Patience certainly appears needed when investing in digital identity software group Intercede. After all, hopes that profits would recover appear to have been dashed now that management is boosting spending on research and development (R&D), sales and marketing - R&D spending rose 29 per cent to £2.1m. That leaves broker finCapp forecasting no more break-even for 2013 - leaving few near-term share price catalysts.
Admittedly, that's not dreadful news and it is worth taking note of a company that writes off, rather than capitalises, its R&D. Indeed, the balance sheet is devoid of goodwill - even though the company reckons it has invested 300-plus man years on software development. Moreover, the cash pile benefited from a £0.9m inflow from operating activities.
Intercede is also the only significant independent supplier of secure identity software, covering smartcards, smartphones and tablets. At the moment, it manages 5m digital identities but, as it comes out of its closet, its stated target is more than 100m by 2020. To achieve that means concentrating increasingly on the growing US market, rather than the battered eurozone and UK economies. In fact, last year America accounted for nearly two-thirds of sales.
INTERCEDE (IGP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 60p | MARKET VALUE: | £29m | |
| TOUCH: | 58-62p | 12-MONTH HIGH: | 85p | LOW: 23p |
| DIVIDEND YIELD: | nil | PE RATIO: | 43 | |
| NET ASSET VALUE: | 12p | NET CASH: | £6.97m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 2.81 | -0.18 | -0.20 | nil |
| 2009 | 5.70 | 1.41 | 4.70 | nil |
| 2010 | 6.19 | 0.51 | 1.10 | nil |
| 2011 | 6.87 | 2.01 | 4.10 | nil |
| 2012 | 6.96 | 0.91 | 1.40 | nil |
| % change | +1 | -55 | -66 | - |
Aim: Software & computer services | ||||
