Trading Update and Financing
24 October 2019 – London, UK – Crossword Cybersecurity Plc (AIM:CCS, “Crossword”, the “Company” or the “Group”), the technology commercialisation company focused solely on cyber security and risk, provides an update to trading and financing.
Trading for 2019 is broadly in line with expectations. As a result of recent changes in accounting practices relating to IFRS15 in respect of recognition of revenues from the Company’s Software as a Service (“SaaS”) contracts that have recently become clear, the level of revenue reported for the year to December 31, 2019 will be below current market expectations. However, due to these changes, there will be a corresponding increase in revenue in future years. There is no impact on cashflow. The effect on the balance sheet is to increase deferred revenue.
With an increase in SaaS contracts recently signed and anticipated, Crossword undertook a review of its revenue recognition practices. This review recommended an accounting policy change, that will impact the revenue reported in the current financial year and defer part of it to the following year. A prior year adjustment is not required.
Additionally, subject to shareholder approval, Crossword is moving forward with entering into loan agreements of £1m, having £1m committed from third parties and current shareholders and Directors, to satisfy the Company’s near to mid-term cash requirements. The funds will be made available for general working capital purposes. The loan terms include interest at a fixed rate of 12 per cent per annum, an equity element and a term of 3 years.
Tom Ilube, Chief Executive Officer, commented:
“Underlying current trading is still broadly in line with expectations and the outlook remains strong with the pipeline having doubled since the beginning of the year, as we reported recently. However, as a result of accounting policy changes we will be reporting revenues for the current year below market expectations. In addition, the Board is pleased to confirm our plans to raise the required £1m of working capital in the most efficient way as proposed loans. I am encouraged by the level of support we have received for the proposed fundraising, the necessity of which was communicated to investors in our interim results published on September 23. We look forward to providing further updates in due course.”
Contacts
Crossword Cybersecurity plc – Tel: +44 (0) 20 3953 846
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
For media enquiries contact:
Lorena Duke, GingerPR
lorena@gingerpr.co.uk, 01932 485 300
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.