Intercede Group (LSE:IGP) — Interim Results

0:01 Good afternoon, ladies and gentlemen, and welcome to the INTERCEDE GROUP PLC interim results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all of the questions submitted today and publish responses where it's appropriate to do so.

0:32 Before we begin, I would like to submit the following poll. And as usual, if you could give that your kind attention, I'm sure the company would be most grateful. I'd now like to hand you over to CEO, Klas Van Der Leeste. Good afternoon, sir. Good afternoon, Jake, and good afternoon, everyone. My name is Klas Van Der Leeste. I'm the CEO for INTERCEDE. I would like to welcome both existing investors as well as potentially new investors to this session where we cover our interims for the period April 1 until the September 30. During this session, I'm joined by Nitol Patel, who's our CFO, and Ellen Story, who's our chief product officer. Look forward to providing you with an update in the coming forty five minutes whilst this presentation is us presenting to you. Look We forward to your questions, but also your feedback after the session. So without further ado, let's start with the presentation. So whilst you see two parts being presented here, the first part being the interims, the second part being the acquisition. Part two was already covered and has been stored on IMC platform following our presentation on the eighteenth of, October.

1:34 That's available to you to review. We are not gonna cover part two again, but we happily take any questions you may still have following the acquisition announcement of of Logix. So during this session, we will focus on part one or interims for the period to the September 30. We'll start with quick introduction, where we fit in the market. Ultimately, we fit within the wider identity and access management market, the IEM market. And whilst it is a a very broad market, we focus on the authentication segment. Specifically, we have a very specific view on strong authentication and authentication. We use the pyramid. Those who've listened to us before will recognize the pyramid, which we use in order to indicate the balance between weak authentication at the bottom moving all the way up to strong authentication.

2:31 INTERCEDE as a company for the last twenty years has focused on the real top end of that that pyramid, the PKI element, and we build up a phenomenal client base on the back of that. So we believe we're one of the market leaders in the PKI space. Our client base is second to none. It's very recognizable, with clients spread globally, but with a heavy very heavy focus on the North American federal market and the defense and aerospace, market. However, in the last two years, we better much realized that PKI in itself is a niche. It's not available to everybody. It's it's complicated, technically complex. It's also expensive to maintain. So, realistically, it's only really available for those who've got the right skills and resources in house and also the financial resources to support this. So in the last two years, we very much tried to focus on how can we come down the pyramid.

3:25 We added about eighteen months capabilities around FIDO. FIDO is originally a consumer consumer standard, but has very much found its way into the corporate enterprise space. And we now offer out of the box standard support for both PKI credentials as well as well as FIDO credentials. It's been interesting that in the last six months, we've seen uptick in the market here in Europe, but also in Asia. And Alan was in The US last week with our client advisory board and got very good feedback on the capabilities we're offering again for the federal space and defense and aerospace pockets.

4:05 The pyramid then also very much has been leading leading contributor to our m and a play. We were very keen to start dominating that middle section of the pyramid simply because of of target account market, I. E, available market size, hence the acquisition of AuthLogix, which covers both the middle section, the MFA market, as well as the the password sector. Passwords are here very much to stay. We strongly believe that passwords will be used for many, many years to come. And probably within our lifetimes, many of us will still continue to use passwords because there will be many applications that still will rely on passwords going forward. So if you have to use passwords, at least make sure you use a strong password, and more importantly, use a password that's not knowingly being hacked or exposed already on the dark web.

5:00 So if we then move on to progress report, we had a a good start in half one. Our revenue growth was was very sensible, early 20% growth both in terms of reported as well as constant currency. We had some good deal flow in the period, which resulted in strong cash flow generation, and that in itself resulted in in good cash for the period. We continue to focus very strongly on margins and cost control, and profits for the period were slightly higher than we had forecast and budgeted for. The momentum we've seen in half one is very much being dragged into the second half as well. And post period close, we've signed a few more deals that really help us to propel into the second half and then indeed into the period towards the end of March.

5:53 Post post period, we announced the acquisition of of Logix. Again, for any of you who haven't listened to the original recording of the October 18, I encourage you to do so. And if you have questions as part of this this presentation, then please use the facility to to ask the questions as we head towards the end of the the presentation. Clearly, Orthologix will allow us to do is offering a broader product portfolio both in our existing client base, but also in net new clients. They're very strong in The Middle East with very strong in North America, so we can upsell and cross sell in in both regions. And the markets for MFA and PSM, Password Security Manager, is significantly bigger than the markets we have traditionally focused on. If we then move on to the right hand side of the slide, revenues for the period were 6.1, playing 4.9 before, so good good sensible increase.

6:49 We had a number of license orders in the period, most notably from Department of State. It's a total value of $1,600,000. Again, just to be absolutely clear, the majority of what we sell is perpetual license. So perpetual license is recognized within the period. Support and maintenance is then recognized on a month by month basis. So not all this revenue was recognized in half one. We also had some services orders from the same same agency, both professional services and some development in order to fit within their wider solution set. So we've reported in the last couple of years, our support and maintenance renewals remain very, very strong, 98% renewal rate. And, basically, once our customers are on platform, it the business tends to become quite And we're very pleased that, you know, a large part of our of our cost base is now supported by the revenue associated from our support and maintenance renewals.

7:52 On the back of the the deals we've signed, receivables increased accordingly. Nittel, CFO, will provide a bit more color on that in the next couple of slides. And on the back of that, our deferred revenue grew as well. Some of that revenue will recognize in half two. The remainder of that will follow into next fiscal year. As we said before, cash is important. Cash was $10,000,000 at the end of the reporting period and dropped slightly following the acquisition announced on the October 10. But also since October 10, we've continued to generate good cash. And again, Nitol will pick that up in the next couple of slides. So Nitol, I'll hand over to you for the financial review. Thanks, Klaus. So, obviously, the income statement will show let me just move that slide. So as Klaus has mentioned, we did have some delays in FY twenty two, and we're seeing that impact come through in h one f y twenty three. And we've continued with that momentum into h two. Revenue was up by 23% in current constant currency mode and, obviously, 24% reported.

9:00 And the good news for us is that a license deal has is very accretive and does feed at the bottom line. And just a note for this transaction on the license sale, there was a third party element to that functionality that they bought. And that's why you'll see the gross profit has been slightly lower because we've accounted for that third party sale. It just depends on that on the client whether they want to use that functionality or not. And look going forward in h two, we're not forecasting any of our clients using that functionality.

9:33 As we've mentioned previously, our biggest expense is payroll, and we look to control that as best we can with the view of retention and, obviously, the tight UK and US labor markets, especially in developers. What we've done is that we have expense, as you know, our development expense into the income statement. It was 1,500,000 in h one, and it's forecasted to be 1,600,000 in h two. During the year, we obviously had pay rises. In April, we we allocated 4.8% to our staff. And then, obviously, that thing hasn't the activity in the year in the period has increased our commission bonuses as well. In just in September, the board decided that in light of the current situation in the energy market and the cost of rising through that place in electricity and gas that the the board will make a the company will make a one off payment, a COLA payment, cost of living allowance payment to all employees in The UK and The US.

10:37 £1,000 gross in The United Kingdom, and $1,100 gross in United States. We've accounted for that in these numbers as well. And although they they didn't get paid in September, they were they're gonna be paid in November. One thing about The UK r and d tax legislation is that we can claim tax benefits or credits for that expenditure in The United Kingdom. And the good news is that all our developers are in The UK. So you can see there's a $606,100,000 pound tax credit in the numbers, and that's because we've applied for it and we received the money last week. Just as a point of note, and there was a question about this that what has the autumn statement had an impact on this and there will be an impact going forward as the percentage allowable is reduced from a 130% to 86.

11:32 And therefore, the effective rate that we'll be able to claim against has reduced from circa 32, 33% to 21%. But we'll still continue to make those claims because we can and we are spending and innovating in The United Kingdom. As a consequence of the revenue streams coming through and control of margins, we've seen our profits increase, and we'll continue to focus on this going forward. Just wanted to give a flavor of our regional our revenue as a regional revenue stream analysis and also from where where the revenues come from. As you can imagine, the largest market for us is The United States Of America, stroke Americas, But we have had some few wins in the in the rest of the world and in UK.

12:21 Klas will explain to that, but that was after h one. The Orthologix acquisition also gives us a footprint in The Middle East. We don't have a big footprint in The Middle East. We've only got two deployments. So this helps us to expand the rest of the world offering as well. As mentioned before by CLAS, support and maintenance is a key key KPI for us. And the reason we like this is because they are not recurring nature of it. But it also gives us the ability to attach inflationary increases to these SNM. And because our clients are normally large defense contractors or US federal or or governments in The United Kingdom or rest or Europe, we can then apply these inflationary increases to cover at least some or more potentially, hopefully, most of our increase that we're incurring on our staff costs. We won't cover most of it at the moment, but we're looking to cover as best we can going forward.

13:17 The other part that we're focusing on as well is professional services. And this is just to give us engagement with our star with our clients all the time because now we've got a cadence of bringing every quarter a new version of our product. It means that we're engaging with our clients, making sure that we can help them upgrade and we use our PS to get them into to upgrade into a better platform, more functionality, making the product more embedded into their workflows. One thing that we can we we obviously everyone's noted is the volatility in exchange movements between the dollar and sterling. And as you can imagine, most of our invoice is in dollars. We don't enter into forward exchange contracts at the moment purely because we don't have the certainty of the license income. But because our SNM is growing and we know now that during the period of February, March, and April, there'll be large amounts being renewed. We will look at that point and then enter into three months forward exchange contracts with our bank just to give us certainty to know what we are converting at and then reducing the volatility that we've experienced in f one. H one, we have experienced some decent head positive headwinds in the movement of the exchange rate, but that's unwinding now in h two, and that's been forecasted to do so.

14:35 Financial position. INTERCEDE has a very clean and simple balance sheet, and we'd like to keep it that way as best we can. The noncurrent assets are just mainly to do with IFRS 16 leases. And now the three areas we focus on are trade and low receivables, cash, and deferred income. These metrics are really important for us because it gives us the strength to continue investing in our product and also then give us the capability of potentially using the balance sheet to then do an m and a further do an m and a acquisitions on top of the Orthologix one and class, and I will explain further on why this is good this is really important for us. Of the trade and other receivables, the DSO has dropped from 68 to 47. And, again, good indication of what we're planning what we've been doing. We've been invoicing early and we're collecting our cash early.

15:24 Of that 3,600,000, we've received 3,100,000. So our cash balance, even though reduced after the acquisition, has gone back up after paying all the trade and payables, which we're also very keen to make sure that our suppliers get paid because they're they're they're also having the same issues as we are on on economic environment. So we wanna make sure that they can maintain their services into us. The loyal customer base I've mentioned before allows us to pass inflation increases as on when we can. One of the things that will happen going forward is that because of the acquisition in October for Orthologix, the IFRS three regular standard means that we'll have to account for it as a business combination, which will see three new lines coming in, goodwill, identify the identify the intangibles, and deferred consideration.

16:15 And we'll just make the the balance sheet slightly more complicated, and you'll see some new lines coming into the income statement reflecting amortization, m and a costs, and so forth. One of the things that we also did just to highlight is that we accrued the £250,000 m and a cost into the income statement for h one because we knew that although the deal was a week late compared to the September 30, most of the costs were incurred during that period of August and September during DD. A key metric of our six c's is cash and why we find cash is really important for us, especially through the restructuring that class and the team did previously. So we want to focus on cash so that we know we can constantly invest in our product, but also gives us security, especially considering the volatile economic environment that people are entering at the moment and experiencing.

17:05 If you look at the bars, the the four bars are indicating cash generation, cash on the balance sheet, debt in the company, and net cash position. And if you see it's all been growing rather nicely, and the black bars show you the cash balance of the company. So as we mentioned, the key key metric for this of the six c's, we have a robust working capital document being adapted every forward looking document that's adapted every month for twelve, eighteen months. And we build the models in to to make sure that we understand how the integration works and any potential acquisition, what bandwidth we have to to make sure that we execute on that. And that's so far on the financial. I'm just gonna pass you back over to class. So in this section, we're gonna give a quick quick summary on product and market, which Alan will lead, and Ed will also provide and teed quite nicely up for how we're approaching m and a and what we're looking for going forward. So, Alan, over to you.

18:06 Thank you, Claus. So people buy our product, MyID, to protect themselves against data breach. They do that and because of the increasing levels of fines, the threat to business continuity, or on occasion to have to comply with specific regulation. One of those key regulations that's driven our business is in The US called FIPS two zero one, also subtitled PIV, personal identity verification. And that realizes that the most common form of data breach is a weak credential, so insists people move towards stronger authentication, move towards the top of that pyramid. PIV is not just about the credential. It's also about the identity. So there's no point me having a strong credential that says I'm Bill Gates if I'm not Bill Gates. So there's identity in here as well. So these are the elements that MyID provides. It allows you to register and identify people, make sure they are who they claim to be, to actually issue and manage their credentials, and to do that at scale. So our product scales up to tens of thousands, hundreds of thousands, millions of identities for some of our larger programs.

19:08 And also manage the life cycle of them. People forget them. They lose them. How can you do that and not have a huge operational impact on the business? And depending on the type of credential you're using, well, you may need to be involved at the point of authentication, the point of usage of that credential. So if I put a key and certificate down to a smart card, I can log on to Windows. I can sign an email. We don't need to be involved in that. Support for that is built into Windows. If I'm using FIDO, one of the newer authentication standards that came from the consumer space but is now starting to build it in the enterprise space, then you need an authentication server. You need a product there that will validate that token at the point of use to make sure it's valid. And that's what MyID can do, so we are a fully certified five zero two server.

19:54 So I'll explain how we do that on the next slide. So the three rectangles in the middle here really represent key features that MyID provides. On the left hand side, we have the identity. So sometime we're just integrating into a a directory in an organization of user data. Sometimes we're having data passed into us from a human resources system or a system such

20:17 as SailPoint. For the higher assurance programs, we can capture information about the person and prove they are who they claim to be. So that can be fingerprints. It can be facial biometrics, sort of passport style quality photographs. It can be proof of ID, and that's to the level of taking a passport or driving license, putting on specialist hardware, and making sure that that's not being faked or tampered with. So it's a genuine passport. Then we can take that data and push it through background checking systems. So So that

20:49 can be one to many fingerprint systems. Has this person previously tried to enroll as somebody else? And once we've got to the point of knowing somebody called Sam's enrolling, this really is Sam, the address, the driving license, the passport, all of that still matches. Is Sam a good guy? Is Sam on a terrorist no fly list? Do we actually want the to let them into the air traffic control towers or track the nuclear material that some of our customers do this for?

21:16 And Nitel mentioned, the fact that some of our cost of sales has gone to a third party. 95% of the product we write ourself. There are very small occasions when we do integrate third party SDKs, and they're very specialist into our product. We have a reseller agreement for those, and that's in this area. That's in biometrics. So it's a very specialist area. Didn't make sense for us to buy that or build this ourselves. So we now know we have a person who is who they claim to be, and we've done all the background checks against them. We can now issue the management credential. So here, we integrate again with a number of third party systems. So the the big theme of MyID is integrating lots of solutions together and putting policy over those. So the PKI vendors, the people who provide the certificates here, people like Microsoft, PrimeKey, INTERCEDE, Digisert, Verizon, etcetera.

22:07 Mobile device management vendors. So lots of our customers now are starting to use stronger identities on mobile as well as their desktops. So we have customers deploying this live. We have integration where Microsoft have taken our SDK and embedded it into their Intune product, and VMware AirWatch have taken it and deployed it into their Workspace ONE product. So those are our SDKs embedded into those platforms.

22:35 And down the bottom here, we have people using MyID, so people issuing cards to people, providing help desk services, and a huge amount of self-service in the product. So at a kiosk, we provide the software, not the hardware, but we can run on any kiosk at their desktop,

22:51 on their phone, either in our app or embedded into a partner's app. We can provide all that life cycle issues and management. On the right hand side, this is where we get involved in the authentication. So for example, if we're using FIDO credential, we can issue and manage that FIDO credential to the individual. We're very much focused on FIDO for the enterprise, so we're not trying to be a a me too player in the consumer space focused on that enterprise management and deployment. So we bring the capability to issue the FIDO credentials to a policy. We know who's got them. It's the right piece of hardware. It's the right crypto. We bind it to the person. We give that visibility and traceability. We make sure when the person's left the organization, all of those credentials are revoked.

23:36 So in this example, we've issued a FIDO token. That person wants to access an application. Most of the time in larger organizations, those applications will be protected by an identity and access management system. So something like four drop, ping identity, Okta. Now most of those systems will cope with a lower level of assurance. I can authenticate to them with a password or perhaps a one time code sent to my phone.

24:01 But if you wanna use the higher levels of insurance, the hardware backed phishing resistance credentials that lots of our customers do, then those systems can call into us. So person logs on to an application, the application is protected by Okta. Okta calls into MyID for the higher level of assurance using standards protocols, OpenID Connect. This is very easy to integrate, very easy, very standards based. MyID will then authenticate that person with their FIDO credential so we know it's the right person. It's bound to their identity. It's the right device. It's high assurance, it's two factor authentication. We can then pass that back to that identity and access management system so that person can then be authenticated into the application. It's faster to do than it takes to exploit. So it's a very seamless experience.

24:47 But that really indicates our strategy in that area. We're not trying to fight the giants in this space. We're looking at how do we add value and work well with them.

24:59 And there are some key drivers in this space which really drove us on to why did we do the acquisition we did. So FIPS two zero one is one of the few digital identity standards out there describing the technology and the business process. And we've seen customers as far afield as Germany and Singapore look at and look to follow these standards. So it's not just related to The US.

25:21 The original standard said PKI is the only technology you can use. That So limited its deployment, but the three factors on the right here are changing that. So the first one was a executive order that came out of the executive order of president Biden's office. So the executive was the president. So this said, you must use multifactor authentication, strong authentication to the maximum extent possible. So that drives it out to everybody in the organization, and it drives it down the supply chain. More detail behind that came out from the office of management and budget. So they published a memorandum, which is again tied to the executive of office of the president, and that was on zero trust. So that states it's no longer enough for somebody just to log on to the network securely.

26:09 We need to move that to the application level. So just because Sam logged on twenty minutes ago, now he's accessing a finance application, do we still trust him?

26:20 Is Sam allowed to access a finance system? Is it 3AM in the morning, which will be unusual behavior? Is he now trying to log on from an IP address in China, and he's tried a 100 log ons within the last five seconds? Something suspicious is happening. So this is really changing the level of security that needs to be rolled out. That's partly due to the current geopolitical climate and the increase in state sponsored hacking, and it's partly down to the cyber threats that are out there on critical national infrastructure. So for example, when Colonial Pipeline in The US was hacked, they could no longer supply energy. Energy security is very important. So, you know, if that company had to stand in front of the senate and explain what happened. So the drive for more authentication is definitely there.

27:08 The one that really resonates with us here is the new version of FIPS two zero one dash three. So this is the one that most of our customers need to comply with. First and second version of that standard said PKI is all you can use. The third version, was ratified in January, customers have around twelve months to start complying, says, depending on the level of data you're protecting, you can use different forms of authentication. They don't need to all be at the highest level. So it's broadened the scope of the regulation substantially. So if as some of our customers do, they're protecting military helicopter plans, air traffic control systems, access to US citizen data, absolutely you need to be at the top level. If however, you're not protecting data sensitive, you can be further down that pyramid. So a hardware one time password token, a phone as a push notification app may be enough to give you that protection.

28:02 Even if you're protecting right down at the bottom of the pyramid, so data that's not particularly sensitive, but you still need a level of protection, you can use a password, but you have to know it's as secure as it can be and it's not known to be compromised. So there's definitely drivers in our existing types of customers and customers for a wider range of authentication. The other thing we're seeing is demand for people wanting to move away from passwords towards passwordless and also phishing resistant credentials. So phishing resistant credential is one that can't be stolen. Phishing is where somebody will steal a credential from somebody and then reuse that credential to log on as that person. That's exactly what happened in the colonial pipeline situation.

28:50 So password was stolen and was used to access the system and plant malware. So under those examples, people are looking to move towards more secure authentication, but many of them don't have the the skill set or the budget to actually move to the highest level. But they don't need to. They can still get more secure. So we're seeing increased demand from our high security, security conscious customers and from lower down the market for a wider range of authentication. So over the last two to three years, we've been trying to anticipate the drivers that Alan's been talking about. We're very close to organizations like NIST in The US who develop these standards and ultimately publish and ratify the standards.

29:35 And that basically is being the input for our m and a journey. So if we start on the left here eighteen months ago, we were very, very clear in what we wanted to achieve. We said we know that PKMI space. We know it. We're trusted in that space. We got the referenceability. We can see where Fido is going. We bring Fido into the product and basically start to offer a single pane of glass for customers who want to manage both PKI credentials as Fido credentials. Then we looked at the middle section of that pyramid and said, okay. What what do we do? We either partner, we build, we buy. Partnering, we didn't see as as a valid option because there's a lot of consolidation taking place. So one day, you partner with somebody tomorrow. They're owned by one of your competitors if you're not careful. We looked at building the capability and, you know, came to the conclusion it would take us two to three years to build a credible product in that space.

30:31 Whilst we knew the market would open up, we knew that FITS two zero one dash three was about to be ratified. It actually was ratified in January this year. So we decided to go on the m and a track and identify key players in this in in the the wider MFA space. We've done a global a global search on these companies. In the end, we have two companies ready to sign LOIs. We decided to focus on the company we announced earlier in October, can be called Ortho Orthologix. They're UK based, retinal based. They're easy to get to. All the development is done in The UK, so we can very quickly integrate the teams. The guys are very, very credible. But they also brought a secondary product even though we weren't in the market looking for PSM password security management. They presented this product in addition and fully integrated into their MFA offering.

31:26 Based on due diligence, we said, yeah. This is a real a real good fit. We can see how we can bring this to market. As Alan said, passwords are here to stay for the the long long term. So if you're gonna use passwords, make sure you don't use a breach to our exposed password, and that's exactly what what AuthLogix is offering. So step one in our journey for m and a was to come down that pyramid. And with AuthLogix, we believe we've achieved that, and we are now actively integrating AuthLogix into our core business. Integrating it from a product perspective, we fully expect that within the next six six to eight months, we have an integrated product version. Clearly, the ambition here is to continue to sell individual products because some companies may only want PSM. Some companies may only want MFA.

32:15 Some companies may only want FIDO or PKI. So stand alone offerings are absolutely fine. But particularly in our client base, but also in prospects going forward, our ambition is to offer a fully integrated solution. So you don't have the single pane of glass, and you can choose where the client or the client can choose where they want to be. They want want some users on PKI, other users on Fido, whereas others may use standard MFA through one time passwords either through an app or through a a hardware or an SMS message. So that's step one. But as Alan likes to refer to it, m and a is not one and done on the back of a single deal. So m and a for us is a journey.

33:01 So we have a full time head of corporate development. We've already been scouring the market for, you know, adjacent areas that are in effect overlapping pyramids. And as Alan's already indicated, zero trust is is very much the buzzword at the moment. We know that's gonna come. Once Sam is on the network, we need to make sure that half an hour later, two hours later, it's still Sam, it's not somebody purporting to be Sam. So where are the areas we're looking at? We're looking at continuous authorization. We're looking more at access control. We're also looking at areas that that are very much adjacent to what we do. We very much focus on employee identity, but there are adjacent areas like device identity.

33:46 So, you know, they, in effect, manage the same credentials, but rather than doing it for a person, you're doing it for a a device. So we have a very clear view of how we're take the m and a journey going forward, over the next six to twelve and, indeed, many many years beyond that. And we will aim to find new new potential acquisition targets that we can bolt on to our existing offering, always with a view that we want to be market leading in the technology that we bring to the market. So if we then try and wrap up and say summary and outlook, if we look go back to the results, we believe we delivered good solid revenue growth.

34:32 24% is is is a good starting point. We wanna keep that going. Our operating profits is very much improved on on the back of the the revenue. We maintain our focus on margin. Margin has significantly improved compared to the the the reporting period last year. Continue to focus on on cash. As Nitol said, cash conversion was strong, still continues to be strong. But with a new CFO, you also get new rules and robust working capital is something that Nitol is very much hammering down in the company, particularly when there is uncertainty in the the wider economical climate at global level. And from a balance sheet perspective, you know, our balance sheet is clean. We dealt with the convertible about eighteen months ago. We've got no debt on the balance sheet. So if we look at where we are today, we had good momentum in half one. We've carried forward that momentum in the beginning of half two, and the aim is to keep driving until the end of March and indeed the end of the fiscal year.

35:34 So if we then try and provide a wrap up from an outlook perspective, I think we're in a real good position. We closed some more deals in the beginning of of half two here in The UK, Continental Europe, as well as as well as North America. We continue to provide quarterly releases so clients, basically, on a quarter by quarter basis can choose to to take advantage of net new functionality that we've we've released. We remain vigilant and cognizant of the what's happening in the the global working environment and focus on the working capital, but also forecast and margins. We continue to push for the scalability, scalability both organically in terms of revenue growth, but also m and a. M and a is very much part of the journey going forward. We've consumed our first deal. It will definitely won't be our last deal, but we'll do lots of lots of analysis and lots of DD before we come back with further announcements.

36:41 Clearly, we own a business unless we look after our employees. It already referred to our six c's. Leading c in there is colleagues, indeed, our employees. Without our employees, we don't have a business. We don't have Coke. We can't serve our customers. We can't serve our channel partners and indeed resellers. So we try and look after our employees as best as we can even in the the the difficult environment we find ourselves in. The cost of living allowance payment is is a small contribution to help them through the winter period. And, whenever we can do more, we will try and accommodate. Finally, from an integration perspective, we're about five to six weeks after the announcement of Orthlogix. The integration is well on track. We have a a clear integration team. We have a clear integration tracker.

37:30 We are starting with customer and partner introductions. We have our head of sales for rest of world visiting Dubai in the last two weeks meeting distributors and resellers for off logics, but at the same time, introducing INTERCEDE to the party. And we actually find that, there is interest, in, some of the resellers to actually take on PKI because they know it's being used particularly at at government level. So we bring a net new offering to those distributors. At the same time, we're also taking Orthologix into our core market, particularly the North American market. Alan was there last week during our client advisory board where we had around 40 clients attending, And we had one of the Orthologix team members with with Alan and the rest of the team joining in and actually presenting the Orthologix offering to, you know, what is clearly a higher, more security conscious type of customer, but we've had real good feedback both from from the customers but also from the partners.

38:35 So we're really trying to cross fertilize the both channel models. And over time, they will be fully integrated. From a product perspective already referred to, Alan is working with the Orthologix team to make sure we have an integrated offering in 2023, and we will be making further announcements in due course on that. So overall, I think we've had a a good run-in half one. We're confident for the outlook for the second half. We're confident for the outlook for the full year. And I always say we can only control what we can control within our business. And as long as we focus and and continue to focus on what we do well, we'll drive we'll drive the results. So on that note, gonna hand back to Jake, and I think we then open up for q and a. There were a few questions already put on the the board. We've answered those questions, so we won't go through those specifically, but they they will be posted as soon as the the session closes. But at this point, I hope that Jake will be back online. Klas, absolutely. And Alan and Nittel as well, thank you very much indeed for your presentation this afternoon.

39:45 Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the right hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. A class, as you kindly did just mention there, we obviously received a number of presubmitted questions ahead of today's event, you have kindly provided responses to already, so we will publish those post the call. But as you can see in the q and a tab there as well, we've also received a number of questions during the presentation itself. So firstly, thank you to everyone on the call for taking the time to submit their questions. And, class, Alan, Nittel, if I could just hand back to you to respond to those where it's appropriate to do so, then I'll pick up from you at the end. Thank you. Thank you. So I will read out the questions. There's one big benefit in reading out the questions because I can decide which which area we're gonna go. So first question is from Michael.

40:42 Mike, I don't know who's thank you. Michael's got a question, and his question reads as follows. What KPIs are you using to monitor the success of the Authlogix acquisition, and could you talk a bit more about what your main strategic priorities are for the next six to to twelve twelve months? Nitol, do you want to take the first part of that question? Thank you. Obviously, the big KPIs, the revenue streams for the deferred consideration. So in f y twenty three, f y twenty four, and f y twenty five, they've they the vendors have got target revenue targets to achieve that deferred consideration. And that's £633,000 in f y twenty three, 1,500,000 in f y twenty four, and 3,000,000 in f y twenty five. So that's a key critical KPI for them to to for them to focus on. And it's for us, it's really good news because if they hit those numbers, although they get the deferred consideration, we're generating that revenue. It's our revenue. It's feeding to our bottom line, and it's annual recurring revenue, and it's a subscription model.

41:45 So that's a key KPI. Obviously, cash generation is always a key KPI. And, you know, the main thing is that this is not a heavily intensive outlay from for Orthologix. The main thing the reason why they joined us was because they don't have the sales and marketing footprint that we do and our channel partners. So we're expecting a lot of a lot of feedback feedback into the profit and cash flow generation. As you can imagine, the inter integration tracker has got some KPIs sat in sets set in there, sales and marketing, finance obviously taking control. We've got an integration plan regarding product road map, which Alan can discuss in in more detail if required. But we've got some rule set KPIs across the whole piece of what we do as an offering, and we're monitoring those and tracking those going forward.

42:35 Good. Thank you. The second part was what are your main strategic priorities for the next twelve months? I think, Michael, it's all about revenue growth. We need to scale this business revenue growth both organically, but also inorganically. We talked about what we want to achieve from an orthologix perspective. From an organic perspective, we really wanna drive the the revenue growth going forward, and everybody is geared towards that. So next question is from Quentin. In your last presentation, you said that MyD was increasingly being offered by your resellers. How is the strategy progressing, and when can we expect to see the exponential growth that this might deliver? Well, let let me let me try on that one. We are continuing to to focus on our resellers.

43:20 I think it's 89% of the new the the business booked in the first half was booked through resellers. So we're continuing to focus on that. The good news with Orthologix is they have their own distribution network. It's not overlapping, so we have a really good opportunity to to to cross fertilize, and we'll continue to to train the the various parties. So we'll train, and this has already started and is in play as as we speak. We'll continue to train the INTERCEDE resellers and partners. We'll continue to train the orthologix resellers and partners so we can cross cross fertilize. You know? With regards to growth, I think where we're showing good growth at the moment from a revenue the fact that the overwhelming majority of our business is booked through partners is a good testament that we're on the right track. Yes.

44:17 I'm always impatient. I always would like to run faster. But at the same time, if we're booking nearly 90% of our business through channel and partner, I think that's a real good starting point. Next question is from David b. Do you have any aspirations to have MyID in the wider consumer market? Now I don't want Alan to feel left out. So, Alan, here's one for you. Thanks, Klas. The honest answer is not yet. So we'd like to grow from a position of strength. MyID product and the Orthologix products are very much enterprise focused products. So that's why we want to move today and grow those. Consumer market tends to be more SaaS based. We move into this space, it will be down to an acquisition as opposed to taking the current product set into that space. Sorry. I was on mute. Thank you. Next question is from Sam e. You mentioned the m and a program in your recent r and s with the intention to add your recurring to add to your recurring income stream. What percentage of your revenue is currently recurring?

45:18 Nitol, one for you. 80% currently. And we're looking to increase that as you can imagine. So it's a really good metric for us. And thank you for asking the question. It's 80% if you count S and M as recurring and an element of PS, which attaches itself to that, adding the annual recurring revenues of Orthologix going forward into f y twenty three. Next question is also from Sam. Can you please also give us an update on initial discussions with partners and clients you're having following the Orthologix acquisition? I think we've we've part answered that we've part answered that already, Sam. We are actively having dialogue with partners and channels and resellers on both sides. A couple of days after the acquisition, I flew into The US, a, to spend time with our team, but also spend time with partners.

46:06 We've had our head of sales for Europe flying into The Middle East to meet the the channel where had Alan out in region, and he was joined by staff in The US, the UND client advisory board. So we're driving really, really hard to make those introductions and make sure that everybody is comfortable in in what they're doing. David has got a question. Are there any capacity constraints or issues in scaling up the business? This question keeps coming up, I think, in most sessions. I I don't think there are capacity constraints in what we do. We have capacity to take on more business, and it's also the reason why our go to market model is very much driven through channels and partners. You know, we are still a small team. We're around 90 staff.

46:52 We cannot run a global sales initiative with a small group of people, but, actually, we can scale out very, very quickly to partners and and resellers. But and also in that in that capacity, we have technology partners who frequently make introductions for us. So, I don't think there are immediate capacity constraints. Or if the secondary question is, do we need to make significant other investments to scale the business? I don't think at this stage that is the case. Martin has got a question. Are you going to report sales in North America, Europe, Middle East separately in the future? Where do you see the biggest growth? It's all? Actually, there is a UK, North America, Europe, and rest of the world analysis in the r and s at note number two, so the revenue stream. We won't be splitting Middle East out because it's part of the ROW.

47:46 But going forward, we'll have a look at that. But that has been split out in the notes for for reference if you need to look at that. It's note two in the RNS. Thank you. I think that's us done with regards to questions. Jake, back to you. Klaus, absolutely. Thank you very much indeed, and Alan and Nittel as well for addressing all of those questions that came in from investors this afternoon. And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended for you to review to then add any additional responses, of course, where it's appropriate to do so. Class, perhaps before redirecting those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap up with, that'd be great. Yep. So a couple of final words in words in closing. Following the Orthologix acquisition as well as a solid start in half one, we're looking forward to the integration of the new business as well as continuing with our organic growth in the second half.

48:44 We have a highly committed and loyal team of colleagues who day after day deliver the best code in our part of the industry. Our aim remains to deliver, you know, sustainable revenue growth and profitability, and we may clearly maintain our forecast for the full year. Thanks again for attending. We look forward to updating you all again in the new year. And finally, please do provide us with your feedback at the end of the session. We do take your feedback very, very seriously, and we look forward to seeing you again soon. That's great. Class, Alan, Nittel, thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations? This may take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of INTERCEDE GROUP PLC, we would like to thank you for attending today's presentation.

49:35 That now concludes today's session, so good afternoon to you all.