Crossword Cybersecurity Plc : Half-yearly report

CROSSWORD CYBERSECURITY PLC
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2017

BUSINESS REVIEW

I am delighted to report excellent progress in the first half of 2017. Crossword generated more revenue in the first half of 2017 than we did in the whole of 2016, as we continue to develop Crossword's technology commercialisation business focused exclusively on cyber security.

There is no let up in global cyber security incidents. The first half of 2017 saw one of the biggest and most alarming cyber security challenges to date - the worldwide Wannacry attack. This global cyber event impacted hundreds of thousands of computers worldwide, including crippling NHS hospitals on a large scale, once again thrusting cyber security into the national headlines. It was quickly followed by the Petya ransomeware virus that leveraged some of the same techniques. Politics was not immune from cyber incident with the Macron election campaign in France being targeted. The rising concern of cyber attacks on critical infrastructure was evidenced by the attack on Germany's main railways in Frankfurt.

Crossword works with universities to commercialise technology based on their extensive cyber research. In the first half of 2017 we extended the group of universities that we are working with to include Imperial College, Edinburgh University and MIT in the USA. This brings to a total of nine the number of universities that we are involved with: Bristol, Warwick, Coventry, Surrey, South Wales, City, Imperial, Edinburgh and MIT.

Following the end of the period, Crossword announced a major initiative, CyberAI, applying leading edge Artifical Intelligence and Machine Learning techniques to real world cyber security challenges. CyberAI brings together world leading academic researchers from MIT, Imperial College and Edinburgh University with four major companies: a global investment bank, a FTSE 100 retail bank, a multinational insurance company and a big four professional services firm. We are excited about the rich seam of intellectual property that should emerge from our CyberAI initiative for Crossword to commercialise globally.

CyberOwl, the spin out from Coventry University funded by Mercia Fund Management, continues to make strong progress, having been selected for and participated successfully in GCHQ's new Cyber Accelerator. In partnership with the University of Warwick, Crossword completed a Ministry of Defence funded proof of concept for blockchain-enabled smart documents and has developed a plan for further exploitation of the intellectual property emerging from that project.

With the impending introduction of GDPR (General Data Protection Regulation) early next year, our cyber risk product Rizikon, based on City, University of London research, is attracting increased interest both with distribution partners and end user companies. We have developed a version of Rizikon that is designed to enable corporates to assess and monitor the cyber security risks of their large supplier base, as this is a key weakness for many companies. Our specialist cyber security consulting business, Crossword Consulting, goes from strength to strength.

On the corporate front, we raised £145k in a placing and subscription at a 20% premium to the then prevailing share price, primarily to support the new CyberAI initiative. Following the end of the period General Sir Nick Houghton, former Chief of Defence Staff of the British Armed Forces joined Crossword as a senior adviser bringing his considerable knowledge of global security issues to the company as we start to consider international expansion. On 1 st September Crossword appointed Rob Johnson as Chief Operating Officer. Rob joined from Mercia Technologies plc, the leading AIM listed commercialisation business, where he managed the company's software and internet investments, as well as assessing new investment opportunities; with a particular focus on AI, Cyber Security and Software as a Service. Prior to his role with Mercia, Rob was a successful entrepreneur and has led five technology companies through to successful exits.

PRINCIPAL RISKS AND UNCERTAINTIES

The key risks to the Group are as follows:

· failure to develop appropriate commercial opportunities for its emerging products;

· failure to establish commercialisation partnerships with leading research universities;

· competition from existing IP transfer businesses seeking to engage in cyber security commercialisation activity; and


· inability to attract and retain experienced cyber security experts in a highly competitive market.


At present the directors are pleased with progress in these areas and consider these risks are sufficiently mitigated.

T Ilube
Director

Further information, please contact:

Tom Ilube
CEO, Crossword Cybersecurity
Tel: +44 (0) 20 8973 2350
Email: info@crosswordcybersecurity.com

NEX Corporate Advisor
Nick Michaels and Jon Isaacs, Alfred Henry Corporate Finance Limited
www.alfredhenry.com
Tel: +44 (0)207 251 3762

NEX Corporate Broker
Claire Louise Noyce - CEO, Hybridan LLP
Tel: +44 (0)203 764 2341
Email: claire.noyce@hybridan.com

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 JUNE 2017

  Note Unaudited
6 months to 30 June 2017
Audited
Year ended 31 December 2016
Unaudited
6 months to 30 June 2016
   £ £ £
        
TURNOVER   396,652                 344,736 163,999
        
Cost of sales  (452,382) (788,666) (191,176)
        
GROSS LOSS   (55,730) (443,930) (27,177)
        
Other operating income - research and development tax credits   

-
 

78,354
 

-
 

Administrative expenses
   

(485,247)
 

(585,329)
 

(376,742)
 

Share-based payments
 

 
 

(44,536)
 

-
 

-
 

Finance income - bank interest receivable

 
   

2,882
 

1,354
 

1,351

 
Finance costs - other interest payable   

(1,203)
 

(73)
 

-
        
        
NET LOSS BEFORE TAXATION   (583,834) (949,624) (402,568)
        
Tax expense  (2,133) (3,267) (1,523)
        
LOSS FOR THE PERIOD/YEAR   (585,967) (952,891) (404,091)
        
OTHER COMPREHENSIVE INCOME
Items that will not be classified to profit or loss
   

 

 

 
   
Foreign Exchange Translation Gain/(Loss)  2,726 6,205 5,812
        
TOTAL COMPREHENSIVE LOSS   (583,241) (946,686) (398,279)
        

           

EARNINGS PER SHARE 3 (£0.19) (£0.39) (£0.17)

           

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017

  Note Unaudited
Group
Audited
Group
Unaudited Group
    £ £ £
    30 June 2017 31 Dec 2016 30 June 2016

 
ASSETS     
       
NON-CURRENT ASSETS       
Property, plant and equipment  7,703 2,280 2,815
Intangible assets  624 583 325
Investment in other unlisted investment and subsidiary   

31
 

31
 

-
Total non-current assets   8,358 2,894 3,140
         
CURRENT ASSETS        
Trade and other receivables  264,745 178,154 192,500
Cash and cash equivalents  1,067,869 1,548,906 668,445
Total current assets   1,332,614 1,727,060 860,945
TOTAL ASSETS   1,340,972 1,729,954 864,085
        
        
EQUITY        
        
Attributable to the owners of the company       
Share capital  159,173 156,015 119,173
Share premium account  3,555,522 3,413,416 2,080,827
Retained earnings  (2,532,788) (1,946,821) (1,398,021)
Translation of foreign operations  5,990 3,264 2,871
Equity Reserve 44,536 - -
TOTAL EQUITY   1,232,433 1,625,874 804,850
        
        
LIABILITIES        
         
CURRENT LIABILITIES        
Trade and other payables  108,539 104,080 59,235
Total current liabilities   108,539 104,080 59,235
TOTAL LIABILITIES   108,539 104,080 59,235
        
TOTAL NET ASSETS   1,340,972 1,729,954 864,085
        
        
     

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 30 JUNE 2017

   

Unaudited
30 June
2017
Audited
31 Dec
2016
 

Unaudited
30 June
2016
  £ £ £
       
CASH FLOWS FROM OPERATING ACTIVITIES

 
     
Cash generated by operations  

(621,805)
(1,053,300)  

(564,344)
       
NET CASH OUTFLOW FROM OPERATING ACTIVITIES (621,805) (1,053,300) (564,344)
    
CASH FLOWS FROM INVESTING ACTIVITIES      
       
Purchase of property, plant and equipment (7,222) (880) (504)
Purchase of shares in other unlisted investment - (31) -
       
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (7,222) (911) (504)
       
CASH FLOWS FROM FINANCING ACTIVITIES      
Proceeds from issue of shares  

145,264
1,369,431  

-
       
NET CASH INFLOW FROM INVESTING ACTIVITIES 145,264 1,369,431 -
    
       
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS  

(483,763)
315,220  

(564,848)
     
 

FOREIGN CURRENCY TRANSLATION DIFFERENCE
 

 

2,726
6,205  

 

5,812
 

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD
 

 

1,548,906
1,227,481  

 

1,227,481
     
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD  

1,067,869
1,548,906  

668,445
     
     

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2017

1.       ACCOUNTING POLICIES

  1. The Group and its operations
     

Crossword Cybersecurity plc's condensed consolidated interim financial statements (the interim financial statements) are presented in pounds sterling (£), which is also the functional currency of the parent company.  These interim financial statements were approved for issue by the Board of Directors on 6 September 2017.

 

The financial information set out in these interim financial statements does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.  The Group's statutory financial statements for the year ended 31 December 2016 have been filed with the Registrar of Companies.  The auditor's report on those financial statements was unqualified and did not contain a statement under Section 498(2) of the Companies Act 2006.


The interim results have not been reviewed by the auditors of the Company.

 
  2. Basis of preparation of financial statements
    

These interim financial statements are for the six month period ended 30 June 2017.  They have been prepared following the recognition and measurement principles of IFRS.  They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2016.

 

These interim financial statements have been prepared on a going concern basis, under the historical cost convention.

 

These interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 31 December 2016.

 
   
3. Earnings per share

 

The calculation of earnings per share is based on the loss attributable to ordinary shareholders divided by the average number of shares in issue during the period.

 



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Source: Crossword Cybersecurity Plc via GlobeNewswire

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