TIDMCCS
RNS Number : 8722K
Crossword Cybersecurity PLC
31 August 2023
Crossword Cybersecurity Plc
H1 Trading Update & Issue of Loan Notes
2024 revenue growth target of 30% to cGBP8m and monthly
breakeven
31 August 2023 - London, UK - Crossword Cybersecurity Plc
(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 2023 and to announce the issue of GBP2.015m new Convertible
Loan Notes.
In the first half of 2023, Crossword shifted its focus towards
establishing a clear path to profitability. Profitability will be
underpinned by continuing strong revenue growth, margin improvement
and cost containment.
Revenue Growth
Crossword expects to report revenue of GBP1.9m (unaudited) for
the 6 months ended 30 June 2023, an increase of 27% from the same
period in the previous year and has not seen a slow-down in cyber
security spend amongst its core regulated and critical national
infrastructure clients. Strong revenue growth was experienced
across all revenue lines and ARR at the end of H1 2023 was GBP2.7m,
growth of 35% compared to the same period in the prior year.
Software Engineering services revenue in H1 2023 helped to
strengthen ties with a key partner and provided a valuable
development opportunity for staff. Crossword continued to leverage
its' 100+ client base to cross sell and has i ncreased emphasis on
targeting its larger clients that can make full use of Crossword's
range of products and services.
Revenue for the full year to 31 December 2023 is on track to
meet market expectations, and Crossword's diversified product and
services offering will drive scale while managing risk.
Margin Improvement
In H1 2023, overall gross margin has increased by 4 percentage
points over the same period in the prior year. Consulting margin
continues to improve as revenue scales to achieve critical mass.
80% growth in the higher margin product revenues helped to drive
margin improvement.
Costs
Administrative expenses have stabilised in 2023, with a strong
foundation now in place to drive the revenue growth and path to
profitability. Excluding one off professional fees in H1 2023,
administrative expenses have increased by less than 2% over the
same period in the prior year. With increasing revenue, this
represents a reduction of 20% in administrative expenses as a
percentage of revenue in H1 2023. Crossword is targeting a drop by
half in administrative expenses as a percentage of revenue in 2024
compared to 2022.
Profitability and Breakeven
The momentum from 2022 places Crossword in a strong position to
achieve revenue growth to circa GBP6m in 2023 and focus on margin
improvement will ensure that there is a clear, carefully managed
route to achieving profitability in the medium term. Furthermore,
the Company is projecting the revenue growth rate for 2024 to be
circa 30%, to achieve total revenue of circa GBP8m in 2024.
Crossword is aiming to deliver EBITDA and cash breakeven on a
monthly basis during the second half of 2024.
Convertible Loan Notes
The Company today announces that it has entered into agreements
for a five year, unsecured, convertible loan up to the value of
GBP2,015,000. The funds raised will be used to support sales and
marketing, product and services development and to provide general
working capital.
Following the General Meeting in July 2023, the company has
authority to issue GBP2.5m additional debt. Following issue of
these new Convertible Loan Notes, the Company will have GBP485,000
capacity for further debt. The Company intends to use the GBP2.015m
funding to achieve EBITDA and cash breakeven in the second half of
2024.
The terms of the loan are as follows;
Term Five Years from the date of the loan agreement
Interest rate 12 per cent., payable at the end of the term
-------------------------------------------------------
At the company's sole discretion, subject to a
Early Repayment minimum repayment amount of GBP10,000
-------------------------------------------------------
Either in cash or in Crossword ordinary shares
of 0.5p each ("Ordinary Shares"). The conversion
price for Ordinary Shares will be lower of the
price (subject to a 15% discount) for each Ordinary
Share which equates to the middle market price
per share of the Ordinary Shares (as derived from
the daily official list of the London Stock Exchange)
on the last Business Day before the date of the
relevant Conversion Notice and 6.5 pence, being
the price (subject to a 15% discount) for each
Ordinary Share which equates to the middle market
price per share of the Ordinary Shares (as derived
from the daily official list of the London Stock
Exchange) on the last Business Day before the
Form of repayment date of the Loan Agreement.
-------------------------------------------------------
Warrants None
-------------------------------------------------------
Related Party transactions
Gresham House Asset Management Limited ("Gresham House") has
subscribed for convertible loan notes to the value of GBP2,000,000.
As Gresham House is a substantial shareholder in the Company, their
investment constitutes a related party transaction under Rule 13 of
the AIM Rules for Companies. The Crossword directors consider,
having consulted with the Company's nominated adviser, that the
terms of the investment by Gresham House are fair and reasonable
insofar as the Company's Shareholders are concerned.
Tom Ilube CBE, CEO at Crossword Cybersecurity Plc, said:
"As the economic landscape continues to be challenging for many,
Crossword is fortunate to be operating in the cyber security sector
where client spend has held up well in the first half of the year.
In an environment of increasing number and complexity of
cyber-attacks, Crossword's business model centred around specialist
cyber security products and services with distinct USPs and a
strongly growing Consulting division, saw continued strong revenue
growth in the first half of 2023.
We are grateful for the continued support of our shareholders.
This latest investment round is intended to take Crossword to
EBITDA and cash breakeven in the second half of 2024. Investments
in Crossword to date have enabled us to create a strong portfolio
of products and services, and with our sole focus on organic
growth, put us on a clear path to profitability.
I am excited about the opportunities with AI and LLMs (Large
Language Models). We are exploring initiatives with industry
partners and leading academics to investigate the application of
Generative AI to cyber security. It is extremely challenging for a
single company to keep track of and evaluate the many applications
that are emerging, so Crossword is looking to bring together its
major clients to engage with this exciting area.
2023 is shaping up to be another year of strong growth for
Crossword, and we are forecasting continued growth into 2024, with
revenue growth of 30% to circa GBP8m. "
- Ends -
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 / Ciara Donnelly
Hybridan LLP (Broker) - Tel: +44 (0)203 764 2341
Claire Louise Noyce
For media enquiries contact:
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, 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/
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END
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