REG - Crossword Cybersec - H1 Trading Update & Extension of Loan Notes

Crossword CybersecurityAnnouncement

13/07/2022 07:00

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RNS Number : 2483S  Crossword Cybersecurity PLC  13 July 2022

Crossword Cybersecurity Plc

H1 Trading Update & Extension of Loan Notes

13 July 2022 - London, UK - Crossword Cybersecurity Plc
(http://www.crosswordcybersecurity.com/) (AIM:CCS, "Crossword", the "Company"
or the "Group"), the cybersecurity solutions company focused on cyber strategy
and risk, is pleased to update the market on trading in the six months to 30
June 2022 and the extension and increase of several Convertible Loan Notes
issued in December 2019.

In the first half of 2022, Crossword successfully delivered on its strategy to
continue building on its organic revenue growth and to acquire outstanding
cyber security companies that complement and diversify its revenue base.  H1
Revenue of £1.5m was 112% higher than the same period in the prior year
(excluding discontinued operations).  Within that, organic revenue growth was
53%.  In March 2022, Crossword completed the acquisition of threat
intelligence company Threat Status Limited, which has now been successfully
integrated. Threat Status Limited has two products: Arc (SaaS platform for
enterprise-level credential breach intelligence) and Trillion (SaaS protecting
users of customer-facing applications from the threat of account takeovers).
The acquisition completed the Company's objective of having five cyber
security SaaS products in the product portfolio a year ahead of schedule.

Financial Highlights

·    ARR (Annual Recurring Revenue) growth of 48% since 31 December 2021
to £1.97m

o  Successful acquisition and integration of companies with strong underlying
SaaS and services recurring revenue

o  Growth in Consulting vCISO recurring revenue to £1m

·    Gross margin improvement in Consulting

·    IASME (the National Cyber Security Centre's Cyber Essentials Partner)
began delivering its Maritime Security Certificate using Rizikon, taking the
number of certifications delivered by IASME using Rizikon to three

·    Expansion of engagement with FTSE 100 client company

·    Cross-selling of product and services from acquisitions into client
base continues to increase

·    Successful completion of the Rizikon pilot with a global aerospace,
defence and security company that has over 6,000 suppliers

Operational Highlights

·    Successful integration of Threat Status Limited, following its
acquisition in March 2022

·    On track to achieve 1,000 users of Rizikon by the end of 2022, from
500 at the end of 2021, with the continued growth in the membership body
programme

·    Launched new integrated Supply Chain Cyber practice in response to
client demand and the substantial increase in supply chain cyber threat levels

·    Issued report following survey of 200 Chief Information Security
Officers "Strategy and collaboration: a better way forward for effective
cybersecurity"

·    Local Omani team engaging with government agencies to support driving
cyber security maturity across the Sultanate of Oman

·    Expansion into two new overseas jurisdictions, within one of which
Crossword is working with a government institution

 

Outlook

·    Projected revenue growth of circa 75% in 2022, driven by organic
growth and already completed acquisitions, in line with market expectations

·    Focus on optimisation of cross-sell opportunities is yielding
improved results

·    Continued focus on acquisition strategy.  Early-stage discussions
are being held with a number of candidates that are leading to positive
conversations currently taking place

·    Target of over 1,000 organisations to be using Rizikon to assess over
10,000 suppliers by end of 2022

·    Crossword's full range of cyber security products and services will
be used to help companies in the Gulf region improve their cyber security
preparedness

·    Growing a team in Singapore as part of the continued investment in
Nightingale, part of our threat detection and response services, to enable
conversion of the pipeline of larger clients, which has been driven by
cross-selling

·    Taking Identiproof to market together with continuing product
development on verifiable credentials technology

·    Investment in Sales with the introduction of the MEDDICC (sales
qualification methodology) framework

·    Decision to invest in the business including expansion into
Singapore, and further investment in Sales and Marketing, will result in
increased spend of £500,000 which will have a commensurate effect on pre-tax
losses.

Convertible Loan Notes

Convertible loan notes to the value of £1.4m that were issued by Crossword in
December 2019 and January 2020 are due to expire in December 2022 and January
2023.  Loan Note holders of £700,000 have agreed to extend their loan notes
for three years until June 2025 and two loan notes holders are increasing
their loans by a total of £150,000.

In addition, Tom Ilube, CEO of Crossword intends to extend his £250,000 loan
notes on the same terms as the other loan note holders, and a further
announcement will be made in due course. By virtue of its size, Mr Ilube's
loan extension would constitute a related party transaction under Rule 13 of
the AIM Rules for Companies. The Independent Directors, being the Directors
other than Tom Ilube consider, having consulted with the Company's Nominated
Adviser, that the terms of Mr Ilube's proposed loan note extension are fair
and reasonable insofar as the Company's Shareholders are concerned.

Other than conversion price, the extended and increased loan notes have the
same terms as the original loan notes.  The conversion price of the revised
loan notes is 25.2p, being the closing price on 12 July 2022 of 28p less 10
per cent. Additionally, other potential investors have expressed interest in
completing additional convertible loan notes on the same terms and the Company
will provide further information as appropriate.

Tom Ilube, CEO of Crossword Cybersecurity Plc, commented: "The excellent
integration of recent acquisitions coupled with healthy organic revenue growth
drove a greater than 110% rise in revenues in H1 2022.  Crossword is
progressing well in its strategy of building a diversified revenues company
focused on consultancy and products, targeting key in-demand sectors.
Crossword's acquisition strategy is focused on making revenue enhancing
acquisitions of quality companies that increase Crossword's access to larger
addressable markets and leverage Crossword's reputation in the market.
 Crossword is operating in a sector where spend is not discretionary, in a
growing market with increasing demand for cybersecurity, as evidenced by our
strong and growing recurring revenues. We see significant opportunities in
improving operational efficiency as Crossword's revenues continue to grow and
the cost base can be spread against higher revenues. We look forward to
updating shareholders on progress."

 

The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK
law by virtue of the European Union (Withdrawal) Act 2018. The information is
disclosed in accordance with the Company's obligations under Article 17 of the
UK MAR. Upon the publication of this announcement, this inside information is
now considered to be in the public domain.

 

Contacts

 

Crossword Cybersecurity plc - Tel: +44 (0) 333 090 2587

Email: info@crosswordcybersecurity.com

Tom Ilube, Chief Executive Officer

Mary Dowd, Chief Financial Officer

 

Grant Thornton (Nominated Adviser) - Tel: +44 (0) 20 7383 5100

Colin Aaronson / Jamie Barklem / Daphne Zhang / Ciara Donnelly

 

Hybridan LLP (Broker) - Tel: +44 (0)203 764 2341

Claire Louise Noyce

 

For media enquiries contact:

Financial PR:

David Hothersall, Kinlan Communications

davidh@kinlan.net - Tel: +44 (0) 207 638 3435

General:

Duncan Gurney, GingerPR

duncan@gingerpr.co.uk - Tel: +44 (0)1932 485 300

 

About Crossword Cybersecurity plc

Crossword offers a range of cyber security solutions to help companies
understand and reduce cyber security risk. We do this through a combination of
people and technology, in the form of SaaS and software products, consulting,
and managed services. Crossword's areas of emphasis are cyber security
strategy and risk, supply chain cyber, threat detection and response, and
digital identity and the aim is to build up a portfolio of cyber security
products and services with recurring revenue models in these four areas. We
work closely with UK universities and our products and services are often
powered by academic research-driven insights. In the area of cybersecurity
strategy and risk our consulting services include cyber maturity assessments,
industry certifications, and virtual chief information security officer
(vCISO) managed services.

 

Crossword's end-to-end supply chain cyber standard operating model (SCC SOM)
is supported by our best-selling SaaS platform, Rizikon Assurance, along with
cost-effective cyber audits, security testing services and complete managed
services for supply chain cyber risk management. Threat detection and response
services include our Nightingale AI-based network monitoring, Nixer to protect
against application layer DDoS attacks, our Trillion and Arc breached
credentials tracking platforms, and incident response. Crossword's work in
digital identity is based on the World Wide Web Consortium W3C verifiable
credentials standard and our current solution, Identiproof, enables secure
digital verification of individuals to prevent fraud.

 

Crossword serves medium and large clients including FTSE 100, FTSE 250 and
S&P listed companies in various sectors, such as defence, insurance,
investment and retail banks, private equity, education, technology and
manufacturing and has offices in the UK, Poland and Oman. Crossword is traded
on the AIM market of the London Stock Exchange.

 

Visit Crossword at https://www.crosswordcybersecurity.com/
(https://www.crosswordcybersecurity.com/)

 

 

 

 

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