REG - Smarttech247 Group - Principal subsidiary’s results

Smarttech247Announcement

04/04/2023 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230404:nRSD2366Va&default-theme=true

RNS Number : 2366V  Smarttech247 Group PLC  04 April 2023

04 April 2023

Smarttech247 Group PLC

("Smarttech247", the "Group" or the "Company")

Principal subsidiary's results for the year to 31 July 2022

 

Smarttech247 (AIM: S247), a multi-award-winning provider of AI-enhanced
cybersecurity services providing automated managed detection and response for
a portfolio of international clients, today announces the financial results of
its principal subsidiary, Zefone Limited (and its subsidiaries) (together, the
"Zefone Group" or "Business"), for the year ended 31 July 2022. The Zefone
Group was acquired by a new holding company, Smarttech247 Group PLC, and the
enlarged group was admitted to trading on AIM, raising £3.7 million on 15
December 2022.

 

Financial highlights

 

Significant growth achieved:

 

·    Revenues increased by 41.2% to €10.2 million (31 July 2021: €7.2
million)

·    Gross profit increased by 36.4% to €5.5 million (31 July 2021:
€4.0 million)

 

·    EBITDA increased by 20.2% to €2.0 million (31 July 2021: €1.67
million)

 

·    Operating profit increased by 32.2% to €1.76 million (31 July 2021:
€1.33 million)

 

 Year to            31 July 2022  31 July 2021  Change
                    €             €             %
 Revenue            10,205,602    7,225,479     +41.2

 Gross profit       5,544,577     4,066,050     +36.4
 (margin)           54.3%         56.3%

 Operating costs    3,848,769     2,973,253     +29.4

 EBITDA             2,007,869     1,670,876     +20.2
 (margin)           19.7%         19.9%

 Operating profit   1,756,536     1,328,374     +32.2

 Profit before tax  1,533,962     1,297,455     +18.2

 As at

 Cash               2,358,082     3,214,851

 Net assets         4,533,445     3,132,370

 

 

 

Operating highlights

 

·    During the period, the Business focused on the continued growth of
its customer base in the UK, Europe and the United States, as well as the
expansion of its team to deliver the proprietary technologies of VisionX,
Threathub and NoPhish.

 

·    A significant number of new contracts were won during the period that
will drive revenue, including:

o  a new VisionX MDR deal with a leading hospital in Ireland;

o  a three-year VisionX MDR deal with a major fintech organisation;

o  a contract extended with a major global food and manufacturing
organisation to include 10 new locations under the scope of the security
management; and

o  a publicly US listed pharmaceutical company.

 

·    The platform was expanded, and headcount increased by over 75% to
provide capacity for growth, whilst margins have been maintained.

 

·    Successful launch of new proprietary technology products in 2022,
including the automated VisionX MDR platform.

 

Post year-end

 

·    The Zefone Group was acquired by a new holding company, Smarttech247
Group PLC, and the enlarged group was admitted to trading on AIM, raising
£3.7 million in December 2022. Since listing the Company's share price has
increased by 11%.

 

·    H1 2023 trading is ahead of budget, with interim results for the
newly quoted Smarttech247 Group PLC for the period ended 31 January 2023 due
to be announced in April 2023.

 

Raluca Saceanu, Chief Executive Officer of Smarttech247, commented:

"The last financial year was transformational for the Business which won a
significant number of new contracts to deliver its Managed Detection and
Response capabilities for global customers.

 

"With the Zefone Group being acquired by Smarttech247, and subsequently being
admitted to trading on AIM in December 2022, the Company has the platform in
place to gain further momentum, accelerate its revenue growth and deliver our
technology to all existing and new partners.

 

"As the threat landscape grows in complexity and sophistication, particularly
given the continuous geopolitical challenges that have influenced this in the
past two years, Smarttech247 is well-positioned to expand its Managed
Detection and Response capabilities and we look forward to another year of
exciting growth for the Business."

- Ends -

For further information please contact:

 Smarttech247 Group PLC                               Tel: +353 21 206 6033
 Ronan Murphy, Executive Chairman

 Raluca Saceanu, Chief Executive Officer

 Nicholas Lee, Finance Director
 SPARK Advisory Partners Limited - Nominated Adviser  Tel: + 44 (0) 20 3368 3550
 Mark Brady / Adam Dawes
 Shard Capital - Broker                               Tel: +44 (0) 20 7186 9900
 Damon Heath

 Fortified Securities - equity adviser

                                                      Tel: +44 (0) 7493 989014
 Guy Wheatley, CFA
 Yellow Jersey PR                                     Tel: +44 (0) 20 3004 9512

 Sarah Hollins / Annabelle Wills / Bessie Elliot

About Smarttech247

Smarttech247 is a multi-award winning automated MDR (Managed Detection &
Response) company. Its platform is trusted by international organisations and
provides threat intelligence with managed detection and response to provide
actionable insights, 24/7 threat detection, investigation and response.

 

The Company's services are geared towards proactive prevention, and it
achieves this by utilising the latest in cloud, big data analytics and machine
learning, along with an experienced incident response team.

 

Smarttech247's offices are located in Ireland, United Kingdom, Romania, Poland
and the USA. The Company was admitted to trading on AIM on 15 December 2022.

 

For further information please visit www.smarttech247.com
(http://www.smarttech247.com)

 

Chairman's Statement

 

2022 was a transformational year. The Business grew significantly, building
out its platform and headcount to service demand whilst, at the same time,
maintaining margins. Then, post period end, in December 2022, after the
acquisition by a new holding company Smarttech247 Group PLC, the enlarged
group was admitted to trading on AIM of the London Stock Exchange.

 

The Group now has the platform in place to support and accelerate its revenue
growth going forward. We have also launched new proprietary products and
secured new contracts from major international companies and institutions.
These initial contracts are important as they provide validation of the
service that Smarttech247 can provide and clear reference points for new
customers. We are often competing with larger global companies to win new
business, and despite this competition, we continue to succeed in growing our
business with high-quality international companies.

 

Cyber-attacks continue to increase with dire implications for the companies
concerned. There is no simple solution to defend an organisation against
everything it can be exposed to. The Group's combination of artificial
intelligence-led managed detection and response capabilities can help to
significantly reduce the impact and manage the situation. We, therefore, see
clear opportunities for future growth using the platform established by the
Smarttech247 team.

 

We firmly believe that our AIM quote will continue to give Smarttech247
greater visibility and credibility in overseas geographies, including the USA
and Europe, and will support our growth plans in the short and long term.

 

I am extremely proud of the team that we now have in place and would like to
thank them for their hard work and dedication throughout the period.

 

Chief Executive's Statement

During the year under review, the Business made significant progress. It has
focused on building out its platform and launching new products and is now
extremely well-placed to grow revenue. As we embark on a new era at
Smarttech247, we are pleased with this continued growth and the strategic
advances that we are making.

To support its extensive capabilities for Managed Detection and Response
("MDR"), the Business launched its VisionX technology in 2022. The technology,
together with our award-winning capabilities and expertise, enables the full
VisionX platform, an automated security operations centre platform providing
24/7 proactive threat detection and response, using cloud data analytics,
machine learning and an incident response capability.

VisionX MDR has won a number of multi-year contracts with prestigious
organisations. These contract wins include a three-year contract with a total
sales value of US$800,000 with a Fortune 150 leading automotive retailer in
the USA with annual revenues of over US$20 billion. This was followed by a
three-year agreement with a large US tech company headquartered in
Massachusetts and a two-year agreement with a prestigious university in
Ireland worth c.US$400,000 and US$450,000 respectively over the length of
these contracts.

The Business is also continuing to develop its threat and vulnerability
software called Threathub. Threathub allows organisations to manage their risk
in a continuous way by providing them with automated threat modelling and
dynamic risk governance capabilities.

Combining the VisionX MDR platform with the managed services offering creates
competitive differentiation for the Business. Major new customers have
highlighted factors like this as the reason for selecting Smarttech247.

 

Smarttech247 currently has multiple contracts with leading global
organisations. The majority of our contracts are multi-year thereby providing
certainty of revenue. Also, with contracts now in place with such prestigious
organisations, we have an excellent source of reference for new business.

The Business also works with several leading industry players whose products
can be incorporated within its MDR platform as required. Such partners include
Microsoft, IBM and Crowdstrike.

During 2022, the Business was able to increase its headcount significantly, by
circa 75% across all locations, in order to provide the capacity for future
revenue growth. This is a significant achievement given the demand for
suitably qualified high-quality personnel. This has also been implemented
against the background of tight control over costs to maintain existing
margins.

One of our key areas of focus is to build out our sales strategy and
operations and we are now making significant investment and progress in this
area which will support our revenue growth.

Financial Summary

In terms of financial performance, the revenue of the Business increased by
over 41% over the prior year as a result of winning several new contracts
during FY2022. Gross profit margins were broadly maintained, and gross profit
increased by over 36%.

Operating costs increased, principally as a result of a growth in headcount as
part of the build out of the Business's platform. The growth in operating
EBITDA was offset slightly by higher other income in FY2021 compared to
FY2022, which principally comprises of government grants. Operating profit
increased by 34% compared to FY2021. Finance costs increased in FY2022 as a
result of the full year impact of the interest charge from the convertible
loan funding put in place late in FY2021. This funding was used to fund growth
prior to the raising of new funds at the IPO. This convertible loan was fully
converted on IPO, post the period end, in December 2022.

Cash raised at the end of FY2021 from the issue of the convertible loan was
used to invest in new products and to build out the operating platform. As a
result, the net asset position of the Business has grown to reflect this
investment. Cash and net assets have further increased substantially post the
period end reflecting the conversion of the convertible loan and the new funds
raised at the IPO.  Therefore, the enlarged Smarttech247, post-IPO in
December 2022, is very well positioned to fund growth going forward.

FY2023 started well with trading ahead of budget. The interim results for the
newly quoted Smarttech247 Group PLC for the period ended 31 January 2023 are
due to be announced in April 2023.

The following financial statements are for the Zefone Group which represents
Smarttech247 Group PLC's principal trading subsidiary and its subsidiaries.

Consolidated statement of total comprehensive income

                                                                                     Unaudited 2022  Audited

€

                                                                                                     2021

€

 Continuing operations
   Revenue                                                                           10,205,602      7,225,479
   Cost of sales                                                                     (4,661,025)     (3,159,429)
 Gross profit                                                                        5,544,577       4,066,050
   Administrative expenses                                                           (3,848,768)     (2,973,253)
   Other operating income                                                            60,727          235,577
 Operating profit                                                                    1,756,536       1,328,374
   Investment income                                                                 1,929           1,512
   Other gains and losses                                                            (8,462)         25,244
   Finance costs                                                                     (216,041)       (57,675)
 Profit before taxation                                                              1,533,962       1,297,455
   Income tax                                                                        (155,737)       (155,262)
 Profit for the year from continuing operations                                      1,378,225       1,142,193
 Total profit for the year attributable to equity holders of the parent
 Other comprehensive income                                                          (548)           4,377
 Total comprehensive profit for the year attributable to equity holders of the       1,377,677       1,146,570
 parent

Consolidated statement of financial position

                                                  Unaudited 2022  Audited 2021

€
€
 Non-current assets
 Intangible assets                                1,739,279       416,336
 Property, plant and equipment                    97,449          94,506
 Right-of-use asset                               63,541          43,157
 Financial assets                                 1,160,548       1,169,010
 Total non-current assets                         3,060,817       1,723,009
 Current assets
 Trade and other receivables                      6,153,306       4,533,672
 Cash and cash equivalents                        2,358,082       3,214,851
 Total current assets                             8,511,388       7,748,523
 TOTAL ASSETS                                     11,572,205      9,471,532
 Equity attributable to owners of the parent
 Called up share capital                          2               2
 Foreign exchange reserve                         34,269          34,817
 Merger reserve                                   23,430          -
 Retained earnings                                4,475,744       3,097,551
 Total equity                                     4,533,445       3,132,370
 Non-current liabilities
 Borrowings                                       2,341,807       2,262,786
 Lease liability                                  3,645           56
 Total non-current liabilities                    2,345,452       2,262,842
 Current liabilities
   Trade and other payables                       4,628,658       4,018,449
   Lease liability                                64,650          57,871
 Total current liabilities                        4,693,308       4,076,320
 Total liabilities                                7,038,760       6,339,162
 TOTAL EQUITY AND LIABILITIES                     11,572,205      9,471,532

Consolidated statement of cashflows

                                                         Notes  Unaudited 2022  Audited

€

                                                                                2021

€
 Cash flow from operating activities
   Profit for the financial year                                1,377,677       1,142,193
 Adjustments for:
 Interest payable                                               602             49,194
 Finance costs                                                  215,439         8,481
 Impact of foreign exchange                                     (269,510)       6,249
 Taxation                                                       155,737         -
 Depreciation and amortisation                                  227,935         372,502
 Fair value Loss / (gain) on investments                        8,462           (25,244)
 Changes in working capital:
 Increase in trade and other receivables                        (1,619,634)     (2,042,299)
 Increase in trade and other payables                           610,210         2,563,167
 Net cash inflow from operating activities                      706,918         2,074,243
 Cash flow from investing activities
 Cash acquired on acquisition                                   12,765          -
 Purchase of intangible fixed assets                            (1,434,727)     (550,797)
 Purchase of tangible fixed assets                              (39,141)        (21,780)
 Purchase of financial assets                                   (2,111)         (1,038,673)
 Net cash outflow from investing activities                     (1,463,214)     (1,611,250)
 Cash flows from financing activities
 Proceeds from borrowings                                       -               1,954,112
 Repayment of borrowings                                        -               (91,387)
 Repayment of lease liabilities                                 (100,716)       (61,056)
 Net cash (outflow) / inflow from financing activities          (100,716)       1,801,669
 Net (decrease) / increase in cash and cash equivalents         (857,012)       2,264,662
 Cash and cash equivalents at beginning of period               3,214,851       950,568
 Foreign exchange impact on cash                                243             (379)
 Cash and cash equivalents at the end of the period             2,358,082       3,214,851

Notes:

1.    Smarttech247 Group PLC, a newly incorporated company, acquired 100%
of the issued share capital of Zefone Limited on 18 November 2022 as part of
the AIM IPO process and so the Company did not own Zefone Limited during the
period under review.

 

2.    This financial information represents the consolidated results for
the Company's principal subsidiary Zefone Limited and its subsidiaries,
prepared under the same standards as applied in the preparation of the
Historic Financial Information included within the Admission Document of the
Company ("the Admission Document"), which can be found on the Company's
website.

 

The financial information is prepared under UK adopted international
accounting standards, with the exception of IAS 1 Presentation of Financial
Statements, as the financial information has been prepared in an abbreviated
format and no accounting policies or supporting notes included.

 

The accounting policies adopted are the same as those adopted in the Historic
Financial Information in the Admission Document.

 

3.    The financial information does not represent the consolidated results
of the Company as Zefone Limited had not been acquired during the period and
are presented for information only.

 

The financial information has been reviewed by PKF under International
Standard on Review Engagements 2400 (Revised).

 

4.    Zefone Limited is incorporated in Ireland and its company level
financial statements have been audited for local statutory purposes, prepared
in accordance with FRS102 and will be filed at Companies House in Ireland.

 

 

 

 

 

 

 

 

 

 

 

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCEAFLDEDSDEAA