Intelligent Environments Group PLC
25 July 2007


25 July 2007

INTELLIGENT ENVIRONMENTS GROUP plc
('iE', 'the Group' or 'the Company'),

TRADING UPDATE FOR THE SIX MONTHS ENDED 30 JUNE 2007

Intelligent Environments Group plc (AIM: IEN), the online software provider for
the retail banking market, today announces that it expects its revenue to be
ahead of market expectations when it reports interim results at the end of
September.

Highlights

Revenues expected to increase by approximately 72% to 3.07 million for
the half year ended 30 June 2007 (Compared to H1 06)


Operating profit for the period remains in line with management
expectations


Cash inflow of 308k will result in a cash balance of 1.174 million at
30 June 2007

Commenting on the forecasted performance of the Group, Phillip Blundell, CEO of
iE said,

'We are confident that profit momentum will continue as the Group expands into
new markets and geographies, in-line with our strategic focus to secure
long-term partnerships.

Partnerships with Barclaycard and Creation Financial Services have now entered
production as has our first building society customer, The Principality Building
Society. During the first half of the year we announced a partnership agreement
with Unisys, that has already resulted in a significant contract win with The
West Bromwich Building Society. Additionally, we have secured a European partner
for credit card services as well as a Middle Eastern partner for insurance
solutions. These new partnerships along with our new transactional revenue model
will help maintain the future growth of the Company.'

The Company will announce its interim results for the six months to 30 June
2007, in late September.

-ends-

For further information, please contact:

iE: Phillip Blundell, Chief Executive 020 8614 9800
Dawnay Day: Alex Stanbury 020 7509 4570
Conduit PR: Charlie Geller or Anouska Widdess 0207 429 6666



This information is provided by RNS
The company news service from the London Stock Exchange

The market didn't value the Barclaycard agreement very highly when it was first announced and it looks like the Creation Financial Services contract is similarly being overlooked. The shares look good for a dip below 9p and they would be a very good buy at that price IMHO.

been a few sellers recently i expect it to pick up towards its results announcmnet this month 15p in my opion is a relaistic valuation not 9p I've topped up three times recently lets hope 2007's results good and no slips ups.....

been a few sellers recently i expect it to pick up towards its results announcmnet this month 15p in my opion is a relaistic valuation not 9p I've topped up three times recently lets hope 2007's results good and no slips ups.....

IEN seems to be on the move post results this month tempted to buy more as results will be good and will get some good exposure then ...

These have been moving in a wedge for the past 4 or 5 months. 13p should be achievable.

Looking at the long term chart, it seems to me there is a long term cup & handle formation spanning over the last 3-4 years. C&H being one of the most bullish chart formations, substantial move up is on the cards. Does anyone else agree with this view?

I have seen the cup & handle too, but it hasn't quite been confimed yet for me. Looking very promising though.

whats a cup and handle ? results out tommorrow yet not pre result buying even when we know the results going to be good key thing is the trading since the period end ??

I think the devil will be in the detail and not in the raw numbers. I'm just now reading the Chairman's comments, and so far they are very encouraging.

Cup and handles are usually continuation patterns, but I have read that sometimes they are in the form of a bottoming reversal pattern.

I've read them headlines are good details worries me all the growth in lower margin areas and not convinced they are managing costs well either
No talk of the last 3 months for a like for like basis either ?? which means the comparisions are not good

There's not a lot IEN can do about the labour market for IT contractors, you either pay to hire or you don't hire. IEN can't afford to lose business by not hiring and the work is still profitable.

What are you refering to when you mention lower margin areas GG? I don't recall the chairman ever commenting on the 3 months between the end of the accounting period and the interims being announced. His statement about trade in general sounded very bullish to me.

the contracting sales are low margin its ok to have increased turnover but if you have to outwork most of this to contractors their is very little left for IEN

ie 1.3m extra sales convert into 60k of EBIT thats not what the market wants

usually they would say like for like sales for the 3 months to the end of september is x or y if it was positive they would have mentioned it

I spoke to Philip Blundell last night and he is still positive about broker forecasts of 700k this year and 1.4M next year this is based on increased licencing revenue
and also the fact that barclayscard and RBS revenue is not in the sales yet

He also accepted that investing in people had an effect on this P&L but would come through in the next set of numbers

trouble is got to wait 6 more months for this ............

expect full years number to be met in my opinion i'm hanging on ...

Seems a cloud has been lifted on the IEN detail and that people are begining to buy again as they are clearly cheap at this level and im confident they will achive their projects with revenue streams and margins expected to be stronger in the 2nd half

was tipped by both shares mag and ic so bit of regular exposure I hope
from the charts it looks as though the stock has plenty of support at 9p expect the 10-12 p level to be tested if the buying continues

There appears to be a large seller in the market holding the price back. As soon as he's finished I expect the price to start an upward climb, which also coincides with the completion of C&H in the chart.

where is this big seller ???

how come a few sellers drive the share back so far ???

Intelligent Environments (IEN), the online financial services software provider, said it has won a three-year contract worth an initial 500,000 pounds from an unnamed major European retail bank to develop and manage an online portal. The company believes this 'white label' approach will become one of the main driver of growth for its business in 2008. The shares were tipped on small cap tipping website WatsHot.com just yesterday and have since risen by 14%.

Buy Intelligent Environments at 7.375p

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AIM-listed Intelligent Environments (IEN) provides an online financial platform called NetFinance to some of the biggest names in the banking sector including HSBC, RBS, HBOS and Barclays. The product is used by these banks for delivering online services, specifically account applications and account management. With 40% of people in the UK now banking online, the market for IEs products is large and growing. There is also considerable potential for international growth through the global reach of its existing client base.

The company has focused its strategy on developing partnerships and apart from those clients mentioned above, the company also works with First Data International, Unisys, Creation Financial Services and Principality Building Society, amongst others. This approach has proved to be very successful for the company; for example, the partnership with Unisys has led to a contract win at West Bromwich Building Society, while the RBS partnership has enabled the company to expand its product offering across continental Europe.

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The economic logic behind the take-up of IEs products is simple. Online applications can reduce customer acquisition costs for companies by up to 4.90 per application, and online account management can save a minimum of 7.50 per online customer per year. Furthermore, the importance of having an online platform that is simple and easy to use is essential in ensuring that customers are acquired and retained. Research shows that a user-friendly product design can increase the number of completed online applications by 40%.

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One of the key reasons to get excited about IE is that it is currently moving its clients from paying a licence fee to a transactional-based revenue model. This means that IE will be paid between 70p to 1 every time someone completes an application online and thus gross margins will improve considerably. Moreover, the company will receive this payment regardless of whether or not the application is approved, thereby mitigating the possible effects that the credit crunch could have upon actual account take-up.


Financials
The company's last set of results for the six months to 30th June 2007 reported that it made pre-tax profits of 0.21 million on revenues of 3.07 million, representing improvements on 2006 numbers of 72% and 39% respectively. For the year ended 31st December 2006 the company recorded revenues of 4.35 million, on which it made a net profit of 0.59 million, generating earnings per share of 0.36p.

This year those figures are set to rise to 6.22 million, 0.87 million and 0.53p respectively. In 2008 net profits should rise to 1.6 million generating earnings per share of 0.98p and that puts the stock, at 7.38p, on a forward price earnings multiple of 7.5. This should then fall to a piddling 5.2 in 2009 on the back of 2.31 million net profits and earnings per share of 1.41p.

With regards to the balance sheet IE is in a strong position, with cash of 1.7 million and no debt. The company also has a large amount of cumulative losses and will therefore not incur a tax charge for the foreseeable future. With cash generation of 1.4 million expected for 2007, rising to 2.3 million next year, the only issue is how IE will deploy its surplus cash.

*The value of investments can go down as well as up. Investing in equities can lose you part or all of your capital. Smaller company shares can be relatively illiquid and thus hard to trade. And that makes such investments more of a high risk than larger company shares. Cornhill Asset Management Limited is an Appointed Representative of Argyle Investment Advisors Limited which is Authorised and regulated by the Financial Services Authority. UK-Analyst.com is owned by t1ps.com Ltd which is authorised and regulated by the FSA and can be contacted at 5-11 Worship Street, London EC2A 2BH or on 020 7562 3370.

Valuation

IE is a rapidly growing business with a reliable revenue stream derived from an impressive client base. IEs peers trade on prospective 2008 earnings multiples ranging from 15 to 23. I reckon a forward rating of 15 is the very least a growth stock such as this should merit, so my initial 1-year target price is 14.7p which implies upside of 99% from here. Buy.

Key Data

EPIC: IEN
Market: AIM
Spread: 7p - 7.75p (9.7%)

WatsHot.com is THE site for you if you are interested in fast-moving small caps. For more on the site click here.

director buy all be it small volume but new institiational shareholder real plus if meets eps targets its still a steal at this level could double in 2007 is my opinion

seems to be on the move north ...

One of SHARES picks for 2009.
Any views on this baby?