Crossword Cybersecurity Plc : Final Results

Press Release

27 April 2017

Crossword Cybersecurity plc

("Crossword '' or the ''Company'')

Final Results
                                      
Crossword Cybersecurity Plc (NEX: CCS), the technology commercialisation company focusing exclusively on the cyber security sector, today announces its Final Results for the year ended 31 December 2016.

Highlights

• Generated £345k of revenue in 2016 vs £21k in 2015 as we transition from pure R&D to commercial activity, whilst continuing to invest significantly in generating IP and building the business
• Created CyberOwl Limited, an early warning and threat intelligence spin out from Coventry University attracting over £650k of seed funding led by Mercia Fund Management. CyberOwl was selected to join GCHQ's new Cyber Accelerator programme
• Won a Ministry of Defence contract for a proof of concept for blockchain enabled smart documents, in partnership with the University of Warwick. Crossword owns the resulting IP and will look to exploit it commercially
• Secured IOMart, a leading Cloud provider, to co-operate on taking Nixer, the machine learning DDoS platform to market, following its launch to design partners in June
• Launched Crossword Consulting, led by a former KPMG executive and staffed by ex-defence, national security and cyber industry professionals, working with key universities
• Led a delegation of leading UK cyber security professors and researchers to meet their peers in the USA at Harvard, MIT, Stanford and Berkeley, sponsored by the UK Government's Department for Culture, Media and Sport (DCMS)
• Appointed Sir Richard Dearlove KCMG OBE, former Chief of MI6, as non-executive Chairman
• Appointed Hybridan LLP as Corporate Broker and in November raised GBP1.4 m in a successful placing and subscription

Commenting on the final results, Tom Ilube, CEO of Crossword Cybersecurity PLC, said "We are delighted to report great results showing evidence of the transition from the pure R&D phase to the start of revenue generation, as we take our university-driven cyber security products and services to market. We have established a range of commercial partnerships for our first product, Rizikon, and our new consultancy team is rapidly building up momentum. Our second product, Nixer is in live trials with our key design partner and we are looking forward to marketing Nixer actively in 2017."

- Ends -

Further information, please contact:

Tom Ilube- CEO, Crossword Cybersecurity 
Tel: [phone] 
Email: [e-mail] 
 
NEX Corporate Advisor 
Nick Michaels and Jon Isaacs, Alfred Henry Corporate Finance Limited 
www.alfredhenry.com 
Tel: [phone] 
 
NEX Corporate Broker 
Claire Louise Noyce - CEO, Hybridan LLP 
Tel: [phone] 
Email: [e-mail]

About Crossword Cybersecurity

Crossword is a technology transfer company specialising in cyber security. Crossword works with universities who undertake advanced cyber security research in order to take their research through productisation to market. 

BUSINESS REVIEW

I am pleased to report another strong year of great progress in 2016, as we scale up Crossword Cybersecurity PLC's technology commercialisation business, focused exclusively on the cyber security sector.

There was no let up in 2016 to the challenge that cyber security issues pose to companies, governments and individuals. HM Government's Cyber Security Breaches Survey 2016, launched in May, revealed that 65% of large businesses experienced a cyber breach or attack in the past year. Tesco Bank was the victim of a cyberattack with thousands of customers losing money from their accounts, leaving the bank at risk of a substantial fine from the Financial Conduct Authority (FCA). One of the largest denial of service attacks in the USA, the so called Dyn Denial of Service (DDoS) attack using Internet of things devices, disrupted many of the world's largest websites. Yahoo revealed that it had been a victim with over 1 billion accounts compromised in the biggest data breach in history.

Crossword works with universities to commercialise technology based on their extensive cyber research and in 2016 we made great strides in building those relationships and bringing our products and services to market.

Crossword established a relationship with the University of Surrey to explore commercialising their cyber security research, including patent pending research into multifactor passwords. We also established a new relationship with the University of South Wales, a leader in cyber forensics with a state of the art forensics lab. This brings the number of relationships with leading cyber security research universities to six; Bristol, Warwick, Coventry, Surrey, South Wales and City, University of London.

Crossword announced the creation of CyberOwl Limited, a spin out from Coventry University with Mercia Fund Management providing the seed funding. CyberOwl is commercialising Coventry's patent pending research into early warning of cyber attacks in extremely large scale environments. CyberOwl subsequently raised a further £510,000 and after a rigorous process was one of just seven cyber security companies UK wide selected to join GCHQ's new Cyber Accelerator.

In partnership with the University of Warwick, Crossword won a Ministry of Defence contract for a proof of concept for blockchain enabled smart documents. The project is extremely interesting and we are exploring next steps to commercialise the output.

The UK Government's Department for Culture Media & Sport (DCMS) commissioned Crossword to lead a delegation of leading UK cyber security professors to meet counterparts in the USA, at Harvard, MIT, Stanford and UC Berkeley. Crossword published a report on this major cyber commercialisation mission and distributed it to over 250 recipients across the university and cyber security sector.

Our cyber risk product, Rizikon, based on City University of London research, is making good progress as we take it to market, with several professional firms signed up as partners and revenue starting to come through. The introduction of the General Data Protection Regulation with its stiff penalties for breaches is driving Board level interest in cyber risk assessment.

Crossword's second product, Nixer is a next generation Denial of Service (DDoS) platform using machine learning (ML) techniques emerging from university research. We have established a relationship with IOMart, the cloud provider, to co-operate on developing this machine learning based platform which will be launched soon. We launched Crossword Consulting, led by a former KPMG executive and staffed by ex-national security, military and cyber industry professionals in partnership with cybersecurity university experts. It is revenue generating and getting good traction with a range of clients.

On the corporate front, we were delighted to announce former Government Chief Scientific Adviser for National Security, Professor Nick Jennings CB FREng, as a senior adviser. We also appointed Hybridan LLP as our Corporate Broker and raised £1.4m in a placing and subscription.

On 1st September Crossword appointed Sir Richard Dearlove KCMG OBE as non-executive Chairman. He succeeded Tom Ilube, who continues in his role as CEO. Sir Richard was Chief of the Secret Intelligence Service (MI6). He retired from the Service in 2004. He is currently Chair of Trustees of the University of London and was previously Master of Pembroke College, Cambridge. Sir Richard is Chairman of Ascot Underwriting at Lloyd's of London and a Director of New York Stock Exchange listed Kosmos Energy.

PRINCIPAL RISKS AND UNCERTAINTIES

The key risks to the Group are as follows:

• failure to develop an appropriate commercial application for its developing 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.

FINANCIAL AND NON FINANCIAL KEY PERFORMANCE INDICATORS

The directors consider the key financial performance indicator to be cash 'burn rate'. At present they consider that this is within reasonable parameters and will continue to monitor this is the future.

At this stage in its development, the directors do not consider that there are any relevant non-financial key performance indicators.

T Ilube
Director

Consolidated Statement of Comprehensive Income for the year ended 31 December 2016

		Year ended  31 December 2016	Year ended  31 December 2015
		£	£
REVENUE		344,736	20,613
Cost of sales		(788,666)	(247,630)
GROSS LOSS		(443,930)	(227,017)
Other operating income - research and development tax credits		78,354	-
Administrative expenses		(585,329)	(530,414)
Finance income - bank interest receivable		1,354	2,181
Finance costs - other interest payable		(73)	-
NET LOSS BEFORE TAXATION		(949,624)	(755,250)
Tax expense		(3,267)	-
LOSS FOR THE YEAR		(952,891)	(755,250)
OTHER COMPREHENSIVE INCOME
Items that will not be classified to profit or loss:
Foreign Exchange Translation Gain (Loss)		6,205	(1,659)
TOTAL COMPREHENSIVE LOSS		(946,686)	(756,909)
EARNINGS PER SHARE		(£0.39)	(£0.38)

Consolidated Statement of Financial position at 31 December 2016

		Group	Group
		£	£
		2016	2015
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment		2,280	3,635
Intangible assets		583	816
Investments in other unlisted investment and  subsidiary		31	-
Total non-current assets		2,894	4,451
CURRENT ASSETS
Trade and other receivables		178,154	43,464
Cash and cash equivalents		1,548,906	1,227,481
Total current assets		1,727,060	1,270,945
TOTAL ASSETS		1,729,954	1,275,396
EQUITY
Attributable to the owners of the company
Share capital		156,015	119,173
Share premium account		3,413,416	2,080,827
Retained earnings		(1,946,821)	(993,930)
Translation of foreign operations		3,264	(2,941)
Total equity		1,625,874	1,203,129
LIABILITIES
CURRENT LIABILITIES
Trade and other payables		104,080	72,267
Total current liabilities		104,080	72,267
TOTAL LIABILITIES		104,080	72,267
TOTAL EQUITY AND LIABILITIES		1,729,954	1,275,396

Consolidated Cash Flow Statement for the year ended 31 December 2016

	2016	2015
	£	£
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations	(1,053,300)	(715,170)
NET CASH OUTFLOW FROM OPERATING ACTIVITIES	(1,053,300)	(715,170)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment	(880)	(853)
Purchase of shares in other unlisted investment	(31)	-
NET CASH OUTFLOW FROM INVESTING ACTIVITIES	(911)	(853)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares	1,369,431	1,500,000
NET CASH INFLOW FROM INVESTING ACTIVITIES	1,369,431	1,500,000
NET INCREASE IN CASH AND CASH EQUIVALENTS	315,220	783,977
FOREIGN CURRENCY TRANSLATION DIFFERENCE	6,205	(1,659)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD	1,227,481	445,163
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	1,548,906	1,227,481

NOTES TO PRELIMINARY RESULTS FOR THE PERIOD ENDED 30 APRIL 2015

1.   The financial information set out above does not constitute statutory accounts for the purpose of Section 434 of the Companies Act 2006.   The financial information has been extracted from the statutory accounts of Crossword Cybersecurity Plc and is presented using the same accounting policies, which have not yet been filed with the Registrar of companies, but on which the auditors gave an unqualified report on 27^th April 2017.

The preliminary announcement of the results for the year ended 31 December 2016 was approved by the board of directors on 26th April 2017.

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Source: Crossword Cybersecurity Plc via Globenewswire