Activities

Provision of secure transaction systems and services to the international banking, telphony, retail, and security markets, using a range of smart and magnetic card solutions

In the recent Agm the chairman said "the company has made a positive start to the financial year and the board remains optimistic about prospects for the business."

Pre-tax losses have also nearly halved from 6.4 mln to a loss of 3.4 mln on cost cutting. They have also had a successful fund raising.

Also chart indicators show that it may be time for the next leg upwards past recent resistance at 7.5p. and please remember you are responsible for the timing of your own buying and selling actions.




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Last chance for ID Data to show how smart it is?
Published: 11:42 Thursday 18 August 2005
By: Joanne Wallen, Associate Editor Related Articles

Smart card company ID Data had the world at its feet in 2000, with shares as high as 57p; now a penny share, the company could just be ready to break through into profit and to finally start to reward investors.

Following a placing last month of 400 million shares at just a penny, raising 3.7 million after expenses, shares are currently trading at just 1.075p, valuing the company at 11.7 million.

Certainly for small companies like ID Data (IDD), the market works in mysterious ways. At the start of 2004, the shares were valued at nearly 8p, yet the company had turned over just 11 million and lost 5.1 million in the year to March 2004. Last year to March 2005, turnover was up 72% to 19.4 million and losses reduced to 4.2 million, and the shares are just over a penny.

Matters were not helped by the wording of the statement about the placing, which said that if the placing and a loan note conversion did not proceed, there was no assurance that the company would have enough money to continue trading.

Chief executive Peter Cox told Citywire when we met him this week that most AIM companies should technically state this when theyre out to raise cash. It seems that if the City hadnt supported the fund-raising, Cox would have taken the company private, because he believes it is now on the brink of success.

The fund raising and conversion of some 3.6 million of loan notes has virtually wiped out the companys debt and considerably strengthened its balance sheet. ID Data has also taken the tough decision to mothball its OriginJ software business and fully write off its investment, with a view to possibly being able to find a buyer for it at some point.

Cox reckoned it would have taken around 10 million to really bring the technology, which enables full Java applications to be written for smart cards, to market. Cox still ultimately believes in the technology, and may look for a buyer in due course.

In the meantime, the company is focusing on its two acquisitions, Mids & Horsey, a card maker that brought it additional capacity and Cardbase, an Irish company that brought in card management software to the group.

Cardbase had spent some 50 million (33.9 million) developing its technology. ID data bought it for just 2.5 million last year from HBOS, Island Capital and the Lewis Group. The business was loss-making, but Cox said this was because it lacked the customer interface that ID Data has now brought to it. Existing customers include ValuCard, Bank of England, British Airways and St George Bank Australia. Cox reckons that since the acquisition, ID Data has identified 100 prospects for the business, each worth between 200,000 and 1 million.

The business has won a significant deal with Bracknell Forest Council, as part of the national smart card project. The initial contract for this one council is worth 750,000 and there are 260 councils in the UK looking to provide services such as library and bus passes on a single smart card.

ID Data makes the cards, and Cardbase supplies the management software that enables each card to be personalised, and the data to be held centrally, so that if a card is lost, the system knows exactly what each person had on the card.
The Bank of England uses the system for managing public key infrastructure encryption, and money transfers. ValuCard operates a system in Nigeria where businesses store large sums of cash on cards, since there are no credit cards and banks do not tend to cooperate with each other.

Cardbase also has strong prospects in the German health insurance market, where there are around 100 insurance companies looking to manage health care entitlements by smart card.

Cox reckons the smart card market is really starting to come alive this year with the introduction of chip and pin into the retail market. He said the telecoms industry is also very active now, as is government. ID Data is actively involved in plans for the national identity card scheme. The company already has the UK governments largest smart card project, supplying the Post Office Counter cards in conjunction with US outsourcing giant EDS. The contract was renewed last year and extended until 2011.

In retail, ID last year won a deal to supply GE Capital, the worlds largest issuer of retail credit cards, and Citibank, the largest issuer of visa and mastercards. Cox reckons that ID Data was the highest bidder on these deals, but that it is the most flexible and able to provide exactly what the customer requires.

The company has also renewed its ongoing contract with Tesco. ID is supplying Tesco with a new type of loyalty card, a key fob targeted particularly at the male shopper.

Another area of interest is the gift card. These are now big business in the US, where some 1.8 billion cards have been sold in place of gift vouchers. Cash can be loaded onto the cards, which are far cheaper and easier to manage for the retailer than paper vouchers. The system has been launched in the UK, and Cox expects the European market to have some 300-500 million cards issued in the next couple of years.

But ID Data has told a good story before, so what is different now?

Cox points out that ID Data now supplies cards in 40 countries. The Cardbase acquisition adds software licence fees and ongoing maintenance fees to the pot. All development has been expensed, the company has bought its high profile facility in Petersfield, and it has set up a joint venture in Poland to reduce production costs, where it will make 150 million cards a year.

The company has strengthened its management team, and is ready to focus on sales and marketing. Cox acknowledges that the first priority is to get the card services business into profit, hence the offshore strategy.

The industry signs are also promising. Large competitors such as Gemplus, are finally starting to show signs of progress. There has also been some consolidation in the sector, with Gemplus buying Setec recently and ST Micro buying Italian company Incard. Cox sees consolidation as a potential exit strategy for ID Data investors.

Another area of interest is the gift card. These are now big business in the US, where some 1.8 billion cards have been sold in place of gift vouchers. Cash can be loaded onto the cards, which are far cheaper and easier to manage for the retailer than paper vouchers. The system has been launched in the UK, and Cox expects the European market to have some 300-500 million cards issued in the next couple of years.

But ID Data has told a good story before, so what is different now?

Cox points out that ID Data now supplies cards in 40 countries. The Cardbase acquisition adds software licence fees and ongoing maintenance fees to the pot. All development has been expensed, the company has bought its high profile facility in Petersfield, and it has set up a joint venture in Poland to reduce production costs, where it will make 150 million cards a year.

There are still risks, but there is also a huge opportunity now, said Cox.

Citywire Verdict:

If ID Data doesnt make it now it never will. The City has supported its latest fund raising, the opportunities are very big, and the time for smart cards really has finally come.

Youd have to like a gamble to get in now, but with an estimated 4 million coming off the costs through the Poland deal, (there will still be losses this year but at least profitability is in sight), and the shares at little more than a penny, the downside is pretty limited

http://www.citywire.co.uk/News/NewsArticle.aspx?VersionID=76487&MenuKey=News.Home&NewsPage=5

1up 2down, thank you for posting the above interview, makes good reading.

And many thanks from me too iup2down,

Still a believer!!!

1up2 down

well spotted
thanks for that

Yeah guys it's looking interesting. I hold 100+K albeit at a much higher price. It now or never as the article says.

Good volume this am,8mill traded so far,mainly buys

I'm holding half a million of these. good luck to all

Same here 1 up 2down,had many a sleepless night over these but getting a gut feeling they will come good!

Added this morning.

We stand a good chance now, thats if the directors don't over pay them selfs

When the share price rises and their options come good, they won't need to

Having taken a closer look at the citywire interview,
I found the article interesting with regard to the mention of,CONSOLIDATION,takeover possibility,and taking the company private,

What do you holders think?
RGDS

mornin all over 4mln buys and not a twitch in sp ????????????? :-/

They have gone up 31% from the lows,thats the positive side??

and a nother 4ml. and still stuck................ ;o\

Douggie,do you think we will see a large sale come through?

LOOKS like we did!

2.5mill

;o\

2mins. to go will we close blue ??????????????? a fair bet not !!!!!!!!!

DOUGGIE at leasr its still green,maybee blue tommorrow?