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Intercede – argues “strategically important” contract award… though still how’s the balance sheet?

By Steve Moore | Wednesday 14 February 2018


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.


Cybersecurity group Intercede (IGP) has announced a New Contract Award, which it emphasises “is a strategically important project that exploits many of the new technologies Intercede has developed over the last two years”...

This is that “a Middle Eastern country has selected Intercede's MyID solution to power the issuance of mobile government identities to its citizens… Using Intercede MyID software, this digital identity can then be used for accessing a mobile eco-system of government services, health care, banking and e-commerce”.

It is added this contract will have an initial new order value of more than £1,000,000 and will also generate recurring annual fees. Approximately 50% of this initial contract value is expected to be received within the next 30 days with the remainder expected to be received in Intercede's financial year ending 31 March 2019”, that it “is a top tier reference customer for other nations to follow” and that it “is anticipated to be the first of many such orders around the world”. This has all helped the shares currently more than 9% higher, to 29.5p – to capitalise the company at just below £15 million.

However, the share price compares to more than 45p before a trading warning and results for the company’s half year ending 30th September 2017 showed, on revenue of £3.7 million (2016: £2.8 million), a pre-tax loss of £3.3 million (2016: £3.7 million), following a £4.8 million such loss on revenue of £8.3 million for its year ended 31st March 2017. Cash was down to £4.8 million, net current assets to £2.7 million and non-current liabilities increased to £4.8 million. House broker finnCap was forecasting a loss for the full-year again comfortably over £4 million (on revenue of just over £9 million).

In this context, half of the more than £1 million initial contract value within 30 days should certainly help - but the year-end balance sheet picture still seems unlikely to be an encouraging one. Particularly cautious of this, I’ll review again on a further trading update - anticipating a year-end such update in early April - and currently continue to avoid.


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