REG - Corero Network Sec. - Unaudited H1 2022 Interim Results
13/09/2022 07:00
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RNS Number : 1811Z Corero Network Security PLC 13 September 2022
13 September 2022
Corero Network Security plc (AIM: CNS)
("Corero," the "Company" or the "Group")
Unaudited H1 2022 Interim Results
Record H1 performance underpinned by strong ARR and new business growth
Corero Network Security plc (AIM: CNS), a leading provider of real-time, high
performance, automatic Distributed Denial of Service ("DDoS") cyber defense
solutions, announces its unaudited interim results for the six months ended 30
June 2022 ("H1 2022").
Financial summary:
· Record H1 2022 order intake(1), increasing by 22% to $10.9
million (H1 2021: $8.9 million)
· Record H1 2022 Group revenue up 6% to $8.8 million (H1 2021: $8.3
million)
· Record Annualised Recurring Revenues(2) ("ARR") up 21% to $13.6
million (H1 2021: $11.2 million)
· Continued strong gross margin of 88% (H1 2021: 84%)
· Record EBITDA(3) of $0.9 million (H1 2021: EBITDA of $0.1
million)
· Record Adjusted EBITDA(4) of $0.3 million (H1 2021: Adjusted
EBITDA of $0.0 million)
· Net cash at 30 June 2022 of $5.8 million (30 June 2021: $5.1
million)
(1)Defined as orders received from customers in the period.
(2) Defined as the normalised annualised recurring revenue and includes
recurring revenue from contract values of annual support, software
subscription and from DDoS Protection-as-a-Service contracts.
( 3) Defined as Earnings before Interest, Taxation, Depreciation and
Amortisation.
(4) Defined as Earnings before Interest, Taxation, Depreciation (including
DDPaaS assets' depreciation which is charged to cost of sales) and
Amortisation, before share-based payments, and less unrealised foreign
exchange differences on an intercompany loan, and PPPL forgiveness - Fully
adjusted basis.
Operational highlights:
· Strong market traction including demand from direct customers,
channel partners and strategic alliances; and from the Company's broader new
business initiatives
· 21 new customer wins secured in the period (H1 2021: 20 new
customer wins), eight of which originated through Corero's strategic
partnership with Juniper Networks Inc. ("Juniper") (H1 2021: eight new Juniper
customers)
· Corero has deployed its unique solutions in 50 countries across
six continents and continues to invest to further expand its global customer
reach and technological innovation
· Planned Sales and Marketing investment to drive revenue growth
delivering tangible results:
o Key hires include Chief Revenue Officer and VP Sales EMEA & APAC
o Additional reseller relationships in more geographies
o Recent customer wins which broaden the Company's international footprint
with the entry into a number of new verticals
· Further strengthened the focus on the Group's Strategic Alliances
& Channels activity (including Juniper and GTT):
o Hired an experienced VP Strategic Alliances & Channels executive to
manage and build our channel and alliance network
o Teamed-up with first class and best of breed third parties to create
content and awareness for channel business development
o Implementing a number of business initiatives to grow business with GTT
and Juniper
Outlook:
· New business pipeline across H2 2022 remains strong with further
momentum building beyond current financial year
· Demand for DDoS mitigation continues to drive record levels of
activity and pipeline and ongoing new business momentum, as reflected in both
profit and ARR growth
· The Board remains confident in Corero meeting expectations for FY
2022 revenue and EBITDA
Lionel Chmilewsky, Chief Executive Officer of Corero, commented:
"Corero has maintained its strong sales momentum in H1 2022, building on the
record performance in the prior year. Having delivered progress across all our
key performance indicators in the period, we are now showing clear signs that
our enhanced and customer-centric strategy, alongside expanding our sales and
marketing efforts, is delivering further tangible results.
"We will continue to invest in Sales & Marketing, and R&D and will
further develop our strong go-to-market strategy to further drive sales
momentum, and we look forward to delivering further progress in the current
financial year and beyond."
This announcement contains inside information for the purposes of article 7 of
the Market Abuse Regulation (EU) 596/2014 as amended by regulation 11 of the
Market Abuse (Amendment) (EU Exit) Regulations 2019/310. With the publication
of this announcement, this information is now considered to be in the public
domain.
Enquiries:
Corero Network Security plc
Lionel Chmilewsky, Chief Executive Officer
Andrew Miller, Interim Chief Financial Officer
Canaccord Genuity Limited Tel: +44(0) 20 7523 8000
(Nominated Adviser and Broker)
Simon Bridges / Andrew Potts / Harry Rees
Vigo Consulting Tel: +44(0) 20 7390 0230
Jeremy Garcia / Kendall Hill
corero@vigoconsulting.com (mailto:corero@vigoconsulting.com)
About Corero Network Security
Corero Network Security plc is a global leader in real-time, high-performance,
automatic DDoS cyber defense solutions. Both Service and Hosting providers,
alongside digital enterprises across the globe rely on Corero's award winning
cybersecurity technology to eliminate the threat of Distributed Denial of
Service (DDoS) to their digital environment through automatic attack detection
and mitigation, coupled with network visibility, analytics and reporting.
Corero's industry leading SmartWall and SecureWatch technology provides
scalable protection capabilities against external DDoS attackers and internal
DDoS botnets in the most complex edge and subscriber environments, while
enabling a more cost-effective economic model than previously available.
Corero's key operational centres are located in Marlborough, Massachusetts,
USA and Edinburgh, UK, with the Company's headquarters in London, UK. The
Company is listed on the London Stock Exchange's AIM market under the ticker
CNS. For more information, visit www.corero.com (http://www.corero.com/)
Chief Executive's Interim review
Introduction
Corero delivered another strong six months of trading in H1 2022, underpinned
by our clearly defined growth strategy, our go-to-market actions and the
ongoing protection our solutions provide to customers facing DDoS cyber
attacks.
The Group's revenues in the first half of 2022 were $8.8 million (H1 2021:
$8.3 million), an increase of 6%. Adjusting for the revenue backlog
(comprising orders with H2 2022 customer delivery requests, as opposed to any
supply fulfilment delays), the revenue increase would have been 11% on a
like-for-like basis. This performance was further highlighted by a record 22%
increase in order intake of $10.9 million in the period (H1 2021: $8.9
million).
Additionally, Corero continues to experience high levels of customer retention
and renewals, and therefore very low levels of customer churn. Annualised
recurring revenues (ARR) as at 1 July 2021 increased to $13.6 million, an
increase of 21% (H1 2021: $11.2 million), driven by growth in DDoS
Protection-as-a-Service ("DDPaaS") and software subscription orders. ARR
remains a key performance indicator for the Group, providing visibility over
future revenue.
EBITDA profit for the six months ended 30 June 2022 was $0.9 million (H1 2021:
$0.1 million), further highlighting the financial progress the Group has made
over the last 24 months.
With the day-to-day impact of the Covid-19 pandemic having now broadly
dissipated, the Company, and indeed the cybersecurity market, continues to
adjust to a new global norm, with individuals and corporations adopting
flexible remote working practices. Throughout this period and in the new
normal, we have observed an increase in DDoS attacks, and we continue to
support our customers with one of the broadest and diverse DDoS defence
on-prem and hybrid solution portfolios in the market.
Strategic update
The Group's six core strategic drivers remain ever-present and have been at
the heart of the Group's recent operational and financial performance.
Key progress in the period includes:
· Increasing our international presence: recent customer wins in H1
2022 included three new countries (Norway, Sweden and Latvia) to reach a total
of 50 countries.
· Leveraging existing and adding new strategic partnerships: The
Group is working to implement more business and product initiatives, including
with Juniper and GTT. These new initiatives are focused on increasing sales
and marketing collaboration alongside a widening of our product solution
reach. Additional investment has been made to focus on the management of
existing and development of new strategic partners with the hire of an
experienced VP Strategic Alliances & Channels executive.
· Intensifying our global, tier one, and major accounts
relationships: customer wins have included significant global enterprises
across a number of verticals such as fibre broadband service providers,
utilities and research and educational networks. In 2022, existing customers
have also continued to expand their use of Corero DDoS solutions to protect
their growing business and infrastructure and their own customer bases.
· Augmenting our services portfolio: we continue to explore and
provide service initiatives that enhance the protection and network security
visibility for our customers.
· Amplifying our demand generation programmes: we have created
targeted content at each stage of the buying cycle, and within the key
segments we serve. This includes increasing advertising, targeted and
sector-specific email campaigns, customer database intelligence and expansion,
and virtual speaking engagements with partners, amongst many other
initiatives.
· Continuing to increase our technological innovation leadership:
we have further strengthened our portfolio of SmartWall products with major
software releases, including improved protection against emerging DDoS threats
such as so-called carpet bomb attacks and enhanced analytics for DDoS
Protection-as-a-Service customers.
Total addressable market and market drivers
Cybersecurity is a high-growth market and the segment for DDoS protection and
mitigation is forecast by MarketsandMarkets to grow from $3.4 billion in 2021
to $6.8 billion in 2026 (a compound annual growth rate ("CAGR") of 15.1% over
the forecast period). The drivers of this growth include a rise in
multi-vector attacks, availability of DDoS-for-hire services, the impact of
growth in IoT devices, the roll-out of 5G services, and growing demand for
hybrid DDoS protection and mitigation services and solutions.
In terms of market dynamics, the competition between large Cloud-based DDoS
Protection providers is increasing whilst the landscape for on-premises DDoS
solution providers is relatively stable. In general, the two solutions remain
complementary.
The key market drivers positively impacting Corero include:
· Continued increase in the level of malicious DDoS activity
worldwide; the H1 2022 post-pandemic attack levels are reported as
consistently higher than both pre-pandemic and in-pandemic statistics. In H1
2022 Corero mitigated DDoS 339,000 attacks, an increase of 18% versus H1 2021.
· The adoption of 100G connectivity is accelerating, with many
providers, including existing customers and prospects, increasing the roll out
100G and 400G networking which drives demand for increased DDoS protection
capacity.
Increasing competitive advantage
As DDoS attacks continue to grow in size, frequency and sophistication, they
reinforce the need for scalable, accurate and automated DDoS mitigation
solutions. Our mission to protect the increasing importance of our customers'
internet-facing networks and services drives our product roadmap. Newer
network topologies, including Cloud and Edge, offer greenfield opportunities
for innovative DDoS protection techniques. Corero has established itself as a
pioneer in bringing real-time DDoS detection and mitigation into the Terabit
era. Insights gained from observing millions of DDoS attacks via our
SecureWatch service platform not only inform our customers but also serve to
provide unique insights into what Corero should build next, to stay at the
forefront of our industry.
Supporting multiple deployment topologies, SmartWall utilises an always-on
DDoS mitigation architecture to automatically, and surgically, remove just the
DDoS attack traffic. Corero continues to invest in its market leading
solutions through its research and development efforts, and its engineering
and customer service teams.
Corero has delivered major software releases in the period which have improved
our competitive positioning including:
· New DDoS mitigation techniques to combat the increasing use of
"carpet bomb" attacks, and
· New DDoS protection service enhancements for self-serve client
visibility, analytics and reporting.
In H1 2022, 98% of DDoS attacks were mitigated automatically, without further
intervention, by Corero.
Financial summary
The Group reported revenues of $8.8 million in the six months ended 30 June
2022 (H1 2021: $8.3 million), with improved gross margins of 88% in H1 2022
due to mix effects (H1 2021: 84%).
Total operating expenses were $7.7 million (H1 2021: $8.4 million), with the
following components:
· Adjusted operating expenses, being those excluding depreciation
and amortisation of intangible assets, decreased to $6.7 million (H1 2021:
$7.2 million), including the benefits of foreign exchange gains of $1.4
million given the Pound Sterling falling in value against the US dollar in H1
2022, comprising $0.5 million realised (trading) and $0.9 million unrealised
(intercompany loan) exchange gains (H1 2021: total exchange loss of $0.2
million). These exchange gains were offset by the $1.1 million planned
investment in the scaling of the Group, particularly in Sales and Marketing
($0.7 million),
· Depreciation and amortisation of intangible assets of $1.0
million (H1 2021: $1.1 million), and
· Capitalised R&D costs of $0.8 million (H1 2021: $0.9
million).
In relation to other income statement movements, there was no repeat of the
one-off benefit in the comparative H1 2021 period of the $0.6 million credit
from the forgiveness of the PPP loan recognised to other income.
EBITDA for H1 2022 was $0.9 million (H1 2021: $0.1 million) and Adjusted
EBITDA, adjusted for items as set out in Note 6, was $0.3 million (H1 2021:
$0.0 million).
Loss before and after taxation was further reduced to $0.3 million (H1 2021:
loss of $1.2 million). The reported loss per share was 0.01 cents (H1 2021:
loss per share 0.3 cents).
Gross cash at bank as at 30 June 2022 was $7.5 million (30 June 2021: $8.8
million; 31 Dec 2021: $11.2 million) and, following scheduled repayment of
debt, borrowings were $1.7 million (30 June 2021: $3.7 million; 31 Dec 2021:
$2.8 million). Net cash at 30 June 2022 was $5.8 million (30 June 2021: $5.1
million; 31 Dec 2021: $8.4 million).
Net cash from operating activities before working capital in the first six
months was a net improvement of $1.3 million (H1 2021: net reduction of $0.1
million). There was a decrease in working capital in H1 2022 of $2.5 million
(H1 2021: working capital decrease of $1.8 million), following an increase in
trade and other receivables flow and a reduced trade and other payables
movement. The trade and other receivables movement was driven by foreign
exchange, and the trade and other payables movement reflected a reduction of
deferred income (due to seasonality of invoicing) and foreign exchange. Net
cash used in investing activities included similar sustained investment in
R&D of $0.8 million (H1 2021: $0.7 million spend), with capex investment
also of a similar magnitude at $0.3 million (H1 2021: $0.2 million).
H1 2021 included $1.9 million of net proceeds from borrowings, whereas H1 2022
included repayments of borrowings of $0.9 million.
Overall, and largely attributable to the changes in cash flows from financing
activities, cash and cash equivalents for H1 2022 decreased by $3.3 million
(H1 2021: decrease of $1.3 million).
Corero's enhanced sales and go-to-market strategy
In H1 2022 Corero made significant planned investment in the sales execution
and enhancing the go-to-market strategy as part of the continued strategy to
scale the business in order to deliver strong growth in H2 2022 and beyond.
· Hired an experienced Chief Revenue Officer and a VP Sales EMEA
& APAC.
· Under the leadership of the Chief Revenue Officer, the sales team
has expanded by a third since 2021 augmenting the existing team with new
talent.
· Hired an experienced VP Strategic Alliances & Channels
executive to strengthen relationships with partners and expand the channel and
alliance network.
Corero is already seeing returns from this investment which we are confident
will position the business to deliver strong growth in H2 2022 and the future.
In H1 2022 we have:
· Added 21 new customers (H1 2021: 20 new customers), including
eight through our global resale partnership with Juniper (H1 2021: eight new
Juniper customers). Corero was particularly successful in the fibre
broadband sector with the addition of several major service providers as new
customers in Europe and in the US.
· Continued to grow with our customers as they grow their networks
and capabilities. For example, since the half year, Corero has secured
incremental orders of over $1.9 million from a global market-leading SaaS
provider.
· Implemented a number of new initiatives designed to further
deepen our strategic partnerships.
· Invested in new demand generation programmes and marketing
initiatives.
Corero enters H2 2022 with growth in ARR, a revenue backlog of $0.6 million
(H1 2021: $0.2 million) and a strong and growing pipeline.
Outlook
The global DDoS mitigation market remains strong, which coupled with Corero's
technological superiority, cost-effectiveness, and efficacy, continues to
underpin customer traction. Our expectation is that the strong cybersecurity
market dynamics and demand for Corero's solutions will remain robust despite
wider economic conditions and cycles given the critical nature of the products
and services to protecting businesses.
Our focus on sales and marketing and defined go-to-market strategy, as well as
the further development of sales channel partners, will further support our
strategic ambitions to grow our customer base.
We expect that H2 2022 will, consistent with seasonality patterns of business
in previous years, display characteristic significant greater weighting of
business activity towards the end of the year.
Based on our record H1 2022 performance, growth in ARR and order intake and
new business pipeline, we remain confident that trading for the FY 2022 to be
in-line with market expectations and believe Corero is well-placed for further
growth in the medium and long term.
Lionel Chmilewsky
Chief Executive Officer
12 September 2022
Condensed Consolidated Income Statement
for the six months ended 30 June 2022
Unaudited six months ended 30 June Unaudited six months ended 30 June Audited year ended 31 December
2022 2021 2021
Continuing operations $'000 $'000 $'000
Revenue 8,820 8,298 20,895
Cost of sales (1,042) (1,364) (3,112)
Gross profit 7,778 6,934 17,783
Operating expenses (7,740) (8,356) (16,120)
Consisting of:
Operating expenses before depreciation and amortisation (6,697) (7,234) (13,928)
Depreciation and amortisation of intangible assets (1,043) (1,122) (2,192)
Profit/(loss) from operations 38 (1,422) 1,663
Share-based payments (202) (265) (522)
Operating (loss)/profit (164) (1,687) 1,141
Other income - 637 637
Finance income - 1 1
Finance costs (161) (182) (406)
(Loss)/profit before taxation (325) (1,231) 1,373
Taxation credit - - 149
(Loss)/profit after taxation (325) (1,231) 1,522
(Loss)/profit after taxation attributable to equity owners of the parent (325) (1,231) 1,522
Basic and diluted earnings/(loss) per share
Cents Cents Cents
Basic (loss)/earnings per share (0.01) (0.3) 0.3
Diluted (loss)/earnings per share (0.01) (0.3) 0.3
EBITDA(1)
879 72 3,970
Adjusted EBITDA(1) - adjusted for DDPaaS depreciation, share based payments, 345 (28)
unrealised foreign exchange differences on intercompany loan and Paycheck
Protection Program Loan ("PPPL") forgiveness
4,150
( 1) See note 6 for definitions and reconciliation.
Condensed Consolidated Statement of Total Comprehensive Income
for the six months ended 30 June 2022
Unaudited six months ended 30 June Unaudited six months ended 30 June Audited year ended 31 December
2022 2021 2021
$'000 $'000 $'000
(Loss)/profit for the period (325) (1,231) 1,522
Other comprehensive (expense)/income:
Items reclassified subsequently to profit or loss upon derecognition:
Foreign exchange differences (1,093) 91 (122)
Other comprehensive (expense)/income for the period net of taxation (1,093) 91 (122)
attributable to the equity owners of the parent
Total comprehensive (expense)/income for the period attributable to the equity (1,418) (1,140) 1,400
owners of the parent
Condensed Consolidated Statement of Financial Position
as at 30 June 2022
Unaudited Unaudited Audited
as at 30 as at 30 as at 31 December
June June
2022 2021 2021
$'000 $'000 $'000
Assets
Non-current assets
Goodwill 8,991 8,991 8,991
Acquired intangible assets 3 7 4
Capitalised development expenditure 4,429 4,640 4,528
Property, plant and equipment - owned assets 674 1,015 796
Leased right of use assets 104 186 145
Long term trade and other receivables 907 833 859
15,108 15,672 15,323
Current assets
Inventories 220 79 57
Trade and other receivables 3,087 3,193 3,206
Cash and cash equivalents 7,492 8,830 11,201
10,799 12,102 14,464
Total assets 25,907 27,774 29,787
Liabilities
Current Liabilities
Trade and other payables (3,483) (3,428) (4,068)
Lease liabilities (99) (88) (94)
Deferred income (4,271) (4,163) (4,677)
Borrowings (971) (1,839) (1,421)
(8,824) (9,518) (10,260)
Net current assets 1,975 2,584 4,204
Non-current liabilities
Trade and other payables (151) (326) (143)
Lease liabilities (27) (126) (78)
Deferred income (1,590) (2,869) (2,147)
Borrowings (728) (1,929) (1,356)
(2,496) (5,250) (3,724)
Net assets 14,587 13,006 15,803
Capital and reserves attributable to the equity owners of the parent
Share capital 6,914 6,914 6,914
Share premium 82,122 82,122 82,122
Capital redemption reserve 7,051 7,051 7,051
Share options reserve 1,692 1,233 1,490
Foreign exchange translation reserve (2,599) (1,293) (1,506)
Accumulated profit and loss reserve (80,593) (83,021) (80,268)
Total shareholders' equity 14,587 13,006 15,803
Consolidated Interim Statement of Cash Flows
for the six month period ended 30 June 2022
Unaudited six months ended 30 June Unaudited six months ended 30 June Audited year ended 31 December
2022 2021 2021
Operating activities $'000 $'000 $'000
(Loss)/profit before taxation for the period (325) (1,231) 1,373
Adjustments for movements:
Amortisation of acquired intangible assets 1 2 5
Amortisation of capitalised development expenditure 940 944 1,872
Depreciation - owned assets 252 307 604
Depreciation - leased assets 41 51 93
Finance income - (1) (1)
Finance expense 155 172 388
Finance lease interest costs 6 10 18
Share based payments expense 202 265 522
PPPL forgiveness - (637) (637)
Cash generated from/(used in) in operating activities before movement in 1,272 (118) 4,237
working capital
Movement in working capital:
(Increase)/decrease in inventories and sales evaluation assets (74) 32 175
(Increase)/decrease in trade and other receivables (1,258) 533 223
Decrease in trade and other payables (1,142) (2,332) (1,999)
Net movement in working capital (2,474) (1,767) (1,601)
Cash (used in)/generated from operating activities (1,202) (1,885) 2,636
Taxation received - - 149
Net cash (used in)/generated from operating activities (1,202) (1,885) 2,785
Cash flows from investing activities
Investment in development expenditure (841) (938) (1,754)
Purchase of property, plant and equipment (257) (234) (421)
Net cash used in investing activities (1,098) (1,172) (2,175)
Cash flows from financing activities
Net proceeds from borrowings (after costs) - 2,683 2,683
Finance income - 1 1
Lease liability payments (51) (48) (103)
Finance expense (89) (109) (238)
Repayments of borrowings (880) (759) (1,738)
Net cash (used in)/generated from financing activities (1,020) 1,768 605
(Decrease)/increase in cash and cash equivalents (3,320) (1,289) 1,215
Effects of exchange rates on cash and cash equivalents (389) (21) (154)
Cash and cash equivalents at 1 January 11,201 10,140 10,140
Cash and cash equivalents at balance sheet dates 7,492 8,830 11,201
Consolidated Interim Statement of Changes in Equity
for the six month period ended 30 June 2022
Share capital Share premium Capital redemption reserve Share options reserve Foreign exchange translation reserve Accumulated profit and loss reserve Total attributable to equity owners of the parent
$'000 $'000 $'000 $'000 $'000 $'000 $'000
1 January 2021 6,914 82,122 7,051 968 (1,384) (81,790) 13,881
Loss for the period - - - - - (1,231) (1,231)
Other comprehensive income - - - - 91 - 91
Total comprehensive expense for the period - - - - 91 (1,231) (1,140)
Contributions by and distributions to owners
Share based payments - - - 265 - - 265
Total contributions by and distributions to owners - - - 265 - - 265
30 June 2021 6,914 82,122 7,051 1,233 (1,293) (83,021) 13,006
Profit for the period - - - - - 2,753 2,753
Other comprehensive expense - - - - (213) - (213)
Total comprehensive income for the period - - - - (213) 2,753 2,540
Contributions by and distributions to owners
Share based payments - - - 257 - - 257
Total contributions by and distributions to owners - - - 257 - - 257
31 December 2021 and 1 January 2022 6,914 82,122 7,051 1,490 (1,506) (80,268) 15,803
Loss for the period - - - - - (325) (325)
Other comprehensive expense - - - - (1,093) - (1,093)
Total comprehensive expense for the period - - - - (1,093) (325) (1,418)
Contributions by and distributions to owners
Share based payments - - - 202 - - 202
Total contributions by and distributions to owners - - - 202 - - 202
30 June 2022 6,914 82,122 7,051 1,692 (2,599) (80,593) 14,587
Notes to the interim financial statements
1. General information and basis of preparation
Corero Network Security plc (the "Company") is a company domiciled in England.
The condensed consolidated interim financial statements of the Company for the
six months ended 30 June 2022 comprise the Company and its subsidiaries
(together referred to as the "Group").
These condensed interim consolidated financial statements have been prepared
in accordance with UK-adopted IAS 34,"Interim Financial Reporting". They do
not include all disclosures that would otherwise be required in a complete set
of financial statements and should be read in conjunction with the Annual
Report and Accounts for the year ended 31 December 2021 ("2021 Annual Report
and Accounts"). The financial information for the half years ended 30 June
2022 and 30 June 2021 do not constitute statutory accounts within the meaning
of Section 434(3) of the Companies Act 2006 and have neither been audited nor
reviewed by the Group Auditor.
The annual financial statements of Corero Network Security plc are prepared in
accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006. The comparative financial information
for the year ended 31 December 2021 included within this report does not
constitute the full statutory accounts for that period. The statutory Annual
Report and Financial Statements for 2021 have been filed with the Registrar of
Companies. The Independent Auditors' Report on the Annual Report and Accounts
for 2021 was unqualified and did not contain a statement under 498(2) or
498(3) of the Companies Act 2006.
There have been no related party transactions or changes in related party
transactions described in the latest Annual Report and Accounts that could
have a material effect on the financial position or performance of the Group
in the first six months of the financial year.
These consolidated interim financial statements were approved by the Board on
12 September 2022 and approved for issue on 13 September 2022.
A copy of this Interim Report can be viewed on the company's website:
www.corero.com (http://www.corero.com) .
2. Significant accounting policies
The basis of preparation and accounting policies used in preparation of these
interim financial statements have been prepared in accordance with the same
accounting policies set out in the 2021 Annual Report and Accounts.
3. Segment reporting and revenue
The Group is managed according to one business unit, Corero Network Security,
which makes up the Group's reportable operating segment. This business unit
forms the basis on which the Group reports its primary segment information to
the Board, which management consider to be the Chief Operating Decision maker
for the purposes of IFRS 8 Operating Segments. Consequently, there are no
separable 'other segmental information' not otherwise showed in these
Condensed Consolidated Financial statements.
The Group's revenues from external customers are divided into the following
geographies:
Unaudited Unaudited Audited
six months ended 30 June 2022 six months ended 30 June 2021 year ended 31 December 2021
$'000 $'000 $'000
The Americas 6,264 5,858 16,042
EMEA 1,915 1,158 2,778
APAC 641 1,282 2,075
Total 8,820 8,298 20,895
Revenues from external customers are identified by invoicing systems and
adjusted to take into account the difference between invoiced amounts and
deferred revenue adjustments as required by IFRS accounting standards.
The revenue is analysed for each revenue category as:
Unaudited Unaudited Audited
six months ended 30 June 2022 six months ended 30 June 2021 year ended 31 December 2021
$'000 $'000 $'000
Software licence and appliance revenue 2,878 3,373 10,337
DDoS Protection-as-a-Service revenue 2,288 1,904 4,025
Maintenance and support services revenue 3,654 3,021 6,533
Total 8,820 8,298 20,895
The revenue is analysed by timing of delivery of goods or services as:
Unaudited Unaudited Audited
six months ended 30 June 2022 six months ended 30 June 2021 year ended 31 December 2021
$'000 $'000 $'000
Point-in-time delivery 2,878 3,373 10,337
Over time 5,942 4,925 10,558
Total 8,820 8,298 20,895
4. Taxation
Due to the utilisation of past tax losses, the Group does not recognise a
material taxation income tax expense or credit. The tax receipt(s) in the
prior annual period relates to research and development expenditure tax
credit(s).
5. Earnings per share
Earnings/(loss) per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares in
issue during the period. The effects of anti-dilutive ordinary shares
resulting from the exercise of share options are excluded from the calculation
of loss per share.
30 June 2022 loss 30 June 2022 weighted average number of 1p shares 30 June 2022 loss per share 30 June 2021 loss 30 June 2021 weighted average number of 1p shares 30 June 2021 loss per share
$'000 Thousand Cents $'000 Thousand Cents
Basic loss per share (325) 494,852 (0.1) (1,231) 494,852 (0.3)
From loss for the year
Diluted loss per share
Basic loss per share (325) 494,852 (0.1) (1,231) 494,852 (0.3)
Dilutive effect of share options - 29,742 - - 27,289 -
Diluted loss per share (325) 524,594 (0.1) (1,231) 522,141 (0.3)
31 Dec 2021 profit 31 Dec 2021 weighted average number of 1p shares
31 Dec 2021 profit per share
$'000 Thousand Cents
Basic earnings per share 1,522 494,852 0.3
Basic earnings per share
Diluted earnings per share
Basic earnings per share 1,522 494,852 0.3
Dilutive effect of share options - 18,914 -
Diluted earnings per share 1,522 513,766 0.3
6. Key performance measures
EBITDA and Fully Adjusted EBITDA
Earnings before interest, tax, depreciation, and amortisation ("EBITDA") is
defined as earnings from operations before all interest, tax, depreciation,
and amortisation charges. The following is a reconciliation of EBITDA
and further adjustments for all three periods presented:
Unaudited Unaudited Audited
six months ended 30 June 2022 six months ended 30 June 2021 year ended 31 December 2021
$'000 $'000 $'000
Loss before taxation (325) (1,231) 1,373
Adjustments for:
Finance income - (1) (1)
Finance expense 155 172 388
Finance lease interest costs 6 10 18
Depreciation - owned assets 61 125 222
Depreciation - lease liabilities 41 51 93
Amortisation of acquired intangible assets 1 2 5
Amortisation of capitalised development expenditure 940 944 1,872
EBITDA 879 72 3,970
Depreciation of DDoS Protection-as-a-Service assets charged to cost of sales 191 182 382
Share based payments 202 265 522
Unrealised foreign exchange differences on intercompany loan (927) 90 (87)
Other income - PPPL forgiveness - (637) (637)
Adjusted EBITDA - for DDPaaS depreciation, share based payments, unrealised 345 (28) 4,150
foreign exchange differences on intercompany loan and PPPL forgiveness
7. Analysis of changes in net cash (cash and cash equivalents, and
borrowings)
As at Movement in period As at 30 June Movement in period As at Movement in period As at 30 June
1 Jan 2021 1 Jan 2022
2021 2022
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Cash and cash equivalents 10,140 (1,310) 8,830 2,371 11,201 (3,709) 7,492
Bank borrowings (1,841) (1,927) (3,768) 991 (2,777) 1,078 (1,699)
Paycheck Protection Program Loan (see below) (637) 637 - - - - -
Total net cash 7,662 (2,600) 5,062 3,362 8,424 (2,631) 5,793
The movement in the period is a combination of the actual flow (from
operating, financing and investing activities) and the exchange rate
movement.
Paycheck Protection Program Loan
For the comparative period, notification of the PPP loan forgiveness in full
was received from Pacific Western Bank on 28th January 2021. The forgiveness
of the PPP loan was a non-cash movement.
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