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DFX Defenx Plc

1.60
0.00 (0.00%)
Last Updated: 00:00:00
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Defenx Plc LSE:DFX London Ordinary Share GB00BYNF4J61 ORD GBP0.018
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 1.60 0.50 2.70 0.00 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

Defenx plc Interim Results (1349K)

19/09/2016 7:00am

UK Regulatory


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Defenx plc

19 September 2016

19 September 2016

Defenx PLC

("Defenx" or the "Group")

Unaudited Interim Results for the six months ended 30 June 2016

Defenx PLC (AIM:DFX), the mobile security software solutions company, announces its unaudited interim results for the six months ended 30 June 2016.

Financial Highlights

-- Revenue up 73% to EUR2.32m (1H15: EUR1.34m) reflecting the positive impact of new product launches and channel partner wins

-- Mobile platform focus continues with 69% of revenues derived from software for mobile devices

-- Strong control of overheads with operating expenses (excluding marketing contributions) of EUR0.71m (1H15: EUR0.39m) 39% below 2H15 predominantly due to lower staff and administrative costs

-- EBITDA before exceptional costs of EUR0.11m (1H15: EUR0.29m) reflects the front-loading of full year marketing contributions into the first half of the year to drive sales that are seasonally weighted into the second half of the year

   --     The unaudited interim financial results are in line with management expectations. 

Operating Highlights

-- Defenx has now sold over 3.8 million licences with over 1 million active licensed users at 30 June 2016

-- Significant progress made since AIM IPO in December 2015 launching new products, including Defenx Mobile Security Suite for Windows 10 Phone and Defenx Cloud Backup for mobile, PC and NAS drives

-- Eight new channel partners signed up, more than doubling the number at IPO, significantly extending reach across the UK, Continental Europe and the Middle East.

Post Period End

-- On 2 August 2016, Defenx acquired 95.2% of Memopal, a cloud backup and sync company. The acquisition secures Memopal's advanced technology, adding cloud backup & sync to the Group's existing product portfolio, key channel partners as well as cross selling opportunities

-- New debt facilities of, in aggregate, EUR1.20m provide additional working capital and allow the Group to narrow the working capital gap between the extended debtor terms customary in its overseas markets and the shorter credit terms in the UK.

Commenting on the results, Andrea Stecconi, Chief Executive Officer, said:

"We are pleased with the strong progress in the first half of 2016 and have delivered against our stated strategy with the addition of new channel partners and products. The acquisition of Memopal in August brings a significant opportunity and we look forward to integrating it fully into our existing business to improve and extend our offering. Based on our performance to date and strong confirmed order book, we are confident of continuing to deliver significant growth in revenues and profits this year in line with market expectations."

This announcement contains inside information.

Enquiries

 
 Defenx PLC 
  Andrea Stecconi - Chief Executive Officer 
  Philipp Prince - Chief Financial Officer     020 3769 0687 
 Strand Hanson Limited (Nominated and 
  Financial Advisor) 
  Richard Tulloch / Ritchie Balmer / 
  James Bellman                                020 7409 3494 
 WH Ireland (Joint-Broker) 
  Adrian Hadden / Nick Prowting                020 7220 1666 
 Beaufort Securities (Joint-Broker) 
  Jon Belliss                                  020 7382 8300 
 IFC Advisory (Financial PR and IR) 
  Graham Herring / Tim Metcalfe / Heather 
  Armstrong                                    020 3053 8671 
 

About Defenx

Founded in 2009, Defenx is a fast-growing and profitable security software company that offers a range of products for the mobile, PC and network security markets. Defenx security software is priced competitively, fully featured and efficient (reduced use of memory, processing capacity and therefore power).

A flexible marketing strategy, focused on white-label and profit-share arrangements with distributors, telecoms companies and hardware manufacturers, enables Defenx to compete with established industry incumbents. Since inception, Defenx has sold over 3.8 million security software licenses, primarily in Europe, the Middle East and Africa.

Defenx's global distribution partners currently include 3Italia, Seagate Technology, Türk Telecom and Western Digital, amongst others including telecoms operators, systems integrators and original equipment manufacturers. Defenx was admitted to trading on AIM on 3 December 2015, raising GBP2.1 million to accelerate its growth through new channel partners and product development.

Website

www.defenx.com/company/investors

Chairman's Statement

Since releasing the 2015 annual results in April this year, Defenx has continued to grow the business organically with the launch of new products and by winning new channel partners.

Already in the year we have announced the following product launches and updates:

   --     Defenx Mobile Security Suite for Windows 10 Phone 
   --     Defenx Cloud Backup for mobile, PC and Network Attached Storage ("NAS") drives 
   --     New Android features: webcam protection & mic capture 
   --     Privacy Advisor for Android. 

We have a strong pipeline of new products and enhancements aimed at further broadening the appeal of Defenx to channel partners and end-users.

Our new channel partners include:

   --     Brigantia Partners Limited, the largest subscription partner services club in the UK 

-- Itway SpA (MIL:ITW), a specialist digital solutions provider that operates in six European countries and Dubai with reported revenues of EUR101 million in 2015

-- Ringo.com, a Mobile Virtual Network Operator offering high quality, innovative mobile services to consumers and small business customers

-- MCR Media Group, a European leader in mobile value-added services to more than 30 carriers around the world

-- Dylog Italia SpA and its subsidiary, Gruppo Buffetti SpA, which are Italian leaders in the distribution of digital products, services and solutions for the professional market, SMEs, and recently, an increasing number of homeworkers through a franchise network of more than 650 points of sale throughout Italy

-- Mandarin SpA, provider of telecommunications services in Sicily, Italy, which has been traditionally underserved by incumbent players, aiming to bridge the digital divide with the best technology and infrastructure

-- InfoCert SpA, a European leader in high-tech solutions for the dematerialisation of document processing, providing document management and digital preservation solutions, digital signatures and registered e-mails

-- Bizmatica SpA, a subsidiary of Econocom Group SA (EBR:ECONB), the listed provider of B2B digital transformation services active in various European countries, including Belgium, France, Italy, the Netherlands, Spain and the UK.

The acquisition of Memopal Srl ("Memopal"), which completed on 2 August 2016, is a transformational deal for Defenx. The board considers the acquisition multiple of between 5.5x and 6.6x EBITDA (depending on the performance of the enlarged group) to represent good value in this sector. In addition, the acquisition:

-- Broadens the Group's owned product portfolio with the addition of proprietary cloud backup and synchronisation technology

-- Doubles the Group's headcount, significantly increasing internal development and customer support capacity that it would otherwise have needed to recruit

   --     Adds 700,000 end-users 
   --     Adds reference channel partners, notably Türk Telecom and Western Digital 

-- Adds profit with the integration of Memopal expected to be earnings enhancing after sales and cost synergies in the first full financial year

-- Improves our short term working capital position by internalising the perpetual license that would otherwise have cost the Group EUR900,000.

Since completion we have made good progress integrating the business to bring the benefits of integrated solutions to end-users and shareholders alike.

To improve retail investor support, we are pleased to announce that Beaufort Securities has been appointed to act as joint broker alongside WH Ireland.

Financial Review

Group revenue grew 73% to EUR2.32m (1H15: EUR1.34m) driven by the new product launches and channel partner wins. Mobile revenues continued to account for around 70% of our business with the balance from PC and Server segments. It was pleasing to see a modest increase in average revenue per user of almost 10%.

The gross profit margin was 81.5% (1H15: 85.8%) reflecting the increase in amortisation, charged on a straight line basis independent of sales seasonality. Amortisation of EUR0.41m (1H15: EUR0.17m) reflects a full period's charge for our Enterprise NAS product plus customer integration costs and the launch of Defenx Mobile Security Suite for Windows 10 in March 2016. As in previous years, we expect gross profit margins to increase in the second half of the year.

Marketing contributions, staff costs and the costs of maintaining our AIM listing account for the majority of expenses. Strong control of overheads resulted in operating expenses excluding marketing contributions falling 39% compared to 2H15 to EUR0.71m (1H15: EUR0.39m).

While sales seasonality results in a majority of Group revenue falling into the second half, the opposite is true for marketing contributions which are incurred in the first half to front-load the benefit over the whole year. Marketing contributions were EUR1.48m (1H15: EUR0.67m) reflecting the planned post-IPO investment in developing the Defenx brand.

There has been no recruitment in the first half with staff and consultant costs of EUR0.39m (1H15: EUR0.23m) reflecting a 32% reduction on 2H15. The operating loss before exceptional expenses for the Group was EUR0.30m (1H15: EUR0.12m profit).

Non-recurring expenses of EUR0.15m for legal & professional fees in respect of the acquisition of Memopal incurred during the period have been disclosed as exceptional.

Balance sheet and cash flow

The net book value of capitalised software development costs increased to EUR2.93m (1H15: EUR2.32m) with the addition of Defenx Mobile Security Suite for Windows 10 and Privacy Advisor for Android and new Android features: webcam protection & mic capture.

Working capital increased by EUR0.45m through the period, from a surplus of EUR1.87m at 31 December 2015 to a surplus of EUR2.32m at 30 June 2016. A fall in trade receivables of EUR0.38m was offset by an increase in software development payments on account of EUR0.81m and modest reductions in other receivables of EUR0.10m and payables of EUR0.12m.

The Group generated cash of EUR0.36m (1H15: EUR0.36m outflow) before its investment in software development of EUR1.54m (1H15: EUR0.42m) of which EUR0.73m has been capitalised in intangible assets with the balance held in other debtors as work in progress. Cash for the period declined by EUR1.18m to EUR0.16m. There was no debt at the period end.

Since the period end, new facilities of, in aggregate, EUR1.20m have been agreed of which EUR0.90m has been entered into and EUR0.30m has been approved subject to certain customary conditions being satisfied. At the time of the Memopal acquisition a EUR0.40m term loan was secured together with an overdraft of EUR0.10m that has been approved subject to security being provided; around EUR0.25m of this will be used to accelerate shareholder loan repayments reducing the interest charge to the Group with the EUR0.25m balance used to provide working capital to the Group.

An invoice discounting facility, initially for EUR0.20m, has also been approved subject to signing, which together with a new supply chain finance facility of EUR0.50m, will allow the Group to narrow the working capital gap between the extended debtor terms customary in its overseas markets and its shorter credit terms.

Outlook

Trading conditions for the Group remain positive driven by the launch of new products and the added market reach from the expanding channel partner relationships. Consequently, the board is confident that 2016 will show continued growth in revenue and profit in line with market expectations.

The acquisition of Memopal represents a major milestone for the Group. I remain confident that the Group is on track and that we will see significant profitable growth in the short, medium and longer term.

Anthony Reeves

Chairman

19 September 2016

Unaudited Interim Condensed Consolidated Statement of Comprehensive Income

 
                                                    6 months                 6 months                Year ended 
                                                       to                       to 
                                                    30 June                  30 June                31 December 
                                                      2016                     2015                     2015 
                                                    Unaudited                Unaudited                 Audited 
                                      Note            EUR                      EUR                      EUR 
 
 Revenue                               4                  2,320,483                1,343,719                4,489,557 
 
 Cost of sales                         6                  (428,329)                (190,140)                (512,168) 
                                             ----------------------   ----------------------   ---------------------- 
 Gross profit                                             1,892,154                1,153,579                3,977,389 
 
 Sales, marketing and 
  administrative expenses              6                (2,188,543)              (1,036,272)              (2,998,190) 
                                              ---------------------   ----------------------    --------------------- 
 Operating (loss)/profit 
  before exceptional expenses                             (296,389)                  117,307                  979,199 
 Exceptional expenses                  6                  (153,792)                        -                (614,192) 
                                              ---------------------   ----------------------    --------------------- 
 (Loss)/profit from operations                            (450,181)                  117,307                  365,007 
 
 Finance income                                                   -                       35                       37 
 Finance expense                                              (960)                  (2,092)                  (2,787) 
                                             ----------------------   ----------------------   ---------------------- 
 (Loss)/profit before 
  tax                                                     (451,141)                  115,250                  362,257 
 
 Tax expense                                                (7,157)                  (8,810)                (170,339) 
                                             ----------------------   ----------------------   ---------------------- 
 (Loss)/profit for the 
  period                                                  (458,298)                  106,440                  191,918 
 
 Exchange gains arising                                           -                        -                        - 
  on the translation of 
  foreign subsidiaries 
                                             ----------------------   ----------------------   ---------------------- 
 Total comprehensive (loss)/profit 
  for the period                                          (458,298)                  106,440                  191,918 
                                                        ===========              ===========              =========== 
 (Loss)/earnings per share 
 Basic                                 7                 (EUR0.075)                 EUR0.027                 EUR0.042 
 Diluted                               7                 (EUR0.066)                 EUR0.025                 EUR0.039 
 
 

Unaudited Interim Condensed Consolidated Statement of Financial Position

 
                                              6 months                 6 months               31 December 
                                              ended 30                 ended 30                   2015 
                                              June 2016                June 2015                 Audited 
                                              Unaudited                Unaudited 
                                Note            EUR                      EUR                      EUR 
 
 Non-current assets 
 Intangible assets               8                  2,929,449                2,322,683                2,607,400 
                                       ----------------------   ----------------------   ---------------------- 
 
 Current assets 
 Trade and other receivables     9                  3,628,996                1,749,044                3,305,604 
 Cash and cash equivalents                            154,855                  143,542                1,333,869 
                                       ----------------------   ----------------------   ---------------------- 
                                                    3,783,851                1,892,586                4,639,473 
                                       ----------------------   ----------------------   ---------------------- 
 
 Total assets                                       6,713,300                4,215,269                7,246,873 
                                                  ===========              ===========              =========== 
 
 Current liabilities 
 Trade and other payables                         (1,313,124)              (1,344,546)              (1,434,431) 
                                       ----------------------   ----------------------   ---------------------- 
 Total liabilities                                (1,368,299)              (1,344,546)              (1,434,431) 
                                                  ===========              ===========              =========== 
 
 Net assets                                         5,400,176                2,870,723                5,812,442 
                                                  ===========              ===========              =========== 
 Capital and reserves 
 Called up share capital                              145,004                  106,372                  145,004 
 Share premium                                      4,051,322                1,294,056                4,051,322 
 Merger reserve                                       695,212                  695,212                  695,212 
 Share based payment 
  reserve                                             106,375                        -                   60,343 
 Retained earnings                                    402,263                  775,083                  860,561 
 Foreign exchange reserve                                   -                                                 - 
                                       ----------------------   ----------------------   ---------------------- 
 Total equity attributable 
  to equity holders of 
  the parent company                                5,400,176                2,870,723                5,812,442 
                                                  ===========              ===========              =========== 
 
 

Unaudited Interim Condensed Consolidated Statement of Changes in Equity

 
                                          Share                                   Share                                  Foreign 
                                                                                  based 
                      Share              premium             Merger              payment            Retained            exchange 
                     capital             account             reserve             reserve            earnings             reserve              Total 
                       EUR                 EUR                 EUR                 EUR                 EUR                 EUR                 EUR 
 
 As at 1 
  January 
  2016                    145,004           4,051,322             695,212              60,343             860,561                   -           5,812,442 
 Share based 
  payments                      -                   -                   -              46,032                   -                   -              46,032 
 Loss for the 
  period                                                                                                (458,298)                               (458,298) 
                -----------------   -----------------   -----------------   -----------------   -----------------   -----------------   ----------------- 
 As at 30 
  June 
  2016 
  (unaudited)             145,004           4,051,322             695,212             106,375             402,263                   -           5,400,176 
                       ==========          ==========          ==========          ==========          ==========          ==========          ========== 
 
 As at 1 
  January 
  2015 
  (restated)               90,903             580,373             678,610                   -             660,144              38,179           2,048,209 
 Change in 
  functional 
  currency                  1,465              11,613              16,602                   -               8,499            (38,179)                   - 
 Profit for 
  the period                    -                   -                   -                   -             106,440                   -             106,440 
 Shares 
  issued                   14,004             702,070                   -                   -                   -                   -             716,074 
                -----------------   -----------------   -----------------   -----------------   -----------------   -----------------   ----------------- 
 As at 30 
  June 
  2015 
  (unaudited)             106,372           1,294,056             695,212                   -             775,083                   -           2,870,723 
                       ==========          ==========          ==========          ==========          ==========          ==========          ========== 
 
 As at 1 
  January 
  2015 
  (restated)               90,903             580,373             678,610                   -             660,144              38,179           2,048,209 
 Change in 
  functional 
  currency                  1,465              11,613              16,602                   -               8,499            (38,179)                   - 
 Profit for 
  the year                      -                   -                   -                   -             191,918                   -             191,918 
 Shares 
  issued                   52,636           3,459,336                   -                   -                   -                   -           3,511,972 
 Share based 
  payments                      -                   -                   -              60,343                   -                   -              60,343 
                -----------------   -----------------   -----------------   -----------------    ----------------   -----------------   ----------------- 
 As at 31 
  December 
  2015 
  (audited)               145,004           4,051,322             695,212              60,343             860,561                   -           5,812,442 
                       ==========          ==========          ==========          ==========          ==========          ==========          ========== 
 
 

Unaudited Interim Condensed Consolidated Cash Flow Statement

 
                                         6 months                 6 months                Year ended 
                                          ended 30                ended 30                31 December 
                                         June 2016                June 2015                  2015 
                                         Unaudited                Unaudited                 Audited 
                                            EUR                     EUR                      EUR 
 Cash flows from operating 
  activities 
 Loss for the period after 
  taxation                                     (458,298)                  106,440                  191,918 
 Adjustments for: 
 Income tax                                        7,157                    8,810                  170,339 
 Net interest expense                                960                        -                    2,750 
 Amortisation of intangible 
  assets                                         407,949                  173,535                  476,623 
 Share based payments expense                     46,032                        -                   60,343 
                                   ---------------------   ----------------------   ---------------------- 
 Operating cash flows before 
  movements in working capital                     3,800                  288,785                  901,973 
 (Increase)/decrease in 
  trade receivables                              378,158                (709,506)              (1,809,552) 
 (Increase)/decrease in 
  other receivables                            (701,550)                        -                (456,513) 
 Increase/(decrease) in 
  trade and other payables                     (113,343)                  (2,173)                  177,521 
 Increase/(decrease) in 
  deferred revenue                              (14,156)                   65,500                  169,138 
                                   ---------------------   ----------------------   ---------------------- 
                                               (450,891)                (646,179)              (1,919,406) 
 Interest paid                                     (960)                        -                  (2,787) 
 Tax paid                                          (963)                        -                  (1,295) 
                                   ---------------------   ----------------------   ---------------------- 
 Net cash flow from operating 
  activities                                   (449,014)                (357,394)              (1,021,515) 
 
 Investing activities 
 Investment in intangible 
  assets                                       (730,000)                (421,133)              (1,351,000) 
 Interest received                                     -                        -                       37 
                                   ---------------------   ----------------------   ---------------------- 
 Net cash used in investing 
  activities                                   (730,000)                (421,133)              (1,350,963) 
 
 Financing activities 
 Net proceeds from issue 
  of share capital                                     -                  716,073                3,511,972 
                                   ---------------------   ----------------------   ---------------------- 
 Net cash from financing 
  activities                                           -                  716,073                3,511,972 
 
                                   ---------------------   ----------------------   ---------------------- 
 Net increase in cash and 
  cash equivalents                           (1,179,014)                 (62,454)                1,139,494 
 Cash and cash equivalents 
  at beginning of period                       1,333,869                  205,996                  205,995 
 Effect of foreign exchange 
  translation on cash and 
  cash equivalents                                     -                        -                 (11,620) 
                                   ---------------------   ----------------------   ---------------------- 
 Cash and net cash equivalents 
  at end of period                               154,855                  143,542                1,333,869 
                                             ===========              ===========              =========== 
 

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

   1.      General information 

Defenx PLC is a public limited company incorporated in England and Wales, registration number 08993398, which is quoted on AIM. Its principal activity is the design and sale of software solutions for the mobile, PC and network that provide privacy and security for an online world. Management and control is exercised from the UK and its main countries of operation are Italy and Switzerland.

   2.      Basis of preparation 

The unaudited interim condensed consolidated financial statements for the six months ended 30 June 2016 have been prepared in accordance with IAS 34 Interim Financial Reporting and do not constitute statutory financial statements. The unaudited interim condensed consolidated financial statements do not include all the information and disclosures required for a complete set of IFRS financial statements, and should be read in conjunction with the Group's annual financial statements as at 31 December 2015. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last financial statements.

These unaudited interim financial statements were authorised for issue by Defenx's Board of Directors on 16 September 2016.

   3.      Accounting policies 

There have been no changes to the accounting policies and methods of computation in the unaudited interim condensed consolidated financial statements for the six months ended 30 June 2016 as compared with the Group's most recent annual financial statements as at 31 December 2015.

   4.      Segmental analysis 

The Group currently has three reportable product segments: Mobile, PC and NAS, which reflect the three separate product categories for which software is developed and sold. The Group does not analyse costs or assets other than intangible assets by segment. The Group does not analyse costs or assets by geographical region.

Revenue by product segment and geographic market (based on customer location) for the Group is as follows:

 
                                        6 months                 6 months                Year ended 
                                        ended 30                 ended 30                31 December 
                                        June 2016                June 2015                  2015 
                                        Unaudited                Unaudited                 Audited 
                                          EUR                      EUR                      EUR 
 Revenue by product category 
 Mobile                                       1,608,621                  982,662                3,197,934 
 PC                                             644,000                  331,630                1,252,544 
 NAS                                             16,291                   14,439                   25,145 
 Other                                           51,571                   14,988                   13,934 
                                 ----------------------   ----------------------   ---------------------- 
                                              2,320,483                1,343,719                4,489,557 
                                            ===========              ===========              =========== 
 Revenue by geographic market 
  (customer location) 
 Europe (EU including the 
  UK)                                         1,890,044                1,098,774                3,725,222 
 Europe (Non-EU)                                413,113                  230,506                  739,190 
 Other                                           17,326                   14,439                   25,145 
                                 ----------------------   ----------------------   ---------------------- 
                                              2,320,483                1,343,719                4,489,557 
                                            ===========              ===========              =========== 
 

Non-current assets (capitalised development costs) by product segment for the Group are as follows:

 
                              6 months                 6 months                Year ended 
                              ended 30                 ended 30                31 December 
                              June 2016                June 2015                  2015 
                              Unaudited                Unaudited                 Audited 
                                EUR                      EUR                      EUR 
 Non-current assets 
 Mobile                             1,009,226                  703,214                  394,311 
 PC                                         -                        -                        - 
 NAS                                1,537,723                1,618,828                1,747,256 
 Other                                382,500                        -                  465,833 
                       ----------------------   ----------------------   ---------------------- 
 Total                              2,929,449                2,322,042                2,607,400 
                                  ===========              ===========              =========== 
 
   5.      Seasonality 

The Group's revenue generated by and marketing contributions paid to channel partners are subject to seasonal trends.

The larger proportion of the annual marketing contributions arise in the first half of the year to support channel partners who in turn generate higher sales in the second half of the year driven by the back-to-school market, annual hardware release cycles and Christmas trading. This will typically lower revenues and profits for the first half of the year. The Group seeks to mitigate the seasonal impact by incentivising sales in the first half of the year.

For the 12 months ended 30 June 2016, Group revenue was EUR5.47m (12 months ended 30 June 2015: EUR2.87m) and marketing contributions were EUR2.13m (12 months ended 30 June 2015: EUR1.18m).

   6.      Loss/profit from operations 
 
                                         6 months      6 months      Year ended 
                                          ended 30      ended 30     31 December 
                                         June 2016     June 2015        2015 
                                         Unaudited     Unaudited       Audited 
 The operating loss is stated               EUR           EUR           EUR 
  after charging: 
 
 Cost of sales 
 Amortisation of intangible 
  assets                                    407,949       173,535        476,623 
                                        ===========   ===========    =========== 
 Sales, marketing and administrative 
  expenses 
 Marketing contributions                  1,483,423       646,391      1,451,965 
 Staff costs                                327,424       162,018        691,358 
 Auditors' remuneration 
  - audit services                           20,100         5,456         29,237 
 Auditors' remuneration 
  - non-audit Services                        1,915             -        145,709 
 Share based payment expense                 46,032             -         60,343 
 Bad debt expense                               753             -         69,485 
 Lease payments - land and 
  buildings                                  17,451        13,950         29,588 
 Net foreign exchange (gains)/losses         23,313       (2,381)         34,443 
                                        ===========   ===========    =========== 
 
 Exceptional expenses 
 Costs in respect of the 
  AIM admission                                   -             -        614,192 
 Legal & professional fees                  153,792             -              - 
  in respect of the acquisition 
  of Memopal Srl 
                                        ===========   ===========    =========== 
 
   7.      Loss/earnings per share (EPS) 

Basic EPS amounts are calculated by dividing the profit for the period attributable to ordinary equity holders of Defenx by the weighted average number of Ordinary Shares outstanding during the period.

Diluted EPS amounts are calculated by dividing the profit attributable to ordinary equity holders of Defenx by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of Ordinary Shares that would be issued on conversion of all the dilutive deferred shares, options and warrants into Ordinary Shares.

The following reflects the income and share data used in the basic and diluted EPS computations:

 
                                        6 months                 6 months                Year ended 
                                        ended 30                 ended 30                31 December 
                                        June 2016                June 2015                  2015 
                                        Unaudited                Unaudited                 Audited 
                                          EUR                      EUR                      EUR 
 (Loss)/profit attributable 
  to ordinary equity holders 
  of the Defenx for basic 
  earnings and as adjusted 
  for the effects of dilution                 (458,298)                  106,440                  191,918 
                                            ===========              ===========              =========== 
 
 Weighted average number 
  of Ordinary Shares for 
  basic earnings per share                    6,098,912                3,898,282                4,549,653 
 Effect of dilution from 
  deferred shares                               300,000                  300,000                  300,000 
 Effect of dilution from 
  share options and warrants                    526,614                        -                   86,571 
                                 ----------------------   ----------------------   ---------------------- 
 Weighted average number 
  of Ordinary Shares for 
  basic earnings per share 
  adjusted for the effect 
  of dilution                                 6,925,526                4,198,282                4,936,224 
                                            ===========              ===========              =========== 
 
 

There have been no other relevant transactions involving ordinary shares or potential Ordinary Shares since 31 December 2015 other than in respect of the post period end acquisition of Memopal Srl as disclosed in note 10 below.

   8.      Intangible Assets 

The Group's intangible assets all relate to capitalised software development costs. There were no Intangible assets in the statement of financial position of Defenx.

 
 Group                       Mobile                    NAS                     Other                    Total 
                              EUR                      EUR                      EUR                      EUR 
 Cost 
 At 1 January 2016          648,979                 2,095,351                 500,000                 3,244,330 
 Additions                  730,000                     -                        -                     730,000 
                     ----------------------   ----------------------   ----------------------   ---------------------- 
 At 30 June 2016           1,378,979                2,095,351                 500,000                 3,974,330 
                          ===========              ===========              ===========              =========== 
 At 1 January 2015          298,501                 1,583,210                    -                    1,881,711 
 Change in 
  functional 
  currency                   10,979                    641                       -                      11,620 
 Additions                  545,154                  218,040                     -                     763,194 
                     ----------------------   ----------------------   ----------------------   ---------------------- 
 At 30 June 2015            854,634                 1,801,891                    -                    2,656,525 
                          ===========              ===========              ===========              =========== 
 At 1 January 2015          298,501                 1,583,210                    -                    1,881,711 
 Change in 
  functional 
  currency                   10,979                    641                       -                      11,620 
 Additions                  339,500                  511,500                  500,000                 1,351,000 
                     ----------------------   ----------------------   ----------------------   ---------------------- 
 At 31 December 
  2015                      648,979                 2,095,351                 500,000                 3,244,331 
                          ===========              ===========              ===========              =========== 
 
 Accumulated 
 depreciation 
 At 1 January 2016          254,672                  348,093                   34,167                  636,932 
 Charge for the 
  period                    115,081                  209,535                   83,333                  407,949 
                     ---------------------    ----------------------   ----------------------   ---------------------- 
 At 30 June 2016 
  (unaudited)               369,753                  557,628                  117,500                 1,044,881 
                          ===========              ===========              ===========              =========== 
 At 1 January 2015           99,500                   60,807                     -                     160,307 
 Charge for the 
  period                     51,920                  121,615                     -                     173,535 
                     ---------------------    ----------------------   ----------------------   ---------------------- 
 At 30 June 2015 
  (unaudited)               151,420                  182,422                     -                     333,842 
                          ===========              ===========              ===========              =========== 
 Net book value 
 At 30 June 2016 
  (unaudited)              1,009,226                1,537,723                 382,500                 2,929,449 
                          ===========              ===========              ===========              =========== 
 At 30 June 2015 
  (unaudited)               703,214                 1,619,469                    -                    2,322,683 
                          ===========              ===========              ===========              =========== 
 At 31 December 
  2015 (audited)            394,307                 1,747,258                 465,835                 2,607,400 
                          ===========              ===========              ===========              =========== 
 
 

The intangible assets booked represent qualifying expenditure on the development of software for resale less accumulated amortisation and impairment costs. The carrying value of these intangible assets is tested for impairment on a half yearly basis, or when there are indications that the value of the assets might be impaired.

The directors have assessed development projects' individual net present value against forecasts of future sales of the related products, unit sales prices and costs over a five-year period. No sales beyond five years have been included in the calculations. The impairment tests are sensitive to changes in these forecasts and changes could result in impairment; however, the varying bases indicate a net present value in excess of the carrying value of the intangible assets at the balance sheet date.

   9.      Trade and other receivables 
 
                                      6 months                 6 months                Year ended 
                                      ended 30                 ended 30                31 December 
                                      June 2016                June 2015                  2015 
                                      Unaudited                Unaudited                 Audited 
                                        EUR                      EUR                      EUR 
 Gross trade receivables                    2,722,292                1,663,670                3,099,697 
 Provision for impairment                   (271,113)                (219,787)                (270,360) 
                               ----------------------   ----------------------   ---------------------- 
 Net trade receivables                      2,451,179                1,443,883                2,829,337 
 Prepayments and accrued 
  income                                       49,741                  289,344                  162,191 
 Payments on account                        1,128,076                   15,817                  314,076 
                               ----------------------   ----------------------   ---------------------- 
 Total receivables                          3,628,996                1,749,044                3,305,604 
                                          ===========              ===========              =========== 
 Provisions for impairment 
 Opening balance                            (270,360)                (417,510)                (417,354) 
 Utilised during the period                         -                  197,723                  200,193 
 Net increase during the 
  period                                        (753)                        -                 (53,199) 
                               ----------------------   ----------------------   ---------------------- 
 Closing balance                            (271,113)                (219,787)                (270,360) 
                                          ===========              ===========              =========== 
 
   10.    Events after the reporting date 

On 2 August 2016, Defenx acquired 95.2% of Memopal Srl, a cloud backup and sync company for a total consideration of up to EUR1.78m, of which EUR0.38m is deferred. The initial consideration of EUR1.40m was satisfied by EUR0.44m in cash plus interest charged at 8% per annum payable to the sellers in equal instalments over a period of 24 months and the issue of 621,394 new ordinary shares of 1.8p in Defenx. The deferred consideration of up to EUR0.38m will be satisfied by the issue of up to an additional 238,035 new ordinary shares, subject to certain performance thresholds of the enlarged group being met for the year ended 31 December 2017.

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR VVLFFQKFFBBQ

(END) Dow Jones Newswires

September 19, 2016 02:00 ET (06:00 GMT)

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