Intercede Group PLC Annual Report and Accounts 201

Contents
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Financial and Operational Highlights Chairmans Statement Business and Finance Review Board of Directors Directors Report Corporate Governance Report of the Remuneration Committee Independent Auditors Report: Group Consolidated Statement of Comprehensive Income Consolidated Balance Sheet Consolidated Statement of Changes in Equity Consolidated Cash Flow Statement Notes to the Consolidated Accounts Independent Auditors Report: Company Company Balance Sheet Notes to the Company Accounts Notice of Annual General Meeting
Intercede Group plc Annual Report and Accounts 2011
Financial and Operational Highlights
During the year significant progress has been made, both financially and operationally, across many areas. Highlights include: 1. Continued strong financial performance:
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Revenue (000)
Sales revenues increased from 6.2m to 6.9m Profit before tax of 2.0m (2010: 0.5m) Fully diluted EPS 4.1p (2010: 1.0p) Cash balances of 6.0m at 31 March 2011 (2010: 4.7m)
6,872
7 6 5 4 3 2 1 0 2009 2010 2011 6.19 5.70 6.87
2. Kuwait National ID scheme issued 800,000 identity cards using Intercede MyID and ordered additional services to support future expansion to an additional 2 million residents. 3. UK National Health Service purchased additional MyID licenses, bringing the total number of licences sold to date to 1.2 million. 4. Lockheed Martin purchased additional licences for the US Transportation Worker Identity Credential (TWIC) programme bringing the total number of licences sold to date to 2.1 million. 5. A major new US aerospace and defence contractor ordered MyID licences and services with a value in excess of $2 million. 6. Intercede became the first company in its sector to enable the issuance of US government certified PIV-I cards. Booz Allen Hamilton was the first customer to take delivery. 7. Intercedes MyID technology has been selected for the Victoria HealthSMART project in Australia. 8. Intercede announced collaboration with Microsoft and the launch of the Intercede MyID Management Agent for Microsoft Forefront Identity Manager (FIM). 9. The launch of Intercede MyID PIV version 9.0 and its accreditation by the US General Service Administration for Federal Government use. MyID PIV version 9.0 is Intercedes latest major product release focused on the US PIV and PIV-I market.
Profit before tax (000)
2,005
2.0 2.01 1.5 1.41 1.0
0.5 0.51 0 2009 2010 2011
www.intercede.com
Chairmans Statement Intercede MyID offers governments and major corporates a first line of defence against increasingly sophisticated cyber attack
Introduction
Intercede is one of the worlds leading developers and suppliers of software for identity and credential management. This software is branded as the Intercede MyID Identity and Credential Management System. MyID is used by governments, public authorities and companies around the world to protect and strengthen the identity assurance of their citizens and employees.
Results
In the year ended 31 March 2011, revenue increased by 11% from 6,194,000 to 6,872,000 at a gross margin of 99.7%. This growth has been achieved in spite of the cancellation of the UK National Identity Scheme by the newly elected government, from which Intercede had previously expected to earn revenues. Intercede has nevertheless been able to secure new business from other areas - a testament to the strength of the business. As a result of the growth delivered from multiple projects, Intercede has a strong and diverse customer base from which to generate recurring revenues. Good progress has been made growing our international sales and technical capabilities through a targeted programme of investment, which has been accelerated to take advantage of the growing market opportunity. This includes the opening of an office in Reston, Virginia, to support our US operations and recruiting additional sales and technical support resources in the region. Furthermore, Intercede is investing in strategic partnerships in Germany and Austria to complement our existing sales resources in France. The pre-exceptional operating profit for the period was 1,952,000 which compares to 2,026,000 in the previous year. As at 31 March 2011, the Group had cash balances of 6,046,000 - an increase of 1,382,000 from 2010. This is after the payment during the period of 747,000 of legal costs related to the patent litigation settled in the previous year, which further underlines the strongly cash generative nature of the business. During the year Intercede delivered a profit before tax of 2,005,000 (2010: 510,000). This is the third consecutive full year of profitability, an outstanding achievement against a backdrop of challenging trading conditions.
Results
Year ended 31 March 31 March 31 March 2011 2010 2009 000 000 000
Revenue Gross profit Pre-exceptional operating profit Exceptional item Profit before tax
6,872 6,850 1,952 2,005
6,194 6,128 2,026 (1,517) 510
5,701 5,660 1,858 (371) 1,408
www.intercede.com
Chairmans Statement continued

Strategy
2010/2011 objectives
Launch MyID 9 as a major product release, designed to deliver new levels of business productivity and cost improvements to customers Expand the number of large customers who generate long term recurring revenues
P rogress to date
MyID PIV version 9.0 was pre-released to test customers in November 2010 and formally launched in February 2011, with Booz Allen Hamilton taking first delivery Intercede announced contracts to supply Intercede MyID to the following strategic customers:
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a leading US manufacturing and defence systems enterprise a large US Federal Agency a major Intergovernmental Organisation (IGO) Giesecke & Devrient
Further develop a network of global partners and integrators to deliver complete solutions to customers around the world
Intercede is working with the following partners to build a global ecosystem based on the MyID platform:
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Cryptas has won new business for Intercede MyID in Germany and Austria Diyar United Company has extended Intercedes involvement in the Kuwait National ID program Microsoft has collaborated with Intercede to enable Intercede MyID to provision identity credentials for use within Microsoft FIM Oberthur has bid Intercede MyID for national ID contracts in three continents The US Federal PKI Policy Authority (FPKIPA) has certified Symantec as the first vendor authorized to issue PIVInteroperable (PIV-I) smartcards. This service uses Intercede MyID Thales has secured new business using Intercede MyID technology in South Africa and Australia
Increase the service revenues from Intercedes expert professional services team at a time when one of the major barriers to market growth is a lack of skilled implementers Drive product innovation in the support of managed service partners including the delivery of security in the cloud and the use of mobile devices as a secure credential Accelerate growth and compensate for any loss of revenue that may result from cuts in UK public sector spending by investing to drive new sales in international markets, particularly in the US
Intercede has grown its professional services team in the UK and US by 60%
A research team has been set up to drive new innovation in the management of identities and credentials for mobile devices, physical/logical access convergence and security in the cloud
In spite of the cancellation of the UK National Identity Scheme, from which Intercede had previously expected to earn revenues, Intercede has nevertheless been able to increase overall sales by 11% by securing new business from other regions, notably a 42% increase in US revenues
Key Performance Indicators
I am pleased to report that the percentage of revenue for recurring customers has reduced compared to the previous period as we have been particularly successful in securing new customers. At the same time our support and maintenance revenues have increased. These are both strong indicators for future revenue growth. The Group has continued to strengthen the proportion of revenue originating in the US. This is important because it both fuels and justifies our ongoing investment in this major market. At a time when government spending around the world is coming under increasing scrutiny, it is reassuring to note that private sector customers now account for nearly half of our revenues compared to less than 40% last year. At a time of resurgence in global economic growth this is a positive trend. Finally, the percentage of revenues from software licence sales has increased, validating Intercedes business model as a product producer. This means the scalability of our business is continuing to increase which is critical to our ability to service what we believe will be a fast growing market over the next few years.
Goals for 2011/12
The Groups business plan in the coming year is to build on this years success by executing the following strategy:
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Invest in sales and marketing; Grow UK revenues by participating in the UK governments recently announced Identity Assurance program; Exploit the growing PIV-I market in the US in partnership with major US systems integrators and aerospace and defence contractors; Further collaboration with Microsoft; Establish Intercede MyID as a platform for issuing trustworthy identities on mobile devices; Expand our ecosystem through strategic partnerships including selective investments; Secure participation in additional large scale national identity card projects; and Develop the value of the Intercede MyID brand through participation in industry conferences, standards groups and the use of new media in order to extend the influence and reach of our sales channels
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Product Development
This year has been marked by the continuing development of Intercedes core MyID product suite to service an increasingly global customer base. Intercede MyID PIV version 9.0 was released in February 2011 at a major launch event in Washington DC. In the US, the adoption by the private sector of smart card and identity products that either interoperate or are compatible with government standards is proving to be of particular interest. Customers include those organisations that wish to emulate the best practice of the US Governments Personal Identity Verification (PIV) initiative. Intercede has already delivered a number of these deployments outside of Federal Government, thereby achieving significant first mover advantage in this emerging sector. These include Boeing, Lockheed Martin and Booz Allen Hamilton. In parallel, Intercede is continuing to develop MyID to service customers in other parts of the world who require compliance with alternative technical standards. This includes national identity card schemes, solutions to issue credentials onto mobile phones, closer coupling with Microsoft infrastructure security products and enhanced integration between logical and physical access systems. The Board has recently decided to accelerate investment in existing and new product capability to maximise the potential of market leadership and to ensure Intercede is best placed for future exploitation.
Outlook
The theme of my presentation at the February 2011 launch of Intercede MyID PIV version 9.0 in Washington DC was that assured identities are the foundation of defence against cyber attack. Even since I spoke those words, high profile breaches at HB Gary, Epsilon, Sony and RSA Security are evidence that weak identity management leaves the door open for malicious intrusion and subsequent assault on reputation and assets. Many other organisations have also been breached but have either chosen to keep the fact secret or are not aware that the breach has occurred. The US Secret Service is now routinely involved in monitoring communications traffic between hackers and their sponsors so that they can warn targeted organisations that they are coming under Advanced Persistent Threat (APT). APTs can be perpetrated by criminals or can be state sponsored. Critical national infrastructure, financial networks and corporate intellectual property are all under increasing stress and the risk of cyber attack has never been higher. In a different dimension, corporate networks are being devolved to the Cloud and BlackBerries, iPads and iPhones are replacing laptops as preferred devices for roaming staff. The prevalence of new generation mobile devices is making it more difficult for Chief Information Security Officers (CISOs) to control end user terminal equipment or to control who can view the information held on a remote device. Furthermore, the growth of social networking greatly increases the opportunities for social engineering to obtain personal information. This can lead to usernames and passwords being more easily compromised.
As a consequence, there is a shift in focus from communications security to information security. In other words, if a CISO cannot control the devices used by employees or where corporate information may be copied to, the only remaining response is to ensure that the information is encrypted. This requires the management of encryption keys as part of a users credential with a resulting increase in demand for Intercede MyID technology from corporate customers. Intercede is already seeing its main corporate customers, particularly in the aerospace and defence sectors, replacing username and password login with the use of digital certificates on smart cards. Likewise, we are receiving market demand from the same customers to use medium hardware certificates, particularly on mobile devices, for encrypting emails. This trend is likely to continue across the sector and will drive the adoption of the PIV-I standard into mainstream corporate America and most probably into the international market. In order to respond to this potentially large market, Intercede is collaborating with Microsoft to ensure that Intercede MyID can add PIV-I capability to Microsoft Forefront Identity Manager (FIM) and other Microsoft platforms. The opportunities for stronger identity management are not restricted to the corporate world. The consumer/citizen market is also dynamically evolving. In the US, President Obamas National Strategy on Trusted Identities in Cyberspace (NSTIC) aims to make online transactions safer, faster and more private. The official website www.nist.gov/nstic summaries the problem thus;
The Government will create the necessary commercial, legislative and regulatory environment such that an active market of identity assurance services is created and sustained servicing all segments of society. It is envisaged that the public sector will act as a catalyst to the creation of this environment by mandating that central Government Departments accept assurances of identity from the market of appropriately accredited service suppliers. An appropriate environment will be created to ensure that an open, standards based market place is created in which all types and sizes of service provider are able to collaborate and compete to provide a variety of different service offerings to customers as per their differing needs. It is envisaged that the market will evolve to meet customer needs for privacy, security and convenience and should be structured around an agreed set of principles. These principles will be based on the development of an identity trust framework.
Intercede believes that the creation of Identity Service providers in both the US and UK will stimulate a large and growing market for the management of digital credentials in software, on smart cards, on USB tokens, in mobile phones and trusted platform modules (TPMs). Conceptually, the technical architecture of any Intercede MyID solution delivered to a US or UK IDP will be similar to that already delivered by Intercede to Swisscom in support of the Swiss eID program. Finally, there are many new national ID projects currently being considered in Europe, Latin America, Africa, the Middle East and the Far East. Intercede MyID has been bid by multiple partners into multiple countries. We are already engaged in an expansion of the Kuwait National Identity scheme and anticipate additional licence revenues over the next two years. While the timescales for contract awards can be slow and unpredictable, we would expect to secure a number of new government customers in the coming period. Based on the outlook above, Intercede has a bright future and a growing sales pipeline. It is now our responsibility to ensure that we have the product line flexibility to meet these new opportunities as they emerge. We also need to secure the requisite levels of scalability within our organisational structure to meet the demands of a growing number of customers. The establishment of a strong market position has provided us with sufficient cash resources to fund this next stage of our growth plan and I look forward to reporting further success in due course.
A recent Federal Bureau of Investigation report stated that identity theft has emerged as a dominant and pervasive financial crime that exposes individuals and businesses to significant losses and undermines the credibility and operation of the entire U.S. financial system. A contributing factor is the unmanageable number of passwords people must remember to access their online accounts. Many people dont even try; they just re-use the same ones for all of their accounts, making it that much easier for identity thieves. The National Strategy for Trusted Identities in Cyberspace (NSTIC) envisions a cyber world - the Identity Ecosystem - that improves upon the passwords currently used to log-in online. It would include a vibrant marketplace that allows people to choose among multiple identity providers - both private and public - that would issue trusted credentials that prove identity.
In April 2011, the UK Cabinet Office launched an identity assurance initiative to enable UK citizens to securely access government services. This broadly follows the US NSTIC model and the Cabinet Offices published service description sets out the following objectives:
It is proposed that the market develops identity assurance services for customers of public services such that those customers can easily and securely provide trustworthy identity and other personal information when using digital public services.
Richard Parris Chairman & Chief Executive
Business and Finance Review After another strong trading and financial performance we enter the new financial year with over 6m to fuel our accelerated growth plans
Introduction
Intercede has delivered another strong trading performance, driven by an increasing demand for products and technologies that enable customers to achieve enhanced levels of cyber security. The further growth reflects the continued momentum from the Groups involvement in an increasing number of projects around the world with a consequential increase in revenues from software licence sales, associated support and maintenance and the delivery of ongoing professional services assistance.
Business Development
The Groups overall objective is to put in place the platform and processes to accelerate revenue growth over the next 12-24 months, fuelled by increasing investment in new markets and new partners. A number of opportunities are opening up as a result of the progress made to date. The challenge is how to obtain the resources required for expansion into areas such as mobile, whilst continuing to develop the core IDCMS technology in conjunction with existing and potential new partners. The Group had 64 employees and contractors as at 31 March 2011, which represents a substantial increase in experience and expertise over the past 2-3 years, a time during which we have established a major US and European presence. Selective investment has also increased across a variety of other areas during the same period, for example;
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Sales and marketing including membership of industry bodies such as Intellect and the Transglobal Secure Collaboration Program; Partner development and support; Technical and product development; Quality management processes; and IT infrastructure and equipment
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The Group enters 2011/12 with a larger pipeline than ever before, both in terms of the number and value of individual opportunities. Whilst experience tells us that project delays can and will happen for a variety of reasons, we remain focused on the action we can take to ensure that we are best placed to deal with any changes to project timings.
Business and Finance Review continued

Year ended 31 March 2011 000 Revenue Gross profit (%) Pre-exceptional operating costs Pre-exceptional operating profit (%) Exceptional item Profit before tax Basic earnings per share Adjusted earnings per share 6,872 (4,898) 1,952 2,005 4.1p 4.1p (28%) 6,850 (100%) Year ended 31 March 2010 000 6,194 6,128 (4,102) 2,026 (1,517) 510 1.1p 4.2p (33%) (99%)
Change % 10.9 11.8 (19.4) (3.7) 100.0 293.1 272.7 (2.4)
Financial Results
The financial results outlined above reflect the continued momentum from the Groups involvement in an increasing number of projects around the world against a backdrop of increased investment to deliver accelerated future growth. Sales revenues have grown by a further 11%, with no single project representing more than 22% of total revenue (2010: 15%). Whilst gross profit margins remain high, the increase in costs resulting from the selective investment in additional resources outlined above has resulted in a small reduction in pre-exceptional operating profit. Staff costs continue to represent the main area of expense, representing 81% of the total pre-exceptional operating costs (2010: 84%). Intercede had 64 employees and contractors as at 31 March 2011 (2010: 55). The average number of employees and contractors increased from 54 to 58 year on year. The exceptional item represented the costs associated with defending a patent infringement lawsuit which was filed by ActivIdentity in the United States District Court for the Northern District of California on 1 October 2008. No further legal costs arose during the current financial year following the settlement of this claim on 23 March 2010. The net finance income for the year was 53,000 (2010: 1,000) which reflects the benefit of the Group having no borrowings following the May 2009 convertible loan note conversion. There is no UK corporation tax charge for the current year as a result of the availability of prior year tax losses. Having regard for the tax relief available in respect of research and development expenditure, 3,168,000 of prior year tax losses remain available for utilisation against future years profits (2010: 3,574,000). A profit for the year of 1,998,000 (2010: 496,000) resulted in a basic earnings per share of 4.1p (2010: 1.1p) and a fully diluted earnings per share of 4.1p (2010: 1.0p). The adjusted fully diluted earnings per share, based upon profit prior to tax and exceptional item of 2,005,000 (2010: 2,027,000), is 4.1p (2010: 4.2p).
Funding
As at 31 March 2011, the Group had cash balances totaling 6,046,000 (2010: 4,664,000). The increase in cash balances principally reflects a 2,169,000 inflow from pre-exceptional operating activities (2010: 2,085,000). Following the settlement of the ActivIdentity patent litigation, all outstanding legal costs have now been paid. This resulted in a further 747,000 being paid out during April and May 2010 to the Groups legal advisers. The Group has no debt following the May 2009 convertible loan note conversion. Action was also taken during the past year to further strengthen the Companys Balance Sheet by cancelling the Share Premium Account and cancelling and extinguishing the Deferred Shares. This Capital Reduction, which was registered by the Registrar of Companies on 30 October 2010, has eliminated the deficit showing as profit and loss account reserves, thereby facilitating the payment of a dividend as and when the Board considers this to be appropriate.
Summary
The Group has delivered another strong trading and financial performance. As a result we enter the new financial year with over 6m of cash available to fuel our accelerated growth plans.
Andrew Walker Finance Director
Board of Directors
Richard Parris Chairman & Chief Executive (Age 54)
Richard Parris has over 25 years experience in the IT industry. He founded Intercede in 1992, and has led the Group through all stages of its growth from an e-commerce consulting company to an AIM listed software business. Between 1984 and 1992 he held a range of senior technical and sales management positions at Boeing Computer Services in the US and Europe, including working as a new business manager for network management software products. Richard is a Chartered Engineer with a First Class Honours degree from Manchester University and has an MBA (with Distinction) from the University of Warwick Business School.
Andrew Walker Finance Director (Age 51)

Andrew Walker is a finance professional with over 20 years of senior management experience. He was Group Financial Controller of the Rugby Group PLC from 1995 to 2000, and an Executive Board member from 1997. From 1993 to 1995 he was Finance Director for APV Refrigeration & Freezer Division, and from 1991 to 1993 he was Finance Director for APV Vent-Axia Industrial Division. From 1990 to 1991 he was Group Chief Accountant for APV plc. Before joining APV plc, Andrew worked for Price Waterhouse from 1981 to 1990. Andrew has a BCom (Honours) degree in Accounting from the University of Birmingham and is a Fellow of the Institute of Chartered Accountants. He was appointed Finance Director of Intercede on 11 September 2000.
Royston Hoggarth Non-Executive Director (Age 49)

Royston Hoggarth is the UK Managing Director of Hays PLC, Chairman of iPSL Limited and a non executive director on several public and private Boards. Until September 2009 he was Chief Executive UK for BT Global Services. Prior to joining BT he was Chief Executive for the UK, US and European subsidiaries of Cable & Wireless PLC. He worked for Logica CMG PLC for six years where he was Group Marketing Director, responsible for Group strategy and Chief Executive International, responsible for the Americas, Middle East, Asian and Australian businesses. Royston spent 13 years with IBM in a variety of senior management roles. He was appointed a Non-Executive Director of Intercede on 5 August 2002.
Jurek Sikorski Non-Executive Director (Age 59)

Jurek Sikorski is Associate Director Business Development at the London Business School and a Director of Tatra Care Limited. He has over 30 years experience in the pharmaceutical, medical devices, in vitro diagnostics and biotechnology industries. This includes roles as the Chief Executive of SRS Technology Group Plc, Cantab Pharmaceuticals Plc and Proteus International Plc. He was also Non-Executive Chairman of Fluid Technologies and Vice Chairman of the BioIndustry Association. He has also worked as Marketing and Sales Director at SRS Technology Group Plc, Smith & Nephew and Wellcome Diagnostics Ltd. Jurek received a BSc (Honours) degree from Reading University. He was appointed a Non-Executive Director of Intercede on 4 December 2000.
Jacques Tredoux Non-Executive Director (Age 47)

Jacques Tredoux is the Chief Executive of Tredoux Capital Limited, a company authorised by the Financial Services Authority to provide corporate finance advisory services, and Non-Executive Chairman of COR Financial Services Limited. 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 provided corporate finance and fundraising assistance to the Company since prior to its admission to AIM. Jacques qualified as a lawyer in 1988 in South Africa, and practised at Edward Nathan & Friedland Inc and Clifford Chance. He was appointed a Non-Executive Director of Intercede on 31 March 2006.
Directors Report
For the year ended 31 March 2011 The Directors present their Annual Report and the audited financial statements for the year ended 31 March 2011. Principal Activities & Business Review The Group is a leading independent developer and supplier of identity and credential management software. A review of developments during the year and prospects for the future is provided in the Chairmans Statement and the Business and Finance Review on pages 2 to 7. The Company 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. Results and Dividends The audited accounts for the year ended 31 March 2011 are set out on pages 14 to 31. The Groups retained profit for the year was 1,998,000 (2010: 496,000). The Directors do not recommend the payment of a dividend (2010: nil). Key Performance Indicators
2009 Sales growth Own technology related sales Overseas sales 103% 99% 56% 2010 9% 100% 74% 2011 11% 100% 80%
intellectual property protection; competitive pressure on pricing, delivery or technology; delays or additional cost in product design and launch programmes; fluctuations in project delivery performance and costs; the loss or lack of key personnel; and overall economic conditions. Employees It is the Groups policy to provide, where possible, employment opportunities for disabled people and to care for people who become disabled whilst in the Groups employment. 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. Environment The Groups policy with regard to 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 period covered by this report, the Group has not incurred any fines or penalties or been investigated for any breach of environmental regulations. Supplier Payment Policy It is the Groups policy to pay its suppliers in accordance with the terms and conditions agreed in advance of each transaction once satisfactory performance of service or receipt of goods has been achieved. The Company has no trade creditors. The Groups creditor days at 31 March 2011 were 35 (2010: 34). Directors and Their Interests Details of the present Directors are provided on page 8. The Director retiring by rotation in accordance with the Articles of Association is Andrew Walker who does intend to offer himself for reelection. Details of the Directors service contracts with the Company are given in the Report of the Remuneration Committee on page 12. The interests of the Directors and their immediate families in the shares of the Company are set out below:
Ordinary Shares 2011 RA Parris AM Walker R Hoggarth JS Sikorski J Tredoux 5,472,232 1,376,227 168,721 118,776 12,526,344 2010 5,472,232 1,248,077 168,721 113,776 12,526,344
The primary objectives of the Group are to continue to develop its technology and to establish sales channels for the distribution of this technology throughout the world. The Key Performance Indicators outlined above provide an indication of the progress made to date in this regard. Management of Financial Risk The Groups policy for the management of financial risk is set out within note 15. 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 2011 was 1,601,000 (2010: 1,469,000) which has been written off as incurred. Intellectual Property The Groups 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. Principal Risks and Uncertainties Facing the Group This Annual Report contains certain forward-looking statements. These statements are made by the Directors in good faith, based on the information available to them up to the time of approval of this report. Actual results may differ from those expressed in such statements, depending on a variety of factors. These factors include customer acceptance of the Groups products; changes in customer requirements and in levels of demand in the market; restrictions to market access;
Jacques Tredoux is interested in 1,463,216 shares which are registered in the name of Pershing Keen Nominees Limited which is a nominee of Angus Investment Holdings Limited (Angus). Angus is controlled by The Woodcock Trust. As at 31 March 2011, Jacques Tredoux was also interested in 11,063,128 shares indirectly held by The Azalia Trust. Jacques Tredoux and his wife and children are members of the class of discretionary beneficiaries of both The Woodcock Trust and The Azalia Trust. None of the Directors had any material interest in any contract or arrangement made by the Company during the year with the exception of those referred to in note 17.
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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 11 May 2011, the following had notified the Company of disclosable interests in 3% or more of the Companys issued share capital:
Ordinary Shares Number The Azalia Trust* RA Parris Anjar International Limited Plastic Technologies Limited Herald Investment Management Barclayshare Nominees Limited Hargreave Hale Nominees Limited The Woodcock Trust 11,063,128 5,472,232 3,241,631 3,147,436 1,900,266 1,611,227 1,568,788 1,463,216 % 22.9 11.3 6.7 6.5 3.9 3.3 3.3 3.0
Statement of Directors Responsibilities The Directors are responsible for preparing the Annual Report and the 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 prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, and the parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (UK 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. In preparing these financial statements, the Directors are required to:
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select suitable accounting policies and then apply them consistently; make judgements and accounting estimates that are reasonable and prudent; state whether IFRSs as adopted by the EU and applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Group and parent company financial statements respectively; prepare the Group and parent company financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business
*The undertakings within The Azalia Trust with disclosable holdings of 3% or more of the Companys issued share capital are: React Invest Limited (7.1%), Ferrybridge Enterprises Limited (3.8%) and Friskney Enterprises Limited (3.7%). Political and Charitable Contributions The Group has made no political or charitable contributions during the current or prior year. Statement of Disclosure of Information to Auditors Each of the Directors confirm that, so far as they are aware, there is no relevant audit information of which the auditors are unaware; and each Director has taken all of the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Companys auditors are aware of that information.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Companys transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the Companys website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Annual General Meeting The eleventh Annual General Meeting of the Company will be held at 11:00 am on Wednesday 21 September 2011 at Lutterworth Hall, St. Marys Road, Lutterworth, Leicestershire, LE17 4PS. The Notice of the Annual General Meeting can be found on page 32 of this Annual Report. Auditors A resolution to re-appoint PricewaterhouseCoopers LLP as the Companys auditor will be proposed at the forthcoming Annual General Meeting. By order of the Board
Andrew Walker Company Secretary 7 June 2011
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Corporate Governance
For the year ended 31 March 2011 The Group is committed to high standards of corporate governance. As an AIM company it is not required to comply with the requirements of the Combined Code but, given that the Group is committed to meeting these principles as far as it reasonably can, the commentary below reflects the extent to which voluntary compliance has been achieved during the year under review. This commentary is not subject to audit. Board of Directors The Company is controlled through the Board of Directors which currently comprises two executive and three independent non-executive directors. The Company has historically combined the posts of Chairman and Chief Executive in one person, namely Richard Parris. The Board believes that to separate the roles would be detrimental at this stage of the Groups development. All directors, in accordance with the Code, submit themselves for re-election at least every three years. Committees of the Board The Board has established two standing committees, the Audit Committee and the Remuneration Committee. These operate within defined terms of reference that are reviewed by the Board annually. The Group does not have a Nominations Committee at present, but all Board level appointments are dealt with by the Board as a whole. The Audit Committee consists of the Non-Executive Directors under the Chairmanship of Jurek Sikorski. Its duties include the review of the Groups financial controls and accounting policies and the review of the annual and interim financial statements prior to submission to the Board. The Finance Director is normally invited to attend each meeting as are the external auditors, who have direct access to the Chairman of the Committee at all times. The Remuneration Committee also consists of the Non-Executive Directors under the Chairmanship of Royston Hoggarth. The Committees responsibilities are to advise upon and make recommendations to the Board with regard to the salaries of the Executive Directors, and to approve proposals for the granting of share options. Relations with Shareholders 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 (www.intercede.com) and the provision of Annual and Interim Reports. All shareholders will receive at least twenty working days notice of the Annual General Meeting at which all of the Directors will be present and available for questions. Going Concern The Directors, after having made appropriate enquiries, including a review of the Groups financial forecasts for 2011/12 and 2012/13, have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements. Internal Control The Board confirms that there is an ongoing process for identifying, evaluating and managing the significant risks faced by the Group which complies with the guidance Internal Control: Guidance for Directors on the Combined Code (The Turnbull Report). The key features of the Groups internal control systems are as follows: Group Organisation and Culture 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. Senior management concentrates on the formulation of strategic proposals to the Board and operational decision making. Delegation of Authority The Board reserves to itself a range of key decisions to ensure it retains proper direction and control of the Group, whilst delegating authority to individual directors who are responsible for the day to day management of the business. Financial Reporting 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 period.
12
Report of the Remuneration Committee

For the year ended 31 March 2011 As a company listed on AIM, Intercede Group plc is not required to present a Report of the Remuneration Committee, however 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 the remuneration of the Companys Directors. The Remuneration Committee is composed entirely of the NonExecutive Directors. None of the Committee members has any personal interest in the matters to be decided. The Chairman & 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, car allowance, an annual bonus plan, pension contributions and share options. Note 4 to the financial statements provides details of the remuneration paid and payable in respect of the year ended 31 March 2011. Service Contracts The Executive Directors have service contracts that are terminable by either party giving 12 months notice to the other. The Non-Executive Directors service contracts are terminable on three months notice by either party with the exception of J Tredoux whose services are provided via Tredoux Capital, corporate finance advisers to the Group. This engagement is terminable on 30 days notice by either party. Pension Arrangements The Group makes pension contributions to money purchase schemes in respect of both of the Executive Directors. Share Options The Company operates a Share Option Plan which comprises three parts in similar form i.e. an EMI Part, an Approved Part and an Unapproved Part. The Plan is open to all employees and directors, with the grant of options being supervised by the Remuneration Committee of the Board. The following options were exercised during the year:
Plan EMI Approved Date of Grant 22 Dec 2000 22 Dec 2000 No. of Shares 164,175 22,825 Exercise Price 47.0p 47.0p Date Exercised 30 Nov 2010 30 Nov 2010
As at 31 March 2011 the following options were outstanding:

Plan EMI Unapproved Date of Grant 3 July 2002 3 July 2002 No. of Shares 109,078 260,922 Exercise Price 40.5p 40.5p Dates Exercisable 3 July 2003 to 2 July 2012 3 July 2003 to 2 July 2012
AM Walker was granted 128,150 options under the EMI part of the Plan prior to the Groups admission to AIM. He exercised those options on 30 November 2010. He was also granted a further 240,000 unapproved options on 3 July 2002. No other Director has been granted options to date. The Groups shares commenced trading on 5 January 2001 at an issue price of 60p and, as at 31 March 2011, the mid market price was 82.5p. The share price fluctuated between a high of 83.0p and a low of 27.0p during the year ended 31 March 2011.
13
Independent Auditors Report to the Members of Intercede Group plc

For the year ended 31 March 2011 We have audited the group financial statements of Intercede Group plc for the year ended 31 March 2011 which comprise the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated cash flow statement and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. Respective responsibilities of directors and auditors As explained more fully in the Statement of Directors Responsibilities on page 10, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Boards Ethical Standards for Auditors. This report, including the opinions, has been prepared for and only for the companys members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the groups circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion the group financial statements: l give a true and fair view of the state of the groups affairs as at 31 March 2011 and of its profit and cash flows for the year then ended; l have been properly prepared in accordance with IFRSs as adopted by the European Union; and l have been prepared in accordance with the requirements of the Companies Act 2006 Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Directors Report for the financial year for which the group financial statements are prepared is consistent with the group financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: l certain disclosures of directors remuneration specified by law are not made; or l we have not received all the information and explanations we require for our audit Other matter We have reported separately on the parent company financial statements of Intercede Group plc for the year ended 31 March 2011.
Paul Norbury (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Milton Keynes 7 June 2011
14
Consolidated Statement of Comprehensive Income

For the year ended 31 March 2011
2011 000 6,872 (22) 6,850 (4,898) 3 1,952 1,952 1,952 5 6 7 53 2,005 (7) 1,998 1,998 8 4.1p 4.1p 1.1p 1.0p 2010 000 6,194 (66) 6,128 (5,619) 509 2,026 (1,517) 509 27 (26) 510 (14) 496 496
Notes Continuing operations Revenue Cost of sales Gross profit Administrative expenses Operating profit Operating profit before exceptional item Exceptional item Operating profit Finance income Finance costs Profit before tax Taxation Profit for the year Total comprehensive income attributable to owners of the company Earnings per share (pence) - basic - diluted 2
There is no other comprehensive income for the year. The accompanying notes are an integral part of these financial statements.
15
Consolidated Balance Sheet

2011 000 167 280 447 Current assets Trade and other receivables Cash and cash equivalents 12 841 6,046 6,887 Total assets Equity Share capital Share premium account Other reserves Retained earnings Total equity Current liabilities Trade and other payables Deferred revenue 14 790 1,353 2,143 Total equity and liabilities 7,334 1,385 1,455 2,840 5,982 13 484 86 1,508 3,113 5,191 4,413 4,718 1,508 (7,497) 3,142 7,334 954 4,664 5,618 5,982 2010 000 84 280 364
Notes Non-current assets Property, plant and equipment Deferred tax 9 10
The financial statements on pages 14 to 26 were authorised for issue by the Board of Directors on 7 June 2011 and were signed on its behalf by: RA Parris AM Walker Director Director
The accompanying notes are an integral part of these financial statements.
16
Consolidated Statement of Changes in Equity

Share capital 000 At 31 March 2009 Issue of shares, net of costs (see note 13) Total comprehensive income At 31 March 2010 Capital reduction (see note 13) Issue of shares, net of costs (see note 13) Purchase of treasury shares (see note 13) Total comprehensive income At 31 March 2011 4,305 108 4,413 (3,931) 2 484 Share premium 000 2,875 1,843 4,718 (4,718) 86 86 Other reserves 000 1,508 1,508 1,508 Equity reserve 000 109 (109) Retained earnings 000 (8,102) 109 496 (7,497) 8,649 (37) 1,998 3,113
Total 000 695 1,951 496 3,142 88 (37) 1,998 5,191
17
Consolidated Cash Flow Statement

2011 000 Cash flows from operating activities Operating profit Exceptional item Operating profit before exceptional item Depreciation Decrease/(increase) in trade and other receivables Increase in trade and other payables Cash generated from operations before exceptional item Exceptional item Taxation Net cash generated from operating activities Investing activities Interest received Purchases of property, plant and equipment Net cash from investing activities Financing activities Proceeds/(costs) on issue of shares Purchase of treasury shares Net cash from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 88 (37) 51 1,382 4,664 6,046 (10) (10) 953 3,711 4,664 50 (134) (84) 25 (48) (23) 1,952 1,952 51 116 50 2,169 (747) (7) 1,415 509 1,517 2,026 31 (60) 88 2,085 (1,085) (14) 986 2010 000
18
Notes to the Consolidated Accounts

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 which is listed on the AIM section of the London Stock Exchange and is incorporated and domiciled in the UK. The address of its registered office is Lutterworth Hall, St. Marys Road, Lutterworth, Leicestershire, LE17 4PS. The registered number of the company is 4101977. Basis of preparation The consolidated financial statements of Intercede Group plc have been prepared in accordance with EU endorsed International Financial Reporting Standards (IFRS), IFRIC interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared on a going concern basis under the historical cost convention. The preparation of financial statements in accordance with generally accepted accounting principles requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and 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 relating to revenue recognition, the measurement and impairment of intangible assets and the recognition of current and deferred income tax assets and liabilities. The Company has elected to prepare its entity accounts in accordance with UK GAAP and these are separately presented on pages 28 to 31. 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 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 but in accordance with local Generally Accepted Accounting Principles. Adjustments are made to bring into line any dissimilar accounting policies that may exist. All intercompany balances and transactions, including unrealised profits arising from inter-group transactions, have been eliminated in full. Business combinations and goodwill Goodwill represents the excess of the fair value of the purchase consideration for the subsidiary undertakings over the fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition. Goodwill arising on acquisitions is capitalised and subject to impairment review at least annually, but also when there are indications that the carrying value may not be recoverable. Any impairment is recognised immediately in the income statement and is not subsequently reversed. 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. In general the Groups research and development 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. Property, plant and equipment Property, plant and equipment is stated at historical cost less depreciation and any impairment in value. Historical cost includes all expenditure that is directly attributable to the acquisition of the assets. Subsequent costs are included in the assets 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 income statement during the financial period in which they are incurred. Depreciation is provided to write off the cost less the estimated residual value of property, plant and equipment over their estimated useful economic lives by equal annual instalments using the following rates: Fixtures and fittings 15% pa Computer and office equipment 25% pa Leased assets Leases under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Operating lease payments are charged to the income statement on a straight-line basis. Trade and other receivables Trade receivables are recognised and carried at original invoice amount less a provision for any uncollectible amounts. Provision against trade receivables is made when there is objective evidence that the Group will not be able to collect all amounts due to it in accordance with the original terms of those receivables. The amount of the write-down is determined as the difference between the assets carrying value and the present value of estimated future cash flows. Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in hand and shortterm deposits with an original maturity of less than six months. Convertible loan notes Convertible loan notes are regarded as compound instruments, consisting of a liability component and an equity component. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt. The difference between the proceeds of issue of the convertible loan notes and the fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the group, is included in equity reserve and is not subsequently re-measured. The interest expense on the liability component is calculated by applying the prevailing market rate for similar non-convertible debt at the date of issue of the instrument to the liability component of the instrument. The difference between this amount and the interest payable is added to the carrying amount of the convertible loan note. Finance costs Finance costs represent the interest expense on the liability component of the convertible debt. 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. The Groups revenue recognition polices are detailed below: Software licence sales Revenue is recognised upon delivery of the software.
19
Consulting and development services Revenue is recognised on a time and materials basis as costs are incurred. Support and maintenance Support and maintenance services are provided on fixed fee contracts. Maintenance 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 maintenance period. Distribution of hardware Revenue is recognised upon delivery of the product. Training and installation services Revenue is recognised upon the completion of training or installation services. Finance income Finance income represents interest received and receivable on cash and cash equivalents. 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 Groups sales, 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 parent company, which is considered to be the Chief Operating Decision Maker (CODM) for the purposes of IFRS 8. Pension costs The Group operates a money purchase pension scheme via an independent provider. Contributions are charged to the income statement as incurred. Holiday entitlements In accordance with IAS 19 Employee Benefits, accruals are made in respect of holiday entitlements that have accrued to employees but had not been taken at the balance sheet date. Foreign currencies The consolidated financial statements are presented in pounds sterling, which is the Groups functional and presentational currency. 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. Taxation The tax expense represents the sum of the current tax 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 substantially 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 probable that taxable profits will be available against which deductible temporary differences can be utilised. Adoption of new accounting standards Since the Groups previous annual financial report for the year ended 31 March 2010 the following pronouncements are now effective and have been adopted by the Group: IFRS 1 (revised) First time adoption Amendment to IFRS 1 (revised) First time adoption additional exemptions Amendment to IFRS 2 Share-based payments: group cash-settled share-based payment transactions IFRS 3 (revised) Business combinations IAS 27 (revised) Consolidated and separate financial statements Amendment to IAS 32 Financial Instruments: disclosure and presentation classification of rights issues Amendment to IAS 39 Financial instruments: recognition and measurement eligible hedged items IFRS Annual improvements (2009) IFRIC 12 Service concession arrangements IFRIC 15 Arrangements for construction of real estate IFRIC 16 Hedges of a net investment in a foreign operations IFRIC 17 Distributions of non cash assets to owners IFRIC 18 Transfer of assets from customers There has been no material effect on the Groups financial statements following the introduction of the above. The Group has not applied the following new standards, amendments and interpretations for which adoption is not mandatory for the year ending 31 March 2011 and/or which have not yet been endorsed by the EU. The Group has not concluded its evaluation of the impact of these pronouncements but at this stage does not expect there to be any material impact on the financial statements: Amendment to IFRS 1 (revised) First time adoption fair value hierarchy (IFRS 7) exemptions IFRS 9 Financial instruments IAS 24 (revised) Related party disclosures Amendment to IFRIC 14 Prepayment of minimum funding requirements IFRIC 19 Extinguishing financial liabilities with equity instruments Amendment to IFRS 1 (Revised) First time adoption hyperinflation & fixed dates Amendment to IAS 12 Income taxes deferred tax Amendment to IFRS 7 Financial instruments- disclosures on derecognition Annual Improvements to IFRS (2010) In addition, a number of exposure drafts of new or amended standards and interpretations have been announced by the International Accounting Standards Board (IASB). These include exposure drafts on revenue recognition and leases. The Group is not able to evaluate the potential impact of these pronouncements until final details of these and other exposure drafts have been concluded by the IASB.
20
Notes to the Consolidated Accounts continued

Revenue
All of the Groups 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:
2011 000 UK Rest of Europe USA Rest of World 1,369 928 3,965 610 6,872 2010 000 1,601 1,389 2,795 409 6,194
Revenues of 1,479,000 (2010: nil) and 790,000 (2010: 572,000) are derived from two end customers. These revenues are from the only end customers which individually represent over 10% of the groups revenues.
Operating profit
Operating profit is stated after charging:

2011 000 Staff costs (note 4) Foreign exchange loss Depreciation of property, plant and equipment (note 9) Operating lease rentals Exceptional item Other expenses 3,964 54 51 81 770 4,920 2010 000 3,441 2 31 81 1,517 613 5,685
Included in the costs above is research and development expenditure totalling 1,601,000 (2010: 1,469,000). The exceptional item represented the costs associated with defending a patent infringement lawsuit which was filed by ActivIdentity in the United States District Court for the Northern District of California on 1 October 2008 and subsequently settled on 23 March 2010.
The analysis of auditors remuneration is as follows:

2011 000 Fees payable for the audit of the parent company and consolidated financial statements Fees payable for the audit of the Companys subsidiaries, pursuant to legislation Tax compliance fees Consultancy fees 28 2 8 38 2010 000 26 2 15 25 68
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Staff costs
2011 Number 2010 Number 40 8 6 54
The average monthly number of employees and contractors of the Group (including Executive Directors) was:
Technical Sales and marketing Administration
44 8 6 58
Their aggregate remuneration comprised:

2011 000 Wages and salaries Social security costs Pension costs 3,484 379 101 3,964 2010 000 3,069 290 82 3,441
Pension contributions totalling nil (2010: 11,000) are included within year end trade and other payables.
Directors remuneration
The aggregate remuneration of the Directors and key management was as follows:
2011 000 Emoluments Company contributions to money purchase pension scheme 610 24 634 2010 000 454 22 476
Emoluments exclude fees paid to third parties.
Directors emoluments
Salary and fees 2011 000 Executive Directors RA Parris AM Walker Non-Executive Directors JS Sikorski R Hoggarth Fees paid to third parties 27 12 348 12 143 27 12 491 12 25 12 355 12 19 18 170 139 88 55 258 194 185 133 12 7 12 6 Bonus 2011 000 Benefits in kind 2011 000 Total 2011 000 Total 2010 000 Pension contributions 2011 000 2010 000
Fees payable to JS Sikorski include 12,000 (2010: 10,000) in respect of sales consultancy advice. Fees paid to third 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 Report of the Remuneration Committee on page 12.
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Finance income
2011 000 2010 000 27
Interest income on short term bank deposits
53
Finance costs
2011 000 2010 000 26
Interest on convertible loan notes
Taxation
2011 000 2010 000 (14) (14)
The tax charge comprises:
Current year UK corporation tax Current year US corporation tax Prior year UK corporation tax Taxation
(7) (7)
The difference between the tax charge shown above and the amount calculated by applying the standard rate of UK corporation tax to the profit before tax is as follows:
2011 000 Profit on ordinary activities before taxation Profit on ordinary activities at UK corporation tax rate of 28% (2010: 28%) Research and development claim Capital allowances in excess of depreciation Expenses not deductible for tax purposes Other temporary differences Losses brought forward utilised during the year Losses carried forward Share scheme deduction Prior year UK corporation tax Tax charge for the year 2,005 (561) 339 17 (4) (3) 211 (13) 7 (7) 2010 000 510 (143) 141 6 (1) (3) (14) (14)
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Earnings per share
The calculations of earnings per ordinary share are based on the profit or loss for the financial year and the weighted average number of ordinary shares in issue during each year.
2011 000 Profit for the year Adjusted profit before tax and exceptional item 1,998 2,005 Number Weighted average number of shares basic diluted 48,239,997 48,735,005 Pence Earnings per share basic diluted adjusted* 4.1p 4.1p 4.1p 2010 000 496 2,027 Number 46,304,420 48,735,005 Pence 1.1p 1.0p 4.2p
*Adjusted fully diluted earnings per share based on profit before tax and exceptional item.
Property, plant and equipment

Fixtures and fittings 000 Computer and office equipment 000 189 48 237 103 (1) 339 127 30 157 49 (1) 205 134 80 Total 000 221 48 (1) 268 134 (2) 400 154 31 (1) 184 51 (2) 233 167 84
Cost At 1 April 2009 Additions Disposals At 1 April 2010 Additions Disposals At 31 March 2011 Accumulated depreciation At 1 April 2009 Charge for the year On disposals At 1 April 2010 Charge for the year On disposals At 31 March 2011 Net Book Amount At 31 March 2011 At 31 March 2010 33 4 27 1 (1) 27 2 (1) 28 32 (1) 31 31 (1) 61
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10 Deferred tax
2011 000 At 31 March 280 2010 000 280
A deferred tax asset has been recognised in respect of prior year trading losses. The Group has unused tax losses of 3,168,000 (2010: 3,574,000) and unrecognised deferred tax assets of 544,000 calculated at the UK corporation tax rate of 26% which came into effect from 1 April 2011 (2010: 721,000 calculated at the previous UK corporation tax rate of 28%).
11 Subsidiaries
The Companys subsidiaries, all of which have been consolidated in the Groups financial statements at 31 March 2011, are as follows:
Country of incorporation Intercede Limited Intercede 2000 Limited Intercede MyID Inc. England and Wales England and Wales USA Class of shares Ordinary Ordinary Common % held 100 100 100 Principal activity Software developer Dormant Service provider
Intercede MyID Inc. was incorporated on 17 September 2009 and has been set up to provide a local presence for the Groups growing US activities.
12 Trade and other receivables

2011 000 Trade receivables Prepayments and accrued income 764 77 841 2010 000 893 61 954
As outlined in note 15, the Groups main credit risk relates to its trade receivables. The carrying amount of trade and other receivables approximates to their fair value, which has been calculated based on expectations of debt recovery from historic performances. Trade receivables are stated net of a provision for estimated irrecoverable amounts of nil (2010: nil). The level of trade receivables over 60 days old which have been provided for is nil (2010: nil). The amount written off as irrecoverable during the year was nil (2010: 42,000). Included within trade receivables are debtors with a carrying amount of 106,000 (2010: 228,000) which are past due but have not been impaired as the amounts are still considered to be recoverable. The level of unprovided trade receivables over 60 days old was 29,000 (2010: 40,000). The average age of the Groups trade receivables is 34 days (2010: 39 days).
13 Share capital
2011 000 2010 000 4,819 3,931 8,750
Authorised
481,861,616 ordinary shares of 1p each (2010: 481,861,616) No deferred shares of 1p each (2010: 393,138,384) 4,819 4,819
Issued and fully paid

48,365,005 ordinary shares of 1p each (2010: 48,178,005) No deferred shares of 1p each (2010: 393,138,384) 484 484 482 3,931 4,413
On 29 May 2009, the remaining holders of the convertible loan notes issued by the Company on 31 March 2000 and 6 December 2001 elected to convert their loan notes together with associated interest for the period to 31 May 2009 into ordinary shares of 1p each in the Company. This resulted in the issue of 3,877,166 ordinary shares at a price of 15p per share and 6,897,083 ordinary shares at a price of 20p per share. On 24 September 2010, shareholder approval was obtained at a General Meeting of the Company to cancel the share premium account and to cancel and extinguish the deferred shares. This Capital Reduction was registered by the Registrar of Companies on 30 October 2010. On 30 November 2010, certain employees and a Director of the Company exercised options over a total of 187,000 ordinary shares at an exercise price of 47p per share. On 3 December 2010, the Company subsequently purchased 57,975 of these shares at a price of 63.06p per share. The shares purchased, none of which relate to options exercised by a Director, are held as treasury shares.
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14 Trade and other payables

2011 000 Trade payables Taxation and social security Accruals 152 127 511 790 2010 000 915 172 298 1,385
15 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 Groups objectives when managing capital are to safeguard the Groups 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, issue new shares, or sell assets to reduce debt. The Groups 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 Groups operations. It is, and has been throughout the year under review, the Groups policy that no trading in financial instruments shall be undertaken. The Group has no derivative financial instruments. The main risks arising from the Groups financial instruments are interest rate risk, liquidity risk, credit risk and foreign currency risk. The Board has 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. The convertible loan notes, which were denominated in sterling, bore interest at fixed rates. Liquidity risk The Groups policy has been to ensure continuity of funding throughout the year. Credit risk The Groups business model is to license its technology and sell its products via OEM and Reseller 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. 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 license its technology and sell its products via other international organisations. This will increasingly result in invoices being raised in currencies such as US Dollars and Euros. The Groups 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 (see note 3). Interest rate profile The Group has cash deposits of 6,046,000 (2010: 4,664,000) at the year end. This includes US Dollar deposits of 172,000 (2010: 794,000) and Euro deposits of 33,000 (2010: 67,000). Interest rates on cash deposits are based on LIBOR. Maturity of financial liabilities The Group has no external borrowings following the May 2009 convertible loan note conversion. The only financial liabilities are short term trade and other payables as outlined within note 14. Borrowing facilities The Group has no undrawn committed borrowing facilities (2010: nil).
26

Currency exposures The table below shows the Groups 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 At 31 March 2011 At 31 March 2010 776 843 Euro 000 82 159 Total 000 858 1,002
16 Financial commitments
a) Capital commitments The Group had no capital commitments at the year end (2010: 12,000). b) Operating leases Future aggregate commitments under non-cancellable operating leases are as follows:
2011 000 Expiry date: - within one year - within two to five years - after five years 18 324 405 2010 000
On 7 April 2000, the Group entered into a fifteen year non-cancellable operating lease in respect of its UK offices. The annual lease rental is 81,000.
17 Related party transactions

During the year ended 31 March 2011, J Tredoux served as a Non-Executive Director. J Tredoux is also a director of Tredoux Capital Limited, the Groups corporate finance adviser. Consultancy fees charged by Tredoux Capital Limited to the Group in respect of his services as a Non-Executive Director and general corporate finance advice, and balances outstanding at the year ends were as follows:
2011 000 Consultancy fees charged Balance outstanding at the year end 21 5 2010 000 20 5
27
Independent Auditors Report to the Members of Intercede Group plc

For the year ended 31 March 2011 We have audited the parent company financial statements of Intercede Group plc for the year ended 31 March 2011 which comprise the Company Balance Sheet and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). Respective responsibilities of directors and auditors As explained more fully in the Statement of Directors Responsibilities set out on page 10, the directors are responsible for the preparation of the parent company financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the parent company financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Boards Ethical Standards for Auditors. This report, including the opinions, has been prepared for and only for the companys members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the parent companys circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion the parent company financial statements: l give a true and fair view of the state of the companys affairs as at 31 March 2011; l have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and l have been prepared in accordance with the requirements of the Companies Act 2006. Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Directors Report for the financial year for which the parent company financial statements are prepared is consistent with the parent company financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: l adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or l the parent company financial statements are not in agreement with the accounting records and returns; or l certain disclosures of directors remuneration specified by law are not made; or l we have not received all the information and explanations we require for our audit. Other matter We have reported separately on the group financial statements of Intercede Group plc for the year ended 31 March 2011.
Paul Norbury (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Milton Keynes 7 June 2011
28
Company Balance Sheet

2011 000 2,976 1,433 1,433 4,409 2010 000 2,976 1,475 (10) 1,465 4,441
Notes Fixed assets Investments Current assets Debtors: Amounts falling due within one year Creditors: Amounts falling due within one year Net current assets Net assets Capital and reserves Called up share capital Share premium account Profit and loss account Total shareholders funds 6 7 7 4 5 3
484 86 3,839 4,409
4,413 4,718 (4,690) 4,441
The accompanying notes are an integral part of these financial statements. Signed on behalf of the Board RA Parris AM Walker 7 June 2011 Intercede Group plc: registered No. 4101977 Director Director
29
Notes to the Company Accounts

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. The financial statements have been prepared on the going concern basis in accordance with applicable UK accounting standards and the Companies Act 2006. The Company has taken advantage of Section 408 of the Companies Act 2006 not to present its own profit and loss account. The amount of loss dealt with in the Company financial statements was 83,000 (2010: 54,000 loss). A summary of the principal accounting policies, which have been applied consistently, is set out below. Basis of accounting The financial statements have been prepared under the historical cost basis of accounting. Cash flow statement The Company has taken advantage of the exemption available under FRS 1 (Revised 1996) Cash Flow Statements which provides that a cash flow statement does not have to be prepared where a company is a member of a group and a consolidated Cash Flow Statement is published. Fixed asset investments Investments held as fixed assets are stated at cost less provision for impairment in value. Convertible loan notes Convertible loan notes are regarded as compound instruments, consisting of a liability component and an equity component. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt. The difference between the proceeds of issue of the convertible loan notes and the fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the group, is included in equity and is not subsequently re-measured. The interest expense on the liability component is calculated by applying the prevailing market rate for similar non-convertible debt at the date of issue of the instrument to the liability component of the instrument. The difference between this amount and the interest paid is added to the carrying amount of the convertible loan note. Taxation UK corporation tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the Companys taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements. A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable tax profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis.
Auditors remuneration
Fees payable to the Companys auditors for the audit of the parent company are 2,000 (2010: 2,000).
30
Notes to the Company Accounts continued

Investments
2011 000 2010 000 2,976
Cost and net book value Investment in subsidiary undertakings 2,976
The Companys subsidiaries at 31 March 2011 were:

Country of incorporation Intercede Limited Intercede 2000 Limited Intercede MyID Inc. England and Wales England and Wales USA Class of shares Ordinary Ordinary Common % held 100 100 100 Principal activity Software developer Dormant Service provider
Intercede MyID Inc. was incorporated on 17 September 2009 and has been set up to provide a local presence for the Groups growing US activities.
Debtors: Amounts falling due within one year

2011 000 2010 000 1,474 1 1,475
Amounts owed by group undertakings Prepayments and accrued income
1,432 1 1,433
Amounts owed by group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.
Creditors: Amounts falling due within one year

2011 000 2010 000 10
Accruals
31
Called up share capital

2011 000 2010 000 4,819 3,931 8,750
Authorised
481,861,616 ordinary shares of 1p each (2010: 481,861,616) No deferred shares of 1p each (2010: 393,138,384) 4,819 4,819
Allotted, called up and fully paid

48,365,005 ordinary shares of 1p each (2010: 48,178,005) No deferred shares of 1p each (2010: 393,138,384) 484 484 482 3,931 4,413
On 29 May 2009, the remaining holders of the convertible loan notes issued by the Company on 31 March 2000 and 6 December 2001 elected to convert their loan notes together with associated interest for the period to 31 May 2009 into ordinary shares of 1p each in the Company. This resulted in the issue of 3,877,166 ordinary shares at a price of 15p per share and 6,897,083 ordinary shares at a price of 20p per share. On 24 September 2010, shareholder approval was obtained at a General Meeting of the Company to cancel the share premium account and to cancel and extinguish the deferred shares. This Capital Reduction was registered by the Registrar of Companies on 30 October 2010. On 30 November 2010, certain employees and a Director of the Company exercised options over a total of 187,000 ordinary shares at an exercise price of 47p per share. On 3 December 2010, the Company subsequently purchased 57,975 of these shares at a price of 63.06p per share. The shares purchased, none of which relate to options exercised by a Director, are held as treasury shares.
Reserves
Share premium account 000 Profit and loss account 000 (4,690) 8,649 (37) (83) 3,839 Total 000 28 3,931 86 (37) (83) 3,925
At the beginning of the year Capital reduction (note 6) Exercise of share options (note 6) Purchase of treasury shares (note 6) Loss for the year At the end of the year
4,718 (4,718) 86 86
Financial commitments
a) Capital commitments The Company had no capital commitments at the year end (2010: nil). b) Operating leases The Company had no annual commitments under non-cancellable operating leases at the year end (2010: nil).
32
Notice of Annual General Meeting

Notice is hereby given that the eleventh Annual General Meeting of Intercede Group plc will be held at Lutterworth Hall, St Marys Road, Lutterworth, Leicestershire, LE17 4PS on Wednesday 21 September 2011 at 11:00 am for the following purposes: 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 the accounts for the year ended 31 March 2011 and the reports of the Directors and the auditors. 2 To re-elect Andrew Walker as a director. 3 To re-appoint PricewaterhouseCoopers LLP 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 4 which will be proposed as an ordinary resolution of the Company and resolutions 5 and 6 which will be proposed as special resolutions of the Company. 4 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 160,000.00 (being approximately 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, on 1 October 2012; (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). 5 THAT, (a) the Directors be given power: (i) (subject to the passing of resolution 4) 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 72,000.00 (being approximately 15% 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, on 1 October 2012; (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.
33
6 THAT, in accordance with article 10 of the Companys 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 48,000.00 (being approximately 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, on 1 October 2012; 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.
By order of the Board Andrew Walker Company Secretary 7 June 2011
Lutterworth Hall St. Marys Road Lutterworth Leicestershire LE17 4PS
Registered Office
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 him. 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 Companys 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 persons entered on the register of members of the Company at 6:00 pm on 19 September 2011 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. 4. Only holders of ordinary shares are entitled to attend and vote at the meeting. 5. As at 7 June 2011 the Companys issued ordinary share capital consists of 48,365,005 shares. The total voting rights in the Company as at 7 June 2011, as adjusted for the 57,975 treasury shares, are 48,307,030. 6. 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 from 15 minutes immediately before the meeting until its conclusion.
Intercede Group plc Lutterworth Hall St. Marys Road, Lutterworth, Leicestershire, LE17 4PS T +44 (0) 1455 558 111 F +44 (0) 1455 558 222 E info@intercede.com www.intercede.com
A UK Registered Company No. 4101977

Intercede Group PLC Annual Report and Accounts 201

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Intercede Group plc Annual Report and Accounts 2011

Financial and Operational Highlights

Profit before tax (000)

0.5 0.51 0 2009 2010 2011

Intercede Group plc Annual Report and Accounts 2011

6,872 6,850 1,952 2,005

6,194 6,128 2,026 (1,517) 510

5,701 5,660 1,858 (371) 1,408

Intercede Group plc Annual Report and Accounts 2011

Chairmans Statement continued

Intercede Group plc Annual Report and Accounts 2011

Chairmans Statement continued

Key Performance Indicators

Goals for 2011/12

Intercede Group plc Annual Report and Accounts 2011

Chairmans Statement continued

Richard Parris Chairman & Chief Executive

Intercede Group plc Annual Report and Accounts 2011

Intercede Group plc Annual Report and Accounts 2011

Business and Finance Review continued

Change % 10.9 11.8 (19.4) (3.7) 100.0 293.1 272.7 (2.4)

Andrew Walker Finance Director

Intercede Group plc Annual Report and Accounts 2011

Andrew Walker Finance Director (Age 51)

Royston Hoggarth Non-Executive Director (Age 49)

Jurek Sikorski Non-Executive Director (Age 59)

Jacques Tredoux Non-Executive Director (Age 47)

Intercede Group plc Annual Report and Accounts 2011

Intercede Group plc Annual Report and Accounts 2011

Andrew Walker Company Secretary 7 June 2011

Intercede Group plc Annual Report and Accounts 2011

Intercede Group plc Annual Report and Accounts 2011

Report of the Remuneration Committee

As at 31 March 2011 the following options were outstanding:

Intercede Group plc Annual Report and Accounts 2011

Independent Auditors Report to the Members of Intercede Group plc

Intercede Group plc Annual Report and Accounts 2011

Consolidated Statement of Comprehensive Income

Intercede Group plc Annual Report and Accounts 2011

Consolidated Balance Sheet

Notes Non-current assets Property, plant and equipment Deferred tax 9 10

The accompanying notes are an integral part of these financial statements.

Intercede Group plc Annual Report and Accounts 2011

Consolidated Statement of Changes in Equity

Total 000 695 1,951 496 3,142 88 (37) 1,998 5,191

The accompanying notes are an integral part of these financial statements.

Intercede Group plc Annual Report and Accounts 2011

Consolidated Cash Flow Statement

The accompanying notes are an integral part of these financial statements.

Intercede Group plc Annual Report and Accounts 2011

Notes to the Consolidated Accounts

Intercede Group plc Annual Report and Accounts 2011

Intercede Group plc Annual Report and Accounts 2011

Notes to the Consolidated Accounts continued

Operating profit is stated after charging:

The analysis of auditors remuneration is as follows:

Intercede Group plc Annual Report and Accounts 2011

Technical Sales and marketing Administration

Their aggregate remuneration comprised:

Emoluments exclude fees paid to third parties.

Intercede Group plc Annual Report and Accounts 2011