TIDMCCS
RNS Number : 1991N
Crossword Cybersecurity PLC
23 September 2019
23 September 2019
Crossword Cybersecurity plc
("Crossword " or the "Company")
Interim Results
Crossword Cybersecurity plc (AIM: CCS, "Crossword", the
"Company" or the "Group"), the cyber security technology
commercialisation company, today announces its unaudited interim
results for the 6 months ended 30 June 2019.
Financial Highlights:
-- Orders received for Rizikon Assurance during the period were
more than double those received in the same period last year
-- The Rizikon Assurance pipeline more than doubled in the first
six months of this year and now stands in excess of GBP3 million
over 100 companies in a wide range of sectors
-- Product and Consulting revenue increased by 21% over the same period in the prior year
-- Total revenue increased by 5% to GBP570,757
-- Total comprehensive loss for the period was GBP1,077,595, an
increase of GBP246,804 over the same period in the prior year,
following investment in product development and sales and
marketing
-- Cash and Cash Equivalents at 30 June 2019 of GBP1,294,491.
Operational Highlights:
-- The Consulting division launched its vCISO service (virtual
Chief Information Security Officer), securing its highest value,
multi-year contract to date
-- Worked with Imperial College London on enhancements to our second product, Nixer
-- Appointed a new world class Advisory Board made up of senior
figures from academia, the corporate world and government.
Outlook:
-- Continuing to convert pipeline into revenue, aiming to close
several large opportunities in the final quarter, and the Board
remains confident that full year results will be in line with
market expectations
-- Next version of Rizikon Assurance which includes Supplier
Assurance Framework dashboard was launched on 4 Sept
-- Nixer, our second product, on track for release in Q4 2019
-- Close to agreeing one or more distribution deals over the coming months.
Tom Ilube, Chief Executive Officer, commented:
"I am very pleased with the progress achieved in the first half
of 2019, with a significant rise in the order book and pipeline for
both Rizikon Assurance, and Consulting. We expect the momentum
achieved in H1 to continue, with our focus on scalable, recurring
product revenue, through conversion of pipeline into orders."
- Ends -
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Contacts
Crossword Cybersecurity plc - Tel: +44 (0) 20 3953 8460
Email: info@crosswordcybersecurity.com
Tom Ilube, Chief Executive Officer
Mary Dowd, Finance Director
Grant Thornton (Nominated Adviser) - Tel: +44 (0) 20 7383
5100
Colin Aaronson / Jamie Barklem /Niall McDonald
Hybridan LLP (Broker) - Tel: +44 (0)203 764 2341
Claire Louise Noyce
About Crossword Cybersecurity plc
Crossword Cybersecurity plc focuses on the development and
commercialisation of university research-based cyber security
related software and cyber security consulting. The Group's
specialist cyber security product development and software
engineering teams work with its university partners to develop the
research concept into a fully-fledged commercial product that it
will then take to market. The Group's aim is to build up a
portfolio of revenue generating, intellectual property based, cyber
security products. Rizikon Assurance, Crossword's leading product,
is a SaaS platform that enables medium to large companies to assess
the cyber maturity and GDPR readiness of their suppliers.
Crossword's team of expert cyber security consultants leverages
years of experience in national security, defence and commercial
cyber intelligence and operations to provide bespoke advice
tailored to its clients' business needs.
Chief Executive Officer's review
Crossword Cybersecurity plc ("Crossword") continues to focus on
scalable, recurring product and consulting revenue, through
conversion of our healthy sales pipeline into orders. In the first
half of 2019, orders received for Rizikon Assurance were more than
double those received in the same period last year. Crossword's
Rizikon bid pipeline now stands in excess of GBP3m across over 100
companies in a wide range of sectors, up from GBP1.4m at the end of
December 2018. The strength of the order book for both Rizikon
Assurance and Consulting puts Crossword in a strong position for
growth at the end of the first half of 2019. In the period under
review, Group revenue grew by 5% compared with H1 2018, with
product and consulting revenue growing 21% over the comparative
period as we shifted the focus away from software development
revenue toward recurring product revenue.
Demand for Crossword's products and services is driven by the
continuing growth in cyber security incidents. In the second
quarter of 2019, businesses in the UK saw a 179% increase in cyber
attacks, an average of 146,491 attempted cyber attacks, compared to
the same period last year. Ransomware threats have risen by 46%
according to Kaspersky with more than 230,000 users attacked during
Q2 2019. Kaspersky detected 16,017 new ransomware samples in the
quarter, more than double the number of a year ago.
Rizikon Assurance, our Software-as-a-Service (SaaS) supplier
risk assessment solution based on a recurring revenue model,
directly addresses supply chain risks and we have seen a growing
trend in supply chain attacks. Ponemon Institute Survey reports
that 59% of companies in the UK and USA said they experienced a
data breach via a third party. The UK's National Cyber Security
Centre (NCSC) has provided a number of examples of supply chain
attacks. For example a cyber-espionage group, Dragonfly, has
allegedly targeted the supply chains of the energy sector across
Europe and North America, attempting to install malware infected
files in order to infect clients.
Rizikon Assurance also helps organisations address General Data
Protection Regulation (GDPR) and the Information Commissioner's
Office (ICO) has significantly ramped up its enforcement of GDPR,
announcing its intention to fine British Airways GBP183 million due
to a breach involving 500,000 customers' personal data and Marriott
International Inc. GBP99 million when 7 million UK residents'
details were exposed.
On 4 September 2019, we launched the new version of Rizikon
Assurance, Rizikon Assurance 2.0, which allows organisations to
visualise all risks for each third-party through fully customisable
360-degree supplier scorecards. The new Third-party Assurance
Framework Dashboard - an industry first - gives Supplier Management
teams, Chief Risk Officers and senior executives a complete
understanding of third-party risks across their supply chain,
helping identify problem areas and prioritise remedial action
Rizikon Assurance is gaining traction in the market. Having
invested in our product sales team last year our sales pipeline has
more than doubled since December 2018 to over GBP3m. The strong
pipeline built up at the back end of 2018 has started to convert
into client contracts with highlights including Kinnerton
Confectionery, Britain's largest independent manufacturer of
chocolate and novelty confectionery, Nuvia, the nuclear industry
focused international engineering service provider, the Nursing and
Midwifery Council (NMC), the regulator of over 690,000 nursing,
midwives and nursing associates, and Stevenage Borough Council,
Peterborough City Council and East Hertfordshire District Council ,
which will use Rizikon Assurance to manage compliance with GDPR
across their suppliers and for wider information governance.
We assess the UK market alone for Rizikon Assurance to be worth
GBP300m per annum. In addition to rolling out Rizikon, we have been
working during 2019 with Imperial College London on enhancements to
our second product, Nixer, with a focus on identifying attack tools
such as credential stuffing using machine learning techniques. We
intend to introduce the new, machine learning version of Nixer to
prospective clients in2019.
Crossword works with universities to commercialise technology
based on their extensive cyber research. In January, we released
insights from our global review of academic cyber security
research. The new database looked at nearly 1,200 current and past
research projects from academic institutions in the United Kingdom,
United States, Europe, Australia and Africa. Our report reaffirms
the value of the cyber security research market, with reported
funding of EU projects at over EUR1 billion. The database
identified several global trends including increases in research
projects across cyber physical systems (CPS), Privacy, Internet of
Things (IoT) and quantum cryptography.
Crossword's software development client, CyberOwl, the company
created with Coventry University and funded by Mercia Fund
Management, is actively selling its product, Medulla, a platform
for cyber-risk prioritisation into the global shipping industry and
industrial internet of things sector. Crossword has a 7.1 per cent.
interest in CyberOwl. ByzGen, another software development client
that the Company founded on blockchain work conducted at the
University of Warwick and EPFL Switzerland, is making progress on
its next fund raising round and is working on opportunities with
some large corporate clients.
In the first half of 2019, the Consulting division launched its
vCISO service (virtual Chief Information Security Officer), and
secured its highest value, multi-year contract to date, which will
deliver recurring revenue through to 2021. vCISO is a
virtual/remote CISO (Chief Information Security Officer) service,
provided by Crossword Consulting cyber security experts at a
fraction of the cost of an in-house CISO. For a monthly retainer,
clients of the vCISO service get information security advice and
support tailored to their industry and specifics of their
organisation and its network of information systems. Crossword's
consulting team is building a strong and diverse client based and
has worked with over 50 different clients to date.
On the corporate front, Crossword appointed a new world class
Advisory Board made up of senior figures from academia, the
corporate world and government. The new Advisory Board, chaired by
former GlaxoSmithKline & NHS CISO, Dr Robert Coles, includes
General Nick Houghton GCB CBE DL, former Chief of the Defence Staff
of the British Armed Forces, Professor Nick Jennings CB FREng Vice-
Provost at Imperial College London and Dr Una-May O'Reilly,
Principal Research Scientist at Massachusetts Institute of
Technology (MIT), Boston, USA.
We have continued to share cyber security spin out opportunities
with IP Group plc, with whom we have an MoU, as we come across
interesting concepts and teams at universities.
Crossword is in conversation with several distribution partners,
including two large scale partners, about Rizikon Assurance
opportunities. We believe we are getting close to agreeing one or
more distribution deals over the coming months with partners who
have large client bases both in the UK and internationally.
Outlook
Cash at 31 August was GBP834,041 and the Company is presently
reviewing fundraising options with a view to raising additional
funds in the next six months, which will be required to sustain the
Company's current trajectory and continued growth. Trading since
the period end has continued to be encouraging, and the Directors
are confident that full year results will be in line with market
expectations.
T Ilube
CEO
Audited
Unaudited 12 Months Unaudited
6 Months ended 31 6 Months
Consolidated Statement to 30 June December to 30 June
of Comprehensive Income 2019 2018 2018
GBP GBP GBP
Revenue 570,757 1,067,609 544,052
Cost of Sales (667,023) (1,013,521) (453,545)
------------ ------------ ------------
Gross Profit (Loss) (96,266) 54,088 90,507
Other operating income-research
& development tax credits 18 192,149
Administrative expenses (972,888) (2,335,228) (896,208)
Share based payments 2,990 (45,751) (18,903)
Finance income-bank interest
receivable 2,462 3,727 1,957
Finance costs-other interest
payable (8,597) (1,237) (1,032)
------------ ------------ ------------
Loss for the year/period
before taxation (1,072,280) (2,132,252) (823,679)
Tax expense (2,360) (8,052) (2,900)
------------ ------------ ------------
Loss for the Year / Period (1,074,640) (2,140,304) (826,579)
Other Comprehensive Income
Items that may be reclassified
to profit or loss:
Foreign Exchange Translation
Gain (Loss) (2,955) (13,542) (4,212)
------------ ------------ ------------
Total Comprehensive Loss (1,077,595) (2,153,846) (830,791)
------------ ------------ ------------
Earnings Per Share (0.23) (0.55) (0.23)
All results are derived
from continuing operations
Interim Statement of Financial Unaudited Audited Unaudited
Position as at 30 June 2019 Group Group Group
30-Jun-19 2018 30-Jun-18
GBP GBP GBP
Non-Current Assets
Tangible assets 9,690 12,066 15,057
Right to Use Asset 273,656 - -
Investments in other unlisted
investment & subsidiary 31 31 31
Total non-current assets 283,377 12,097 15,088
----------------- -------------------- ----------------
Current Assets
Trade and other receivables 460,055 559,387 355,095
Cash and cash equivalents 1,294,491 2,222,706 1,728,888
Total current assets 1,754,546 2,782,093 2,083,983
----------------- -------------------- ----------------
TOTAL ASSETS 2,037,924 2,794,190 2,099,071
EQUITY
Attributable to the owners
of the Company
Share Capital 234,039 234,022 199,506
Share premium account 7,514,670 7,513,906 5,627,202
Other reserves 93,636 96,626 69,778
Retained earnings (6,402,010) (5,327,370) (4,013,645)
Translation of foreign operations (8,968) (6,013) 3,317
Total equity 1,431,367 2,511,172 1,886,158
----------------- -------------------- ----------------
LIABILITIES
Current Liabilities
Trade and other payables 606,557 283,018 212,913
Total current liabilities 606,557 283,018 212,913
----------------- -------------------- ----------------
Total Liabilities 606,557 283,018 212,913
----------------- -------------------- ----------------
Total Equity & Liabilities 2,037,924 2,794,190 2,099,071
----------------- -------------------- ----------------
Statement of Changes in
Equity Group Group Group
As At Audited
Unaudited 12 Months Unaudited
6 Months ended 6 Months
to 30 June 31 December to 30
2019 2018 June 2018
Share Capital GBP GBP GBP
At 1st January 234,022 159,173 159,173
Issue of shares 17 74,849 40,333
At Period/Year End 234,039 234,022 199,506
----------------- -------------------- ----------------
Share Premium GBP GBP GBP
At 1st January 7,513,906 3,555,522 3,555,522
Issue of shares 764 3,958,384 2,071,680
At Period/Year End 7,514,670 7,513,906 5,627,202
----------------- -------------------- ----------------
Equity Reserve GBP GBP GBP
At 1st January 96,626 50,875 50,875
Employee share schemes - value
of employee services (2,990) 45,751 18,903
At Period/Year End 93,636 96,626 69,778
----------------- -------------------- ----------------
Retained Earnings GBP GBP GBP
At 1st January (5,327,370) (3,187,066) (3,187,066)
Total Comprehensive loss
for the period (1,074,640) (2,140,304) (826,579)
At Period/Year End (6,402,010) (5,327,370) (4,013,645)
----------------- -------------------- ----------------
Translation of Foreign Operations GBP GBP GBP
At 1st January (6,013) 7,529 7,529
Translation of Foreign Operations (2,955) (13,542) (4,212)
At Period/Year End (8,968) (6,013) 3,317
----------------- -------------------- ----------------
Total GBP GBP GBP
At 1st January 2,511,172 586,033 586,033
Total Comprehensive loss
for the Period (1,077,595) (2,153,846) (830,791)
Issue of shares 780 4,033,233 2,112,013
Share based Payments (2,990) 45,751 18,903
At Period/Year End 1,431,367 2,511,172 1,886,158
----------------- -------------------- ----------------
Unaudited 12 Months Unaudited
6 Months ended 6 Months
Consolidated Statement of to 30 31 December to 30
Cashflows June 2019 2018 June 2018
Years
Cashflows From Operating
Activities GBP GBP GBP
Loss for the year / period (1,074,640) (2,140,304) (826,579)
Movement in trade and other
receivables 99,331 (383,807) (179,515)
Movement in trade and other
payables 49,883 190,942 120,837
Depreciation and amortisation 72,778 5,592 2,271
Non cash employee benefits (2,990) 45,751 18,903
Net Interest 6,135 (2,490) (925)
---------------- -------------------- -------------------
Net Cashflow from Operating
Activities (849,503) (2,284,316) (865,008)
---------------- -------------------- -------------------
Cashflow From Investing
Activities
Purchase of tangible assets - (5,250) (4,920)
Purchase of shares in other
unlisted investment - - -
Interest receivable 2,462 3,727 1,957
---------------- -------------------- -------------------
Net Cashflow from Investing
Activities 2,462 (1,523) (2,963)
---------------- -------------------- -------------------
Cashflows From Financing
Activities
Proceeds from issue of ordinary
shares 780 4,033,233 2,112,013
Lease liability payments (70,402)
Interest payable (8,597) (1,237) (1,032)
---------------- -------------------- -------------------
Net Cash Inflow from Financing
Activities (78,219) 4,031,996 2,110,981
---------------- -------------------- -------------------
Net Increase in Cash & Cash
Equivalents (925,260) 1,746,158 1,243,010
Foreign Currency Translation
Difference (2,955) (13,542) (4,212)
Cash and Cash Equivalent
at the beginning of the period 2,222,706 490,090 490,090
Cash and Cash Equivalent
at the end of the period 1,294,491 2,222,706 1,728,888
---------------- -------------------- -------------------
Notes to the Financial Information
The group and its operations
Crossword Cybersecurity plc (the "Company") is a company
incorporated on 6 March 2014 in the United Kingdom under the
Companies Act 2006. The Company is the parent company of the
Crossword group of Companies focusing on the cybersecurity sector.
The principle activities are the development and commercialisation
of university research-based cyber security related software and
cybersecurity consulting.
The financial information includes the results of the Company
and its subsidiaries (together referred to as the "Group" and
individually as "Group entities".
Basis of preparation of financial information
The financial information has been prepared in accordance with
the requirements of the London Stock Exchange plc AIM Rules for
Companies ("AIM Rules") and in accordance with International
Financial Reporting Standards ("IFRS") and IFRS Interpretations
Committee ("IFRS IC") interpretations as adopted by the European
Union and the Companies Act 2006 applicable to companies reporting
under IFRS. As permitted, this Half Yearly Financial Report has
been prepared in accordance with the AIM Rules and not in
accordance with IAS 34 'Interim Financial Reporting'.
The financial information has been prepared on the historical
cost. The preparation of financial information in conformity with
IFRS requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the process
of applying the Group's accounting policies. Changes in assumptions
may have a significant impact on the financial information in the
year the assumptions changed. Management believes that the
underlying assumptions are appropriate.
The financial information does not comprise statutory accounts
within the meaning of section 435 of the Companies Act 2006. The
financial information together with the comparative information for
the six months ended 30 June 2017 are unaudited with the audited
information included for the 12 month period ended 31 December
2018. The audited information received an audit report which was
unqualified and did not include a statement under section 498(2) or
section 498(3) of the Companies Act 2006.
The financial information was approved by the Board of Directors
on 20 September 2019 and authorised for issue on 23 September
2019.
The accounting policies used in the preparation of the financial
information for the six months ended 30 June 2019 are in accordance
with the recognition and measurement criteria of the International
Financial Reporting Standards as adopted by the European Union
('IFRS') and are consistent with those which will be adopted in the
annual financial statements for year ending 31 December 2019.
These Interim Financial Statements have been prepared in
accordance with the accounting policies, methods of computation and
presentation adopted in the financial statements for the year ended
31 December 2018, except for; IFRS 16 'Leases', effective 1 January
2019.
IFRS 16 'Leases' - The Group only acts as a lessee and is
required to recognise operating leases on the balance sheet. The
group has adopted the modified retrospective approach meaning the
Group recognised such leases on the balance sheet as at 1 January
2019. The Group has recognised right-of-use assets in respect of
the properties it leases with a value of GBP344,058 being
attributed to the assets and a lease liability of GBP320,121. The
asset is being depreciated over the remaining terms of the leases,
which are 31 months and 29 months, from 1 January 2019.
After making enquiries, the directors have concluded that under
current fund raising plans, the Group has adequate resources to
continue operational existence for the foreseeable future. The
Company is presently reviewing fundraising options with a view to
raising additional funds in the next six months, which will be
required to sustain the Company's current trajectory and continued
growth. The Group could scale back and carry on at a low level
activity with low or even no growth and in that scenario it would
not need to raise cash within the next 6 months. Accordingly, they
continue to adopt the going concern basis in preparing the
half-yearly consolidated unaudited financial statements.
Basis of consolidation
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. Control exists when then the
Group has the power, directly or indirectly, to govern the
financial and operating policies of an entity so as to obtain
benefits from its activities.
The purchase method of accounting is used to account for the
acquisition of subsidiaries by the Group.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation. Uniform accounting policies are
applied by the Group entities to ensure consistency.
Revenue
Revenue comprises the fair value of consideration received or
receivable for licence income and the rendering of services in the
ordinary course of the Group's activities. Revenue is shown net of
value added tax and trade discounts. Income is reported as
follows:
(a) Licence income
Technology and product licensing revenue represents amounts
earned for licenses granted under licensing agreements, including
up-front payments. Revenues relating to up-front payments are
recognised when the obligations related to the revenues have been
completed.
Revenues for maintenance and support services are recognised in
the accounting periods in which the services are rendered.
(b) Rendering of Services
Services relate to implementation and deployment fees for the
technology and products licensed to customers. Revenue is
recognised in the accounting periods in which the services are
rendered.
Revenue and segmental information
An analysis of the Group's revenue for each period for its
continuing operations, is as follows:
GBP Unaudited Audited Unaudited
6 Months 12 Months 6 Months
to 30 ended to 30
June 31 December June
2019 2018 2018
Revenue from the sale of goods/licences 45,939 66,373 40,278
------------- ------------- -----------
Revenue from the rendering of services 30,336 10,680
------------- ------------- -----------
Revenue from software development services
- Cyberowl Limited 63,307 165,806 110,006
------------- ------------- -----------
Revenue from software development services
- Byzgen Limited 120,835 236,421 104,814
------------- ------------- -----------
Revenue from Consulting 340,676 568,673 278,274
------------- ------------- -----------
Total Revenue 570,757 1,067,609 544,052
------------- ------------- -----------
The IFRS 8 Operating segments requires the Group to determine
its operating segments based on information which is provided
internally. Based on the internal reporting information and
management structures within the Group, it has been determined that
there are two geographic operating segments (UK and Poland)
supported by one centralised cost segment (UK and Poland) and one
revenue segment (UK). Reporting on this basis is reviewed by the
Board of directors which is the chief operating decision-maker and
is responsible for the strategic decision-making of the Group.
No analysis of net assets by geographic segment is provided as
the net assets are principally all within the UK.
Share Options
42,354 share options were issued by Crossword Cybersecurityplc
in June 2019. Total options issued amounts to 190,698 as at 30 June
2019. All share options in Crossword Consulting Limited were
cancelled during the period. The fair value of these payments is
calculated by the Company using the binomial option valuation
model. The expense, where material, is recognised on a
straight-line basis over the period from the date of award to the
date of vesting, based on the Company's best estimate of the number
of shares that will eventually vest.
Earnings and diluted Earnings per Share
Earnings per share is calculated by dividing the loss for the
period attributable to ordinary equity shareholders of the parent
by the weighted average number of ordinary shares outstanding
during the year. During the year the calculation was based on the
loss for the year of GBP1,072,280 (2018: GBP2,132,252) divided by
the weighted average number of ordinary shares of 4,680,521 (2018:
3,853,254). Diluted earnings per share is calculated by dividing
the loss of the year by the weighted average number of ordinary
shares outstanding during the year plus unexercised share based
payments. The weighted average number of ordinary shares used in
the calculation of diluted earnings per share was 4,871,426 (2018:
4,725,481).
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR ZLLFLKKFBBBQ
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