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 1st 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.
Further information, please contact:
CEO, Crossword Cybersecurity
Tel: +44 (0) 20 8973 2350
NEX Corporate Advisor
Nick Michaels and Jon Isaacs, Alfred Henry Corporate Finance Limited
Tel: +44 (0)207 251 3762
NEX Corporate Broker
Claire Louise Noyce – CEO, Hybridan LLP
Tel: +44 (0)203 764 2341
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED 30 JUNE 2017
6 months to 30 June 2017
Year ended 31 December 2016
6 months to 30 June 2016
|Cost of sales||(452,382)||(788,666)||(191,176)|
|Other operating income – research and development tax credits||–||78,354||–|
|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)|
|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)
|TOTAL COMPREHENSIVE LOSS||(583,241)||(946,686)||(398,279)|
|EARNINGS PER SHARE||3||(GBP0.19)||(GBP0.39)||(GBP0.17)|
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017
|Note|| Unaudited Group
30 June 2017
| Audited Group
31 Dec 2016
30 June 2016
plant and equipment
in other unlisted investment and subsidiary
|Total non-current assets||8,358||2,894||3,140|
and other receivables
and cash equivalents
|Total current assets||1,332,614||1,727,060||860,945|
to the owners of the company
of foreign operations
and other payables
|Total current 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
|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
| Purchase of property, plant
| Purchase of shares in other
|NET CASH OUTFLOW FROM INVESTING ACTIVITIES||(7,222)||(911)||(504)|
| CASH FLOWS FROM FINANCING
|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
|FOREIGN CURRENCY TRANSLATION DIFFERENCE||2,726||6,205||5,812|
|CASH AND CASH EQUIVALENTS AT
THE BEGINNING OF THE PERIOD
|CASH AND CASH EQUIVALENTS AT
THE END OF THE PERIOD
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.