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Intercede – following a bullish January announcement, now blames ‘The Donald’ for another profit warning ahoy!

By Steve Moore | Friday 3 March 2017


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Having previously gone from “well positioned for future growth” to trading “below expectations” in just over 3 months, cybersecurity group Intercede (IGP) has now followed a January announcement of a record $3 million order (“demonstrates that Intercede continues to win orders for its MyID technology platform in spite of the continuing budget constraints within the US Government”) with that “the order book as of 2 March 2017 indicates that, unless further orders are received that can be recognised as revenue in the current period, the revenue outturn for the financial year ending 31 March 2017 will be approximately £8 million”. Uh oh.

This compares to a house broker forecast prior to the September profit warning of £14.3 million, subsequently reduced to £10 million. The company notes £2 million of orders remain in the current period pipeline, but that the recent US Presidential Budget Proposal “has raised considerable and unexpected uncertainty for the short term budget allocations across the company's target customer base in the US”.

Yep – it’s all the fault of The Donald! The impact would mean “losses for the year to 31 March 2017 being higher than management expectations. In this case, gross cash balances (excluding £4.5m convertible loan notes) are forecast to be approximately £6.0m as at 31 March 2017”.

The announcement seeks to mitigate that in the next year European and US regulation will require a range of agencies and organisations to put in place higher levels of cybersecurity and that the company “is already well advanced in its plans to benefit from this trend”.

However, with a current clear lack of visibility and cash burn ahoy, I retain my prior stance here which has served well; sell.


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