on creation of intangible asset
Foreign exchange & tax rate differences
Losses brought forward utilised
Losses carried forward
Tax credit for the year
2023
£’000
2022
£’000
626
(119)
650
604
2
(34)
113
4
16
(551)
685
323
(61)
740
433
2
(38)
-
2
29
(707)
400
The Group has unused tax losses of £9,946,000 (2022: £10,446,000) and unrecognised deferred tax assets of £2,486,000 (2022:
£2,612,000) 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.
5858
Annual Report and AccountsAnnual Report and Accounts 7. Earnings per share
Profit for the year
Weighted average number of shares – basic
– diluted
Earnings per share – basic
– diluted
2023
£’000
1,311
2022
£’000
723
Number
Number
57,939,548
57,265,739
60,595,485
59,413,261
Pence
Pence
2.3p
1.3p
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:
Issued ordinary shares at start of year
Effect of treasury shares
Effect of issue of ordinary share capital
Weighted average number of shares – basic
Add back effect of treasury shares
Effect of share options in issue
Weighted average number of shares – diluted
Please see note 12 for details of issues of ordinary share capital.
2023
Number
2022
Number
57,743,357
57,143,357
(131,645)
327,836
(112,412)
234,794
57,939,548
57,265,739
131,645
112,412
2,524,292
2,035,110
60,595,485
59,413,261
5959
Annual Report and AccountsAnnual Report and Accounts
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
8. Intangible assets
Cost
At 1 April 2021
Businesses acquired
At 1 April 2022
Businesses acquired
At 31 March 2023
Amortisation
At 1 April 2021
Charge for the year
At 1 April 2022
Charge for the year
At 31 March 2023
Carrying amount
At 31 March 2023
At 31 March 2022
Acquired intangible
assets
£’000
-
-
-
868
868
-
-
-
83
83
785
-
Goodwill
£’000
-
-
-
2,442
2,442
-
-
-
-
-
2,442
-
Total
£’000
-
-
-
3,310
3,310
-
-
-
83
83
3,227
-
Acquired intangible assets are made up of the separately identified intangibles acquired with the purchase of
Authlogics Ltd in October 2022. See note 18 for further detail.
Impairment testing for goodwill
The Group identifies cash-generating units (CGUs) at the operating company level, as this represents the lowest level
at which cash inflows are largely independent of other cash inflows. Goodwill acquired in a business combination is
allocated, at acquisition, to the groups of CGUs that are expected to benefit from that business combination.
Goodwill at 31 March 2023 all relates to the acquisition of Authlogics Limited in October 2022. The CGUs of Authlogics
Limited and the rest of Intercede plc are both expected to benefit from this acquisition and the cash flows are
grouped for the purpose of the impairment review.
The Goodwill value has been tested for impairment by comparing it against the “value in use” in perpetuity of the
CGU group. The value in use calculation was based on projected cash flows, derived from the latest forecasts prepared
by management and budgets approved by the Board, discounted at a Group discount rate of 11.6% to calculate their
net present value.
Key assumptions used in “value in use” calculations
The calculation of “value in use” is most sensitive to the CGU specific operating and growth assumptions, that are
reflected in management forecasts for the five years to March 2028. The revenue growth rates used in the cash flow
forecast are based on management’s expectations of the future opportunities for the Intercede MyID platform and
the ability to upsell additional authentication functionality to existing Intercede and Authlogics customers on a global
basis.
The forecasts include the costs associated with bringing various authentication functionality under a single MyID
platform, which is directly linked to the forecast sales growth. Given the stage of development of the business, the
forecasts assume significant growth in revenue based on targeted total growth of 67% over the 5 year forecast period.
Long-term growth rates to calculate the terminal value are capped at 4% for revenue and 3% for costs. The value in
use calculation shows sufficient headroom of cash flow above the net assets value of the Group when the following
sensitivity analysis is performed: either a 50% increase in the discount rate or a decrease in the terminal growth rate to
0% or a reduction in the targeted growth to 40% during the 5 year forecast period.
6060
Annual Report and AccountsAnnual Report and Accounts 9 (a) Property, plant and equipment
Leasehold
improvements
Fixtures and
fittings
Computer and
Office equipment
Cost
At 1 April 2021
Additions
Disposals
At 1 April 2022
On Acquisition
Additions
Disposals
At 31 March 2023
Accumulated depreciation
At 1 April 2021
Charge for the year
On disposals
At 1 April 2022
On acquisition
Charge for the year
On disposals
At 31 March 2023
Net book amount
At 31 March 2023
At 31 March 2022
9 (b) Leases
70
-
-
70
-
-
-
70
70
-
-
70
-
-
-
70
-
-
100
-
-
100
1
-
(3)
98
85
9
-
94
1
5
(3)
97
1
6
1,087
33
(180)
940
22
70
(165)
867
948
61
(180)
829
18
61
(165)
743
124
111
Total
1,257
33
(180)
1,110
23
70
(168)
1,035
1,103
70
(180)
993
19
66
(168)
910
125
117
All leases that are not classed as short-term or low value are recognised as a right-of-use asset and a corresponding
lease liability, which is explained in detail in the Leased assets policy.
The Consolidated Balance Sheet shows the following amounts in relation to leases:
Right-of-use assets
Buildings
Equipment
Lease liabilities
Current
Non-current
6161
2023
£’000
2022
£’000
262
-
262
261
204
465
411
20
431
368
388
756
Annual Report and AccountsAnnual Report and Accounts Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
9. Leases (continued)
The maturity of lease liabilities is as follows:
Due within one year
Due between one and two years
Due between two and five years
2023
£’000
2022
£’000
261
128
76
465
368
235
153
756
The depreciation charged by each class of right-of-use asset and the interest expense in respect of lease liabilities
is disclosed in notes 3 and 5 respectively. The total cash outflow for leases is disclosed within the Consolidated Cash
Flow Statement.
10. Subsidiaries
Intercede Limited
Intercede 2000 Limited
Country of
incorporation
Class of
shares
% held
Ordinary
100
Principal
activity
Software
developer
England and
Wales
England and
Wales
Ordinary
100
Dormant
Intercede MyID Inc.
USA
Common
100
Service
provider
Intercede National Security Services LLC
USA
Common
100
Dormant
Authlogics Limited
England and
Wales
Ordinary
100
Software
developer
The Company’s subsidiaries, all of which have been consolidated in the Group’s financial statements at 31 March
2023, are as follows:
Intercede Limited, Intercede 2000 Limited and Authlogics Limited are registered at Lutterworth Hall, St. Mary’s Rd,
Leicestershire, LE17 4PS, UK. Intercede MyID Inc. is registered at 2711 Centerville Rd, Suite 400, Wilmington, New
Castle, DE 19808, USA and Intercede National Security Services LLC is registered at 251 Little Falls Drive, Wilmington,
New Castle, DE 19808, USA.
6262
Annual Report and AccountsAnnual Report and Accounts 11. Trade and other receivables
Trade receivables
Prepayments and accrued income
Other debtors
2023
£’000
5,127
280
82
2022
£’000
4,303
239
56
5,489
4,598
The amount written off as irrecoverable during the year was £nil (2022: £151,000). The Group’s customer base is
predominantly made up of large corporates or government departments and there is virtually no history of trade
receivables being uncollected. A credit loss allowance is only recognised in the very rare cases when recoverability is
deemed to be improbable. The movement between the opening and closing credit loss allowance is outlined in the
table below:
At 1 April
Written off
At 31 March
2023
£’000
-
-
-
2022
£’000
(151)
151
-
Included within trade receivables are receivables with a gross carrying amount of £370,000 (2022: £340,000) which
are past due. The level of trade receivables over 60 days old was £118,000 (2022: £4,000). The average age of the
Group’s trade receivables is 63 days (2022: 67 days).
12. Share capital
Authorised
481,861,616 ordinary shares of 1p each (2022: 481,861,616)
Issued and fully paid
58,363,357 ordinary shares of 1p each (2022: 57,743,357)
2023
£’000
2022
£’000
4,819
4,819
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 £155,000 to facilitate the exercise of options by senior managers
during that year).
6363
Annual Report and AccountsAnnual Report and Accounts Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
13. Trade and other payables
Trade payables
Taxation and social security
Accruals
2023
£’000
296
173
1,449
1,918
2022
£’000
328
151
985
1,464
Included within accruals is £25,000 (2022: £79,000) relating to the Employee Unit Incentive Plan (note 16).
14. Financial Instruments
The numerical disclosures in this note deal with financial assets and financial liabilities. There is no material
difference between the fair value and the book values disclosed. Short term trade receivables and payables have
been excluded from the disclosures, with the exception of the currency disclosures.
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern,
so that it can continue to provide returns for shareholders and benefits for other stakeholders, and to provide an
adequate return to shareholders by pricing products and services commensurately with the level of risk.
The Group sets the amount of capital in proportion to risk. The Group manages the capital structure and makes
adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying
assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, purchase existing shares, issue new shares, or sell assets to reduce debt.
The Group’s financial instruments have historically comprised convertible loan notes, cash and cash equivalents,
and various items such as trade receivables and payables which arise directly from its operations. The main purpose
of these financial instruments has been to fund the Group’s operations. It is, and has been throughout the year
under review, the Group’s policy that no trading in financial instruments shall be undertaken. The Group has no
derivative financial instruments.
The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk, credit risk and
foreign currency risk. The Board reviewed these risks on an ongoing basis throughout the year. The policy for their
management is summarised below:
Interest rate risk
The Group has financed its operations to date through a variety of sources of external finance primarily including
equity and convertible loan notes, which have historically borne interest at fixed rates and denominated in sterling.
The last tranche of convertible loan notes were issued in 2017 and successfully retired when a call notice was issued
in February 2021, following which twelve out of thirteen noteholders elected to convert into new ordinary shares.
Liquidity risk
The Group’s policy has been to ensure continuity of funding throughout the year through continued review of cash
flow forecasts.
Credit risk
The Group’s business model is to licence its technology and sell its products via partners who are typically major IT
security industry players. Furthermore, at this stage in the development of the market for identity and credential
management software, end user customers tend to be large corporates or government departments. As such, the
inherent credit risk is relatively low.
6464
Annual Report and AccountsAnnual Report and Accounts Foreign currency risk
A number of suppliers invoice the Group in US dollars and Euros. The Group has also entered into a number of
agreements to licence its technology and sell its products via other international organisations. This results in
invoices being raised in currencies such as US dollars and Euros. The Group’s current policy is not to hedge these
exposures. The exchange differences are recognised in the statement of comprehensive income in the year in which
they arise (note 3).
Interest rate profile
The Group has cash deposits of £8,334,000 (2022: £7,787,000) at the year end. This includes US dollar deposits of
£1,152,000 (2022: £916,000) and Euro deposits of £67,000 (2022: £25,000). Interest rates on cash deposits are based on
SONIA.
Maturity of financial liabilities
The Group has no external borrowings. The maturity of the Group’s lease liabilities is disclosed in note 9(b). The only
other financial liabilities are short term trade and other payables as outlined within note 13.
Borrowing facilities
The Group has no undrawn committed borrowing facilities (2022: £nil).
Currency exposures
The table below shows the Group’s currency exposures; in other words, those transactional exposures that give
rise to the net currency gains and losses recognised in the statement of comprehensive income. Such exposures
comprise the monetary assets and monetary liabilities of the Group that are not denominated in the operating (or
“functional”) currency of the Group (sterling). These exposures were as follows:
Net foreign currency monetary assets
US dollar
£’000
5,802
4,997
Euro
£’000
200
117
Total
£’000
6,002
5,114
At 31 March 2023
At 31 March 2022
15. Financial commitments
a)
Capital commitments
The Group had no capital commitments at the year end (2022: £nil).
b)
Short-term and low-value leases
The Group had no annual commitments under short-term and low-value leases at the year end (2022: £nil).
16. Share based payments
The Directors’ Report on pages 37 to 41 provides details of the status of share options granted since a Share Option
Plan was introduced for senior executives on 22 July 2011. Details relating to the options that remain outstanding as
at 31 March 2023 are outlined below.
Options were granted on 19 October 2018, 24 October 2018, 27 March 2019, 22 August 2019 and 10 October 2022 with
a contractual life of 10 years. The fair value of the options granted was determined using a Monte Carlo valuation
model and includes share price targets, as disclosed in the Directors’ Report.
6565
Annual Report and AccountsAnnual Report and Accounts Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
16. Shared based payments (Continued)
The Growth Share Scheme
Launched in October 2022, the Growth Share Scheme allocated new shares (the “Growth Shares”) in a subsidiary
company, Intercede Limited, which were purchased at nominal cost and awarded to the CEO as disclosed in the
Directors’ Report. The Growth Share Scheme will commence partial vesting if, in the 30-day period following the
release of Group’s results for the year ended 31 March 2025 (the “Vesting Period”), the average closing mid-market
price of an Ordinary Share equals or exceeds 121 pence per Ordinary Share. The Growth Shares do not carry any
voting rights nor entitlement to any dividend.
Performance criteria and vesting criteria
The number of Growth Shares exchangeable into Ordinary Shares depends on the average price of an Ordinary
Share during the Vesting Period. A 30-day averaging period will be used to measure the price of an Ordinary Share
achieved to ensure that performance will not be unduly impacted by short-term volatility. The value of the Growth
Shares is calculated by applying a 5% premium to the base share price of 66 pence (“Base Price”).
• At 121 pence (an 83% per cent. increase from the Base Price) per Ordinary Share or below, no value is delivered to
participants;
• At 173 pence (a 162% per cent. increase from the Base Price) per Ordinary Share, the Growth Share Scheme will
be awarded in full; and
• Between 121 pence per Ordinary Share and 173 pence per Ordinary Share, the Growth Share Scheme award
increases on a sliding scale up to the maximum award.
For the Growth Share Scheme to vest in full, the share price of the Company will need to increase by approximately
162% from the Base Price, representing an increase in market capitalisation of approximately £101m.
Participants have 60 days following the Vesting Period to exchange the Growth Shares into Ordinary Shares. Any
Growth Shares outstanding on the long stop date (being 60 days after the Company’s results for the year ended 31
March 2025 are announced) will automatically be converted to deferred shares. Deferred shares have no rights and
no entitlement to capital in the Company.
The fair value of options and Growth Shares granted and the assumptions used in the calculations were as follows:
Grant date
Share price at grant date
(pence)
Exercise price (pence)
Number of employees
granted options
Number of shares
originally under option
Expected vesting period
(years)
Expected option life
(years)
Expected volatility (%)
Risk free rate (%)
Expected dividends
expressed as a dividend
yield (%)
Fair value per option
(pence)
19-Oct-18
Options
24-Oct-18
Options
27-Mar-19
Options
22-Aug-19
10-Oct-22
Options
Options
27.0
27.0
2
27.0
27.0
2
27.0
27.0
2
24.5
24.5
2
24.5
24.5
2
24.5
24.5
2
17.0
17.0
1
17.0
17.0
1
17.0
17.0
1
33.2
33.2
33.2
33.2
33.2
33.2
1
1
1
38.0
38.0
5
Growth
Shares
66.0
66.0
1
850,000 400,000 400,000 300,000 150,000 150,000 75,000 37,500 37,500 75,000 37,500 37,500 1,700,000
1,785,705
3
7
3
7
3
7
3
7
3
7
3
7
3
7
3
7
3
7
3
7
3
7
3
7
58.68
1.23
66.77
0.76
66.77
0.76
3
3
3
58.73
66.77
66.77
61.00
66.77
66.77
68.60
66.77
66.77
1.11
3
0.76
0.76
0.70
0.76
0.76
0.34
0.76
0.76
3
3
3
3
3
3
3
3
12.0
59.0
57.0
10.0
60.0
58.0
7.0
63.0
60.0
17.0
56.0
55.0
3
7
57.77
2.25
0
7.9
3
3
57.77
2.25
0
4.8
66
Annual Report and Accounts The expected volatility is based on three year historical volatility. The risk free rate of return is the yield on zero-
coupon UK government bonds of a term consistent with the assumed option life.
The total charge for the year relating to employee share options was £50,000 (2022: £67,000). Share options
outstanding at the year end have a weighted average contractual life of 5.9 years (2022: 6.7 years).
In February 2014, HM Revenue & Customs approved an equity-settled Share Incentive Plan (SIP) for all UK employees
(including the Executive Directors), which includes Free Share, Partnership Share and Matching Share elements.
No Free Share awards were made during the year ended 31 March 2023. Partnership shares could be subscribed for
by employees via salary deductions, either on a monthly or lump sum basis, to a cumulative value of up to £1,800.
Matching Shares were given to employees on the basis of one Matching Share for each Partnership Share.
Free Share and Matching Share awards to date have generally been met by the transfer of ordinary shares held in
treasury and from continued on market purchases either by the Company or Link Market Services Trustees Limited
as Trustee of the SIP. To the extent that ordinary shares are not available in treasury or in the volume required
through the market, the Company has issued new ordinary shares to meet these awards.
The total charge for the year relating to the employee share incentive plan was £43,000 (2022: £26,000).
In October 2014, the Company introduced a unit incentive plan to provide similar benefits for all US employees. The
plan provides phantom shares or units, equivalent in value to shares in the company, and the plan is cash-settled.
The total credit for the year relating to the employee unit incentive plan was £51,000 (2022: £9,000 charge) as
outlined in the table below:
At 1 April
Additional (credit) / charge
Paid during the year
At 31 March
2023
£’000
2022
£’000
79
(51)
(3)
25
70
9
-
79
17. Related party transactions
During the year ended 31 March 2023, J Tredoux served as a Non-Executive Director. J Tredoux is also a director of
Tredoux Capital Limited. Fees charged by Tredoux Capital Limited to the Group in respect of his services as a Non-
Executive Director and balances outstanding at the year ends were as follows:
Consultancy fees charged
Balance outstanding at the year end
2023
£’000
25
8
2022
£’000
25
13
67
Annual Report and Accounts Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
18. Businesses 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:
Fair value of consideration
Amount settled in cash
Contingent consideration (subject to achievement of revenue growth targets over three years)
Total consideration
Identifiable net liabilities (recognised at fair value)
Other intangibles
Property, plant and equipment
Trade and other receivables
Cash
Total assets
Trade and other payables
Deferred revenue (current)
Deferred revenue (non-current)
Deferred tax liability (net of related deferred tax asset)
Amounts owed to parent company
Total liabilities
Net liabilities
Goodwill on acquisition
Consideration settled in cash
Debt repaid
Cash and cash equivalents acquired
Net cash outflow on acquisition
68
2022
£’000
1,708
456
2,164
868
4
119
39
1,030
(190)
(387)
(280)
(111)
(340)
(1,308)
(278)
2,442
1,708
340
(39)
2,009
Annual Report and Accounts 18. Businesses acquired - Authlogics Ltd
Consideration transferred
The acquisition of Authlogics was settled in cash amounting to £1,708,000. Acquisition related costs amounting to
£227,000 were expensed. Debt owed by Authlogics of £340,000 was discharged on acquisition.
Identifiable net liabilities
The fair value of identifiable net liabilities acquired as part of the business combination amounted to £278,000,
with a gross contractual amount also being £278,000. 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 £117,000 for the period from 7 October 2022 to the reporting date. Revenue for the
period to 31 March 2023 was £261,000. In its financial year ending 30 June 2022, Authlogics’ sales were approximately
£406,000 with loss before tax of £260,000 and net liabilities (including cash) amounting to £716,000. If the
businesses had been consolidated during that period, approximately £200,000 would have been added to Group
sales per annum.
69
Annual Report and Accounts Company Balance Sheet
As at 31 March 2023
Non-current assets
Investments
Current assets
Trade and other receivables
Total assets
Equity
Share capital
Share premium
Retained earnings
Total equity
Current liabilities
Trade and other payables
Total liabilities
Total equity and liabilities
Notes
2023
£’000
2022
£’000
3
4
5
6
6,034
5,994
4,841
10,875
4,546
10,540
584
5,430
4,837
10,851
24
24
577
5,268
4,616
10,461
79
79
10,875
10,540
The amount of profit dealt with in the Company financial statements was £182,000 (2022: £1,000).
The financial statements on pages 70 to 75 were authorised for issue by the Board of Directors on 19 June 2023 and
were signed on its behalf by:
K van der Leest
N Patel
Director
Director
The accompanying notes on pages 70 to 75 are an integral part of these financial statements.
Intercede Group plc: Registered No. 04101977.
70
Annual Report and Accounts
Company Statement of Changes in Equity
For the year ended 31 March 2023
As at 1 April 2021
Purchase of own shares
Issue of new shares
Employee share option and share incentive plan charges
Profit for the year and total comprehensive income
As at 31 March 2022
Purchase of own shares
Issue of new shares
Employee share option and share incentive plan charges
Profit for the year and total comprehensive income
Share
capital
£’000
571
Share
premium
£’000
Retained
earnings
£’000
Total
Equity
£’000
5,138
4,709
10,418
-
6
-
-
-
130
-
-
(187)
(187)
-
93
1
136
93
1
577
5,268
4,616
10,461
-
7
-
-
-
162
-
-
(54)
-
93
182
(54)
169
93
182
As at 31 March 2023
584
5,430
4,837
10,851
Note: see page 50 for a description of the reserves appearing in the column headings of the table above.
The accompanying notes on pages 72 to 75 are an integral part of these financial statements.
71
Annual Report and Accounts Notes to the Company Financial Statements
For the year ended 31 March 2023
1. Accounting policies
The Company is a holding company which was set up to facilitate the admission of the Group onto the AIM section
of the London Stock Exchange. It does not trade and it has no employees or staff costs and is therefore not required
to display a staff costs note. The Directors of the Company were paid by Intercede Ltd for their services to the Group,
see remuneration report on page 57 for further details.
Basis of Preparation
The financial statements have been prepared on the going concern basis in accordance with Financial Reporting
Standard 101 ‘Reduced Disclosure Framework’ (FRS 101) and the Companies Act 2006. The Company has taken
advantage of Section 408 of the Companies Act 2006 not to present its own statement of comprehensive income.
The Company has taken advantage of the following disclosure exemptions under FRS 101:
(a) The requirements of IAS 7 ‘Statement of cash flows’;
(b) The requirements of IFRS 7 ‘Financial Instruments: Disclosures’;
(c) The requirements of paragraphs 45(b) and 46-52 of IFRS 2 ‘Share Based Payment’;
(d) The requirement in paragraph 38 of IAS 1 ‘Presentation of Financial Statements’;
(e) The requirements of paragraphs 30 and 31 of IAS 8 ‘Accounting Policies, Changes in Accounting Estimates
and Errors’;
(f) The requirements of paragraphs 91-99 of IFRS 13 ‘Fair Value Measurement’; and
(g) The requirements of paragraphs 17-19 of IAS 24 ‘Related Party Disclosures’.
As outlined in note 1 to the consolidated financial statements, the Directors consider that the going concern
assumption is appropriate and therefore the Company’s financial statements have been prepared on a going
concern basis under the historical cost convention.
A summary of the principal accounting policies, which have been applied consistently, is set out below.
Critical accounting estimates and judgements
The preparation of financial statements in accordance with FRS requires management to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income
and expenses. The estimates and associated assumptions are based upon historical experience and various other
factors that are believed to be reasonable under the circumstances, the results of which form the basis of making
judgements about carrying values of assets and liabilities that are not readily available from other sources. Actual
results may differ from these estimates.
The accounting estimate that has the most risk of causing a material adjustment to the amounts recognised in the
financial statements is the judgement relating to amounts owed by subsidiary undertakings. The Company makes
an estimate of the recoverable value of amounts owed by subsidiary undertakings. When assessing impairment
of amounts owed by subsidiary undertakings, management considers factors including the ability to repay the
amount owed on demand through the availability of cash at hand discounted to the year end date.
Investments
Investments held as fixed assets are stated at cost less provision for impairment in value.
72
Annual Report and Accounts Amounts owed by subsidiary undertakings
The Company has amounts receivable from other Group companies which are measured at amortised cost
less impairment losses. The Directors assess periodically whether there has been a significant increase in credit
risk. Where there has been a significant increase in credit risk, lifetime expected credit losses are calculated by
considering, on a discounted basis, the cash shortfalls that would be incurred over the remaining lives of the assets.
Taxation
The tax expense represents the sum of current and deferred tax. UK corporation tax is provided at amounts
expected to be paid (or recovered) and the current tax charge is calculated on the basis of the tax laws enacted or
substantively enacted at the balance sheet date. Deferred tax is recognised using the balance sheet liability method
for all temporary differences, unless specifically exempt, at the tax rates that have been enacted or substantively
enacted at the balance sheet date.
A deferred tax asset represents the amount of income taxes recoverable in future periods in respect of deductible
temporary differences, the carry forward of unused tax losses and the carry forward of unused tax credits. Deferred
tax assets are only recognised to the extent that it is more likely than not that taxable profits will be available against
which deductible temporary differences can be utilised.
Share-based payments
The equity-settled share option programme allows employees to acquire shares of the Company. The fair value of
options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is
measured at grant date and spread over the period during which the employees become unconditionally entitled to
the options. The fair value of all the options granted are measured using the most appropriate valuation model for a
grant of equity instruments, which is dependent on the terms of the grant. The amount recognised as an expense
is adjusted to reflect the actual number of share options that vest except where forfeiture is due only to share prices
not achieving the threshold for vesting.
Share options made available to employees of the Company’s subsidiaries are treated as increases in equity over the
vesting period of the award, with a corresponding increase in the Company’s investment in subsidiary undertaking
based on an estimate of the number of shares that will eventually vest.
Adoption of new accounting standards
The Company has applied the following standards and amendments for the first time for the annual reporting
period commencing on 1 April 2022: 2018-2020 annual improvements cycle, IAS 16 amendments regarding proceeds
before intended use, IAS 37 amendments regarding onerous contracts and IFRS 3 amendments updating a
reference to the Conceptual Framework. None of the amendments had a material impact on the Company’s
financial statements for the year ended 31 March 2023.
At the balance sheet date there are a number of new standards and amendments to existing standards in issue
but not effective. The Company intends to adopt these standards when they become effective, none of which are
expected to have a material impact on the Company.
73
Annual Report and Accounts Notes to the Company Financial Statements
For the year ended 31 March 2023
2. Auditor’s remuneration
Fees payable to the Company’s auditors for the audit of the parent company are £2,000 (2022: £2,000).
3. Investments
At 1 April
Additions
At 31 March
2023
£’000
5,994
40
6,034
2022
£’000
5,892
102
5,994
Additions in the year of £40,000 (2022: £102,000) reflect the employees of the Company’s subsidiaries share option,
incentive and unit plan charges net of any credits or payments relating to the unit plan. Investments have been
assessed in full and it has not been necessary to recognise any impairment. Hence, they are all stated at cost.
The Company’s subsidiaries at 31 March 2023 and their registered offices are set out in note 10 of the consolidated
financial statements.
4. Trade and other receivables
Amounts owed by subsidiary undertakings
2023
£’000
4,841
2022
£’000
4,546
Amounts owed by subsidiary undertakings are unsecured, interest free and have no fixed date of repayment and
are repayable on demand. No impairment was identified in respect of this as at the year end.
5. Share capital
Authorised
481,861,616 ordinary shares of 1p each (2022: 481,861,616)
Allotted and fully paid
58,363,357 ordinary shares of 1p each (2022: 57,743,357)
2023
£’000
2022
£’000
4,819
4,819
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 £155,000 to facilitate the exercise of options by senior managers
during that year).
74
Annual Report and Accounts 6. Trade and other payables
Accruals
7. Financial commitments
a) Capital commitments
2023
£’000
24
2022
£’000
79
The Company had no capital commitments at the year end (2022: £nil).
b) Short-term and low-value leases
The Company had no annual commitments under short-term and low-value leases at the year end (2022: £nil).
75
Annual Report and Accounts Intercede Group plc
Notice of Annual General Meeting
Notice is hereby given that the 23rd Annual General Meeting of Intercede Group plc (the “Company”) will be held
at the Wycliffe Rooms, George Street, Lutterworth, Leicestershire, LE17 4ED on 21 September 2023 at 12 pm for the
purposes outlined below.
Ordinary Business
To consider and, if thought fit, pass the following resolutions which will be proposed as ordinary resolutions of the
Company.
1 To receive and to adopt the Company’s financial statements for the year ended 31 March 2023 together with the
reports of the Directors and the auditors.
2 To re-elect Royston Hoggarth as a director.
3 To re-elect Jacques Tredoux as a director.
4 To re-elect Klaas van der Leest as a director.
5 To re-elect Nitil Patel as a director.
6 To re-elect Tina Whitley as a director.
7 To appoint John Linwood as a director.
8 To appoint Cooper Parry Group Limited to hold office as auditors until the next Annual General Meeting, and to
authorise the Directors to determine the remuneration of the auditors.
Special Business
To consider and, if thought fit, pass resolution 9 which will be proposed as an ordinary resolution of the Company
and resolutions 10 to 13 which will be proposed as special resolutions of the Company.
9 THAT,
a. The Directors be generally and unconditionally authorised, in accordance with section 551 of the Companies
Act 2006 (the “Act”), to exercise all powers of the Company to allot relevant securities (as defined in sections
549(1)-(3) of the Act) up to a maximum nominal amount of £192,165.00 (being 33% of issued ordinary share
capital);
b. This authority shall expire at the conclusion of the next Annual General Meeting of the Company after the
passing of this resolution or, if earlier, the date falling fifteen months from the passing of this resolution
(unless renewed, varied or revoked by the Company prior to or on such date);
c. The Company may, before this authority expires, make an offer or agreement which would or might require
relevant securities to be allotted after it expires; and
d. All previous unutilised authorities under section 551 of the Act shall cease to have effect (save to the extent
that the same are exercisable pursuant to section 551(7) of the Act by reason of any offer or agreement made
prior to the date of this resolution which would or might require relevant securities to be allotted on or after
that date).
76
Annual Report and Accounts 10 THAT,
a. The Directors be given power:
(i)
(Subject to the passing of resolution 9) to allot for cash equity securities (as defined in section 560(1) of
the Act for the purposes of section 561 of the Act) pursuant to the general authority conferred on them by
that resolution; and
(ii) To allot equity securities (as defined in section 560(2) of the Act),
In either case as if section 561(1) of the Act did not apply to the allotment but this power shall be limited:
(A) To the allotment of equity securities in connection with an offer or issue to or in favour of ordinary
shareholders on the register on a date fixed by the Directors where the equity securities respectively
attributable to the interests of all those shareholders are proportionate (as nearly as practicable) to the
respective numbers of ordinary shares held by them on that date but the Directors may make such
exclusions or other arrangements as they consider expedient in relation to fractional entitlements, legal
or practical problems under the laws in any territory or the requirements of any relevant regulatory body
or stock exchange; and
(B) To the allotment (other than under (A) above) of equity securities having a nominal amount not
exceeding in aggregate £58,232.00 (being 10% of issued ordinary share capital).
b. This power shall expire at the conclusion of the next Annual General Meeting of the Company after the
passing of this resolution or, if earlier, the date falling fifteen months from the passing of this resolution
(unless renewed, varied or revoked by the Company prior to or on such date);
c. All previous unutilised authorities under section 570 of the Act shall cease to have effect; and
d. The Company may, before this power expires, make an offer or agreement which would or might require
equity securities to be allotted after it expires.
11 THAT,
a. The Directors be given the general power under Section 570 of the Act:
(iii) Subject to the passing of resolution 9), to allot equity securities (as defined in section 560 of the Act) for
cash, pursuant to the authority conferred by resolution 9, as if section 561(1) of the Act did not apply to any
such allotment, provided that this power shall be limited to:-
(A) The allotment of equity securities having an aggregate nominal amount of up to £58,232 (being 10%
of the issued ordinary share capital); and
(B) Used only for the purposes of financing (or refinancing, if the authority is to be used within six
months of the original transaction) a transaction which the Directors determine to be an acquisition
or other capital investment of a kind contemplated by the Statement of Principles on Disapplying
Pre-Emption Rights most recently published by the Pre-Emption Group prior to the date of this
notice.
b. The power granted by this resolution will expire on the earlier of the conclusion of the next annual general
meeting of the Company or, if earlier, the date falling fifteen months from the passing of this resolution
(unless renewed, varied or revoked by the Company prior to or on such date) save that the Company may,
before such expiry, make offers or agreements which would or might require equity securities to be allotted
after such expiry and the Directors may allot equity securities in pursuance of any such offer or agreement
notwithstanding that the power conferred by this resolution has expired.
77
Annual Report and Accounts c. This resolution revokes and replaces all unexercised powers previously granted to the Directors to allot
equity securities as if Section 561(1) of the Act did not apply but without prejudice to any allotment of equity
securities already made or agreed to be made pursuant to such powers.
12 THAT, in accordance with article 10 of the Company’s articles of association and the Act, the Company is generally
and unconditionally authorised to make market purchases (within the meaning of section 693 of the Act) of
ordinary shares of 1 pence each in the capital of the Company (Ordinary Shares) on such terms and in such
manner as the Directors of the Company may determine provided that:
a. The maximum number of Ordinary Shares that may be purchased under this authority is 5,823,171 (being 10%
of issued ordinary share capital);
b. The maximum price which may be paid for any Ordinary Share purchased under this authority shall not be
more than an amount equal to 105% of the average of the middle market prices shown in the quotations for
the Ordinary Shares in the London Stock Exchange Daily Official List for the five business days immediately
preceding the day on which that Ordinary Share is purchased. The minimum price which may be paid shall
be the nominal value of that Ordinary Share (exclusive of expenses payable by the Company in connection
with the purchase);
c. This authority shall expire at the conclusion of the next Annual General Meeting of the Company after the
passing of this resolution, or, if earlier, the date falling fifteen months from the passing of this resolution
(unless renewed, varied or revoked by the Company prior to or on such date); and
d. The Company may make a contract or contracts to purchase Ordinary Shares under this authority before
its expiry which will or may be executed wholly or partly after the expiry of this authority and may make a
purchase of Ordinary Shares in pursuance of any such contract.
13 That with effect from the conclusion of the meeting, article 97.1 of the articles of association of the Company be
amended such that the aggregate of the fees payable to the Directors (other than Directors holding executive
office and alternate directors) shall not exceed £175,000.
By order of the Board
Nitil Patel
Company Secretary
28 July 2023
Registered Office
Lutterworth Hall
St. Mary’s Road
Lutterworth
Leicestershire
LE17 4PS
78
Annual Report and Accounts
Notes:
1. A member is entitled to appoint a proxy to exercise all or any of his rights to attend and to speak and vote
instead of him at the meeting. A member may appoint more than one proxy in relation to a meeting provided
that each proxy is appointed to exercise the rights attached to a different share or shares held by them. A proxy
need not be a member of the Company.
2.
The form of proxy and power of attorney or other authority, if any, under which it is signed or a notarially
certified or office copy of such power or authority must be received by the Company’s registrars not later
than 48 hours before the time appointed for the meeting. Completion and return of the form of proxy will not
prevent you from attending and voting at the meeting instead of the proxy, if you wish.
3. Only shareholders entered on the register of members of the Company at 6:00 pm on 19 September 2023 are
entitled to attend the meeting either in person or by proxy and the number of ordinary shares then registered
in their respective names shall determine the number of votes such persons are entitled to cast on a poll at
the meeting. Shareholders are urged to appoint the Chairman of the Meeting as their proxy, as only one other
Director will be in attendance to ensure the Annual General Meeting is quorate.
4.
In order to be valid, a proxy appointment must be made and returned by one of the following methods:
(a) By completion of the Form of Proxy, in hard copy form by post, or by courier to the registrar, Computershare
Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY (“the Registrar”);
(b) By appointing your proxy electronically via the Registrar’s website at www.investorcentre.co.uk/eproxy. You
will need your Control Number, SRN & PIN which can be found on your Form of Proxy or email notification, or;
(c) In the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance
with the procedures set out below.
For an instruction made using the CREST service to be valid, the appropriate CREST message (a ‘CREST
Proxy Instruction’) must be properly authenticated in accordance with Euroclear UK and Ireland Limited’s
specifications and must contain the information required for such instruction, as described in the CREST
Manual (available via www.euroclear.com/CREST). The message, regardless of whether it constitutes the
appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must,
in order to be valid, be transmitted so as to be received by the issuer’s agent (ID3RA50) by 12.00 pm on 19
September 2023. For this purpose, the time of receipt will be taken to be the time (as determined by the time
stamp applied to the message by the CREST Application Host) from which the issuer’s agent is able to retrieve
the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions
to proxies appointed through CREST should be communicated to the appointee through other means.
5. CREST members and, where applicable, their CREST sponsors or voting service providers should note that
Euroclear UK and Ireland Limited does not make available special procedures in CREST for any particular
message. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy
Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a
CREST personal member, or sponsored member, or has appointed a voting service provider, to procure that his
CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message
is transmitted by means of the CREST system by any particular time. In this connection, CREST members and
where applicable, their CREST sponsors or voting system providers, are referred in particular to those sections of
the CREST Manual concerning practical limitations of the CREST system and timings.
6. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5) (a)
of the Uncertificated Securities Regulations 2001.
7. As at 28 July 2023 the Company’s issued ordinary share capital consists of 58,363,357 shares. The total voting
rights in the Company as at 28 July 2023, as adjusted for 131,645 treasury shares, are 58,231,712.
8. Copies of the service contracts of the executive directors and the non-executive directors’ terms of appointment
are available for inspection at the registered office of the Company during normal business hours from the date
of this notice and at the place of the meeting for a period of at least 15 minutes prior to the meeting until its
conclusion.
79
Annual Report and Accounts
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