07:00 Mon 28 Sep 2020
Crossword Cybersec - Half-year Report

Crossword Cybersecurity plc
Interim Results
28 Sep 2020 -
Financial Highlights:
· Total revenue increased by 18% to
· Orders received for Rizikon Assurance during the period were 41% higher than those received in the same period last year.
· The number of Rizikon opportunities continued to grow in the period.
· Product and Consulting revenue increased by 43% over the same period in the prior year.
· Consulting recurring revenue more than doubled over the same period in the prior year.
· Total comprehensive loss for the period was
· Cash and Cash Equivalents at
Operational Highlights:
·
· Crossword completed
· Crossword had some notable client wins, including Cammell Laird, one of the most famous names in British industry, and
· In Q2 2020, Crossword began collaborating with leading security reseller and managed security services provider Satisnet Limited, on the provision of third party assurance technology to its clients, as part of the expansion of Crossword's partner programme.
· Crossword's cyber security consulting division continued to grow in a range of high-profile sectors including legal, insurance and financial services.
· Rizikon Pro, launched post-period, is showing very positive early signs with substantially shorter sales cycle, in some cases as low as 4 weeks, from the typical 6-18 months. Conversion from trials to commitments is very high, running at around 50% at this early stage. This all points towards a material breakthrough in our Rizikon sales strategy.
COVID-19
· Our flexible approach enabled us to quickly and effectively implement remote working, before it was mandated, with minimal impact on clients and sales activity.
· Costs have been closely monitored and managed throughout this time of increased uncertainty in order to be prudent, with a hiring freeze in place, some redundancies and careful management of any discretionary spending.
· Crossword issued guidance for businesses on how to address some of the most common security concerns for employees when working from home. The advice was made widely available as many of Crossword's clients mobilised to keep their businesses running as normally as possible whilst adhering to UK Government and Public Health advice designed to control the spread of the COVID-19 virus.
Outlook:
· Continuing to convert pipeline into revenue, the Board is confident of achieving at least 25% revenue growth over 2019, for the year as a whole, and a loss before tax in line with current market expectations. Product and Consulting revenue is expected to growth by at least 35% over 2019. Crossword is dependent on the outcome of several large bids, including 2 multi-million pound opportunities, that are currently in progress, to deliver on market expectations for revenue for the full year. We therefore feel it prudent not to issue more detailed forward guidance until more clarity arises.
· Software and process development in the first half of 2020 culminated in the launch of Rizikon Pro post period, on
· Crossword launched a series of webinars which cover topics from 'the focus of the CISO in two years time', a 'live demo of a real world stuffing attack' and 'Diversity in the Cyber Security and Technology Industry' hosted by Tom Ilube, Crossword's CEO, which was attended by an audience of more than 400 people.
- 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
Grant Thornton (Nominated Adviser) - Tel: +44 (0) 20 7383 5100
Hybridan LLP (Broker) - Tel: +44 (0)203 764 2341
About Crossword Cybersecurity plc
Crossword Cybersecurity plc focuses on the development and commercialisation of university research-based cyber security and risk management 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 and manage all risks from their suppliers. Nixer CyberML, Crossword's most recently launched product, is a new tool for businesses that want to solve advanced security and cybercrime problems, such as detecting and dealing with compromised accounts, fraud, and in-application denial of service attacks. 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.
For media enquiries contact:
duncan@gingerpr.co.uk, 01932 485 300
Chief Executive Officer's review
Crossword Cybersecurity plc ("Crossword" or "the Company") weathered the first half of 2020 in good shape as the global pandemic hit, despite the
Crossword continued to focus on recurring product and consulting revenue. In the first half of 2020, orders received for Rizikon Assurance increased by 41% compared to the same period in 2019. With several large bids awaiting decisions and some signs of gradual recovery, Crossword is hopeful of achieving further growth in the second half of the year. But this depends crucially on winning the major bids underway. In the period under review, Group revenue grew by 18% compared with H1 2019, with product and consulting revenue growing 43% over the comparative period with planned reduction in revenues from software development.
The continuing growth in cyber security incidents drives demand for Crossword's products. Whilst discretionary spend has been cut back by many organisations, there are aspects of cyber security that are not discretionary, and investment continues in these areas. The
Rizikon Assurance, our Software as a Service (SaaS) supplier risk assessment platform based on a recurring revenue model, addresses supply chain risks. The Business Continuity Institute's report states that cyber-attacks and data breaches were the source of 26.7% of supply chain outages and disruptions, and 62% of respondents rate such supply chain risks as their primary concern for the coming year. Supply chain outages cost businesses real money. 13% of businesses in a recent report said that supply chain disruption costs them
Software and process development in the first half of 2020 culminated in the launch of Rizikon Pro post period, on
Crossword continues to demonstrate Rizikon Assurance's value within large and complex enterprises, with some notable client wins, including Cammell Laird, one of the most famous names in British industry, and
We have been working on our second product, Nixer, with Imperial College London with a focus on identifying attack tools such as credential stuffing using machine learning techniques. We introduced the new, machine learning version of Nixer to prospective clients at the end of 2019 and have been hosting a series of Webinars on credential stuffing attacks to prospective clients which are being very well received.
Crossword's Consulting division has been going from strength to strength under
On the corporate front, Crossword completed a
Outlook
Cash at 31 August was
T Ilube
CEO
Consolidated Statement of Comprehensive Income | Unaudited 6 Months to | Audited 12 Months to | Unaudited 6 Months to |
| £ | £ | £ |
Revenue | 674,008 | 1,305,055 | 570,757 |
Cost of Sales | (791,237) | (1,431,648) | (667,023) |
Gross Profit (Loss) | (117,229) | (126,593) | (96,266) |
| | | |
Other operating income-research & development tax credits | - | 171,623 | 18 |
Administrative expenses | (1,148,020) | (2,185,170) | (972,888) |
Share based payments | (26,608) | (32,200) | 2,990 |
Finance income-bank interest receivable | 1,079 | 8,357 | 2,462 |
Finance costs-other interest payable and foreign exchange | (106,269) | (24,351) | (8,597) |
Financial Instrument stated at amortised cost | | 92,764 | |
Loss for the year/period before taxation | (1,397,047) | (2,095,570) | (1,072,280) |
| | | |
Tax expense | (2,410) | (5,878) | (2,360) |
| | | |
Loss for the Year / Period | (1,399,457) | (2,101,448) | (1,074,640) |
| | | |
Other Comprehensive Income | | | |
Items that may be reclassified to profit or loss: | | | |
Foreign Exchange Translation Gain (Loss) | 6,264 | (5,354) | (2,955) |
| | | |
Total Comprehensive Loss | (1,393,193) | (2,106,802) | (1,077,595) |
| | | |
Loss for the period attributable to: | | | |
Owners of the parent | (1,374,575) | (2,101,448) | (1,074,640) |
Non-controlling interests | (24,882) | - | - |
Total Loss for the Year / Period | (1,399,457) | (2,101,448) | (1,074,640) |
| | | |
Total comprehensive loss for the period attributable to: | | | |
Owners of the parent | (1,368,311) | (2,106,802) | (1,077,595) |
Non-controlling interests | (24,882) | - | - |
Total Comprehensive Loss | (1,393,193) | (2,106,802) | (1,077,595) |
| | | |
Earnings Per Share | (0.29) | (0.45) | (0.23) |
Diluted Earnings Per Share | (0.26) | (0.40) | (0.22) |
All results are derived from continuing operations | | | |
| | | |
Interim Statement of Financial Position as at | Unaudited Group | Audited Group | Unaudited Group |
| £ | £ | £ |
Non-Current Assets | | | |
Tangible assets | 11,775 | 15,438 | 9,690 |
Right to Use Asset | 133,688 | 203,062 | 273,656 |
Investments in other unlisted investment | 31 | 31 | 31 |
Total non-current assets | 145,494 | 218,531 | 283,377 |
| | | |
Current Assets | | | |
Trade and other receivables | 432,543 | 606,953 | 447,915 |
Tax receivable | 17,627 | 19,345 | 12,140 |
Cash and cash equivalents | 1,550,317 | 1,514,166 | 1,294,491 |
Total current assets | 2,000,487 | 2,140,463 | 1,754,546 |
TOTAL ASSETS | 2,145,981 | 2,358,994 | 2,037,924 |
| | | |
EQUITY | | | |
Share Capital | 256,605 | 234,061 | 234,039 |
Share premium account | 8,518,391 | 7,515,744 | 7,514,670 |
Other reserves | 155,434 | 128,826 | 93,636 |
Retained earnings | (8,722,924) | (7,428,818) | (6,402,010) |
Translation of foreign operations | (5,103) | (11,367) | (8,968) |
Attributable to owners of the parent | 202,402 | 438,447 | 1,431,367 |
Non-controlling interests | (91,051) | - | - |
Total equity | 111,352 | 438,447 | 1,431,367 |
| | | |
LIABILITIES | | | |
Current Liabilities | | | |
Trade and other payables | 561,852 | 522,286 | 529,810 |
Tax payable | 151,498 | 91,024 | 76,747 |
Total current liabilities | 713,350 | 613,311 | 606,557 |
Long Term Liabilities | | | |
Loan | 1,321,279 | 1,307,236 | - |
Total long term liabilities | 1,321,279 | 1,307,236 | - |
| | | |
Total Liabilities | 2,034,629 | 1,920,547 | 606,557 |
Total Equity & Liabilities | 2,145,981 | 2,358,994 | 2,037,924 |
| | | |
| | | |
| | | |
Statement of Changes in Equity | Group | Group | Group |
As At | Unaudited 6 Months to | Audited 12 Months to | Unaudited 6 Months to |
Share Capital | £ | £ | £ |
At 1st January | 234,061 | 234,022 | 234,022 |
Issue of shares | 22,543 | 39 | 17 |
At Period/Year End | 256,605 | 234,061 | 234,039 |
| | | |
Share Premium | | | |
At 1st January | 7,515,744 | 7,513,906 | 7,513,906 |
Issue of shares | 1,002,647 | 1,838 | 764 |
At Period/Year End | 8,518,391 | 7,515,744 | 7,514,670 |
| | | |
Equity Reserve | | | |
At 1st January | 128,826 | 96,626 | 96,626 |
Employee share schemes - value of employee services | 26,608 | 32,200 | (2,990) |
At Period/Year End | 155,434 | 128,826 | 93,636 |
| | | |
Retained Earnings | | | |
At 1st January | (7,428,818) | (5,327,370) | (5,327,370) |
Loss for the period | (1,374,575) | (2,101,448) | (1,074,640) |
Gain from disposal to non-controlling interests | 14,300 | - | - |
Transfer on disposal to non-controlling interests | 66,169 | - | - |
At Period/Year End | (8,722,924) | (7,428,818) | (6,402,010) |
| | | |
Translation of Foreign Operations | | | |
At 1st January | (11,367) | (6,013) | (6,013) |
Translation of Foreign Operations | 6,264 | (5,354) | (2,955) |
At Period/Year End | (5,103) | (11,367) | (8,968) |
| | | |
Non-controlling interests | | | |
At 1st January | - | - | - |
Transfer on acquisition by non-controlling interests | (66,169) | - | - |
Total Comprehensive loss for the period | (24,882) | - | - |
At Period/Year End | (91,051) | - | - |
| | | |
Total | | | |
At 1st January | 438,447 | 2,511,172 | 2,511,172 |
Total Comprehensive loss for the Period | (1,393,193) | (2,106,802) | (1,077,595) |
Issue of shares | 1,025,190 | 1,877 | 780 |
Share based Payments | 26,608 | 32,200 | (2,990) |
Gain from disposal to non-controlling interests | 14,300 | - | - |
At Period/Year End | 111,352 | 438,447 | 1,431,367 |
| | | |
| | | |
| | | |
Consolidated Statement of Cashflows | Unaudited 6 Months to | Audited 12 Months to | Unaudited 6 Months to |
Cashflows From Operating Activities | £ | £ | £ |
Loss for the year / period | (1,399,457) | (2,101,448) | (1,074,640) |
Movement in trade and other receivables | 176,128 | (66,911) | 99,331 |
Movement in trade and other payables | 100,039 | 330,292 | 49,883 |
Depreciation and amortisation | 73,037 | 147,281 | 72,778 |
Non cash Financial Instrument stated at amortised cost | | (92,764) | |
Non cash employee benefits | 26,608 | 32,200 | (2,990) |
Net Interest | 14,043 | | 6,135 |
Net Cashflow from Operating Activities | (1,009,601) | (1,751,349) | (849,503) |
| | | |
Cashflow From Investing Activities | | | |
Purchase of tangible assets | - | (9,657) | - |
Purchase of right to use assets | | (344,058) | |
Purchase of shares in other unlisted investment | - | - | - |
Interest receivable | | | 2,462 |
Net Cashflow from Investing Activities | - | (353,715) | 2,462 |
| | | |
Cashflows From Financing Activities | | | |
Proceeds from issue of ordinary shares | 1,025,190 | 1,877 | 780 |
Proceeds from issue of debt | | 1,400,000 | |
Proceeds from disposal to non-controlling interests | 14,300 | | |
Lease liability payments | | | (70,402) |
Interest payable | | | (8,597) |
Net Cashflow from Financing Activities | 1,039,490 | 1,401,877 | (78,219) |
| | | |
Movement in Cash & Cash Equivalents | 29,889 | (703,186) | (925,260) |
Foreign Currency Translation Difference | 6,264 | (5,354) | (2,955) |
Cash and Cash Equivalent at the beginning of the period | 1,514,165 | 2,222,706 | 2,222,706 |
Cash and Cash Equivalent at the end of the period | 1,550,318 | 1,514,165 | 1,294,491 |
Notes to the Financial Information
The group and its operations
Crossword Cybersecurity plc (the "Company") is a company incorporated on
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 basis. 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
The financial information was approved by the Board of Directors on
The accounting policies used in the preparation of the financial information for the six months ended
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
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 first half of 2021, 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 in the short term. 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:
£ | Unaudited 6 Months to | Audited 12 Months ended | Unaudited 6 Months to |
Revenue from the sale of goods/licences | 54,790 | 69,884 | 45,939 |
Revenue from the rendering of services | | 16,000 | |
Revenue from software development services - Cyberowl Limited | 24,700 | 91,574 | 63,307 |
Revenue from software development services - Byzgen Limited | 95,256 | 208,555 | 120,835 |
Revenue from Consulting | 499,262 | 919,042 | 340,676 |
Total Revenue | 674,008 | 1,305,055 | 570,757 |
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
27,500 share options were issued by Crossword Cybersecurity plc in
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 period the calculation was based on the loss for the year of
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