Share Name Share Symbol Market Type Share ISIN Share Description
Crossword Cybersecurity Plc LSE:CCS London Ordinary Share GB00BPFJXS57 ORD 5P
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  +0.00p +0.00% 510.00p 490.00p 530.00p 510.00p 510.00p 510.00p 0 08:00:00
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Software & Computer Services - - - - 24

Crossword Cybersecurity PLC 2018 Annual Report and Accounts

15/04/2019 7:00am

UK Regulatory (RNS & others)

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RNS Number : 1198W

Crossword Cybersecurity PLC

15 April 2019

15 April 2019

Crossword Cybersecurity plc


Crossword Cybersecurity plc (AIM: CCS, "Crossword", the "Company" or the "Group"), the cyber security technology commercialisation company, is pleased to announce its final results for the year ended 31 December 2018. The Annual Report and Accounts for the year ended 31 December 2018, the Notice of it Annual General Meeting ("AGM") and a Form of Proxy will be posted to shareholders shortly.

The AGM will be held on Thursday 9th May 2019 at 3.00pm at the offices of Shakespeare Martineau LLP, 6th Floor, 60 Gracechurch Street, London EC3V 0HR.

A copy of the Annual Report and Accounts and the notice of AGM will be sent to shareholders shortly and are available on the Company's website at The Company has also made an Investor Presentation which will be available on its website at

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.


Crossword Cybersecurity plc                     Tel: +44 (0) 20 3953 8460 
Tom Ilube, Chief Executive Officer 
Mary Dowd, Finance Director 
Grant Thornton (Nominated Adviser)              Tel: +44 (0) 20 7383 5100 
Colin Aaronson / Jamie Barklem /Niall McDonald 
Hybridan LLP (Broker)                           Tel: +44 (0)203 764 2341 
Claire Louise Noyce 

About Crossword Cybersecurity plc

Crossword Cybersecurity plc focuses on the development and commercialisation of university research-based cyber security related software and cyber security consulting. The Group's specialist cyber security product development and software engineering teams work with its university partners to develop the research concept into a fully-fledged commercial product that it will then take to market. The Group's aim is to build up a portfolio of revenue generating, intellectual property based, cyber security products. Rizikon Assurance, Crossword's leading product, is a SaaS platform that enables medium to large companies to assess the cyber maturity and GDPR readiness of their suppliers. Crossword's team of expert cyber security consultants leverages years of experience in national security, defence and commercial cyber intelligence and operations to provide bespoke advice tailored to its clients' business needs.

Chairman's Statement

The financial year ending 31 December 2018 marked a transformational year for Crossword Cybersecurity plc as we were successfully admitted to AIM, the London Stock Exchange's growth market. In this report, I set out high level reflections on the year and on finance and governance, with the CEO's Report that follows providing a more detailed review of the business, together with the financial and operational commentary.

Clear Strategy

Crossword has a clear strategy of building a significant intellectual property based, AIM listed cyber security business. Crossword is a technology commercialisation business focusing on cyber security. The Group develops and commercialises university research based cyber security related software and cyber security consulting.

Crossword closed the financial year with our lead product, Rizikon Assurance, having built up strong momentum with software revenue growth over 100% and a healthy sales pipeline, a good set of relationships with a range of cyber security focused universities and a fast growing specialist consulting team. The Group was successfully admitted to AIM at the end of the year, raising GBP2m in the process.

Management's goals for the future are exciting and ambitious. The Board is fully supportive of Management in executing its growth plans for the business over the coming year and creating sustainable shareholder value.


During the period under review, the Board and Management have continued to adopt a robust set of financial controls. We were very pleased to welcome our new full-time Finance Director, Mary Dowd, in May 2018. With over 20 years' experience, Mary wasted no time in reviewing and strengthening all of our financial operations and reporting and guided us smoothly through our AIM quoting.

We strengthened the Group Balance Sheet during 2018 with two funding rounds, in March and December, totalling GBP4.16m. I would like to thank shareholders for their continued support for Crossword's strategy.

Strong Board and Governance

The Directors fully understand the importance of high standards of corporate governance and I refer you to the Chairman's Corporate Governance Statement on page 17 of this report. The Board has adopted the Quoted Companies Alliance ("QCA") Corporate Governance Code (the "QCA Code") in line with the London Stock Exchange's requirement for all AIM listed companies to adopt and comply with a recognised corporate governance code governance appropriate to the nature, complexity and scale of the Group. In addition, we ensure that we maintain high standard throughout the Group by operating a robust framework of controls, and more details can be found in the Director's report. The Board believes that, to deliver our corporate strategy, generate shareholder value on a sustainable basis and safeguard all of our stakeholders' long-term interests, effective corporate governance is essential.

Promising Outlook

The last twelve months have been very exciting for Crossword and the Board is geared up for significant growth over the coming period. The cyber security market continues to expand and there is a wealth of cyber security research for Crossword to mine. Having built a solid business over the past few years, with a strong product in the market, a dedicated sales and marketing team fully up to speed, an exceptional leadership team and a properly funded AIM listed cyber security business I believe that we can look forward to a period of significant commercial growth.

Finally, I would like to thank all our employees for their hard work and dedication, as well as our university partners, business partners, suppliers and shareholder for their continued support. With your support, we are confident that we will deliver on Crossword's potential over the coming months and years.

Sir Richard Dearlove KCMG OBE

Chief Executive Officer's Statement

As Chief Executive Officer, I am pleased to present the annual report and audited accounts for Crossword Cybersecurity PLC ("Crossword" or the "Company") for the financial year ended 31 December 2018.

The past twelve months has been a period of rapid development for Crossword, the technology commercialisation company focused on cyber security, on all fronts. At the beginning of 2018, Crossword was a relatively small, NEX Growth market company with a new product, Rizikon, in the market, just beginning to transition from pure R&D to a commercial revenue generating company. A year later, Crossword is quoted on AIM, having raised GBP4.16m during 2018, recruited a mature sales team, strengthened our Board and management team, built a strong product pipeline, doubled product revenue and significantly grown its consulting activities, and on the way awarded the accolade of NEX Exchange Company of the Year.

The Company's admission to AIM in December was a major milestone on its journey, providing it with the platform that the Company needs for the next stage of growth. Crossword raised GBP2.16m earlier in the year (March), providing the capital to recruit the sales team and, on admission to AIM, it raised a further GBP2m to support continued sales and marketing activity, as well as product development.

In preparation for scaling up, Crossword was very pleased to attract two new Directors during the year. In February, Ruth Anderson joined the Board as a Non-Executive Director. Ruth is Director of Technology Risk at Lloyds Banking Group, managing Group-wide change and transformation risk. Prior to joining Lloyds Ruth was a Director in the cyber consulting group at KPMG, having previous service in intelligence in the British Army. In May, Mary Dowd took up her post as Crossword's Finance Director, joining the Board in June. Mary has over 20 years' experience in both start up and large companies, including as Chief Operating Officer and Chief Financial Officer of a Company with operations in London, Hong Kong, Malta, New York, Boston and San Francisco.

The Company also reviewed its office arrangements in both London and Krakow, Poland, where the Company's dedicated software development team is based, and executed two office moves successfully, moving to more modern offices in both locations giving it capacity and flexibility to expand in the future in line with business needs.

As a technology commercialisation company, Crossword has been building up relationships with universities conducting interesting cyber security research and now has worked with or has memoranda of understanding with fourteen universities. The Company's scientific team has identified over 1,000 cyber security projects from universities in the UK, Europe and the USA and has started an exercise of reviewing these research projects to identify ones that have promising intellectual property that Crossword believes it may be able to commercialise. Our robust project review process has assessed and is assessing projects for their potential marketability. Meanwhile, Crossword is continuing to develop the second product in its pipeline, Nixer, an application DDoS platform, and during the year the Company secured an InnovateUK grant to conduct research with Imperial College to extend Nixer's functionality into defending against credential stuffing attacks. Nixer is expected to launch late in 2019. Additionally, a product proposal continues to be developed for Cyber AI.

As part of preparing different commercialisation options, Crossword signed a memorandum of understanding (MoU) with GBP1Bn market cap, main market listed IP Group, the developer of intellectual property based businesses. The MoU sets up an understanding between IP Group and Crossword to commercialise cyber security intellectual property originating from university research projects. In pooling expertise from the two Groups, the MoU creates a framework to enable detailed technical and commercial exploration of the complex opportunities academia gives rise to.

The investment in a dedicated sales and marketing team began to pay off during the year, as the pipeline for the Company's lead product, Rizikon Assurance, quickly built up to GBP1.4m of qualified opportunities across over 30 companies and some of those opportunities started to convert into contracts. As we move into 2019, the pipeline continues to grow. Overall, product revenue doubled in FY2018 versus the previous year, with clients across a range of sectors including Health, IT Services, Nuclear & Professional Services and a number of recurring revenue deals. Notable recent client wins from the 2018 pipeline for Rizikon Assurance included Nuvia, an international engineering, project management and service provider and Kinnerton Confectionery, Britain's largest independent manufacturer of chocolate and novelty confectionery. Significant Rizikon Assurance enhancements, expected in the second quarter of 2019, will continue to drive the growth in pipeline and subsequent revenue, with anticipated increase in ticket price. In parallel, Crossword's consulting business, with its mix of blue-chip cyber risk consultants and technical cyber security experts, went from strength to strength, working for a range of clients in industries such as financial services, aviation, professional services and energy. Our consulting business offers consulting, advice and testing, to companies who are looking to increase their cybersecurity resilience, along with consulting support to Crossword Cybersecurity plc's product implementation.

In prior years, Crossword had helped create two new ventures, CyberOwl Ltd and ByzGen Ltd, to commercialise intellectual property originating from or created in cooperation with Coventry University and the University of Warwick respectively, and both of these companies were successful in raising additional investment during 2018. ByzGen raised an additional GBP1.5m in 2018, bringing the total amount raised to GBP2m. CyberOwl secured an additional GBP1m. Crossword has commercial revenue generating relationships, royalty arrangements or equity stakes with both of these companies.

The outlook for Crossword is positive. A recent Government report estimated that the UK cyber security sector's total revenue was GBP5.7Bn as at FY 2015/16 and it has continued growing since then. Crossword estimates that the potential addressable market for Rizikon Assurance alone is GBP300m per annum across 10,000 companies. Over the coming year, the Company intends to focus on sales and marketing activity across product and consulting, to drive up revenue rapidly.

Crossword's success is a direct function of the commitment and skill of our staff and the support of our customers and university partners. I would like to take this opportunity to thank everyone who has enables us to achieve fantastic results this year, as we prepare for the next stage of our growth journey.

Tom Ilube CBE

Chief Executive Officer

Financial Statements

                                                           12 Months                        12 Months 
 Consolidated Statement of Comprehensive                       ended                            ended 
  Income                                               31st December                    31st December 
                                            Notes               2018                             2017 
                                                                 GBP                              GBP 
 Revenue                                      2            1,067,609                       736,546 
 Cost of Sales                                           (1,013,521)                    (1,062,350) 
 Gross Profit (Loss)                                          54,088                        (325,804) 
 Other operating income-research & development 
  tax credits                                                192,149                           97,716 
 Administrative expenses                                 (2,335,228)                        (956,126) 
 Share based payments                                       (45,751)                         (50,875) 
 Finance income-bank interest receivable                       3,727                              976 
 Finance costs-other interest payable                        (1,237)                          (1,402) 
 Loss for the year/period before 
  taxation                                               (2,132,252)                      (1,235,515) 
 Tax expense                                                 (8,052)                          (4,730) 
 Loss for the Year / Period                              (2,140,304)                      (1,240,245) 
 Other Comprehensive Income 
 Items that may be reclassified 
  to profit or loss: 
 Foreign Exchange Translation Gain 
  (Loss)                                                    (13,542)                            4,265 
 Total Comprehensive Loss                                (2,153,846)                      (1,235,980) 
                                                   =================                  =============== 
 Earnings Per Share                                           (0.55)                           (0.39) 
 All results are derived from continuing 
   Statement of Financial Position as 
   at 31 December                                              Group         Company            Group          Company 
                                                                2018            2018             2017             2017 
                                                                 GBP             GBP              GBP              GBP 
 Non-Current Assets 
 Tangible assets                                              12,066           4,583           12,408                - 
 Intangible assets                                                -                -                -                - 
 Investments in other unlisted investment 
  & subsidiary                                                    31          11,048               31            1,048 
 Total non-current assets                                     12,097          15,631           12,439            1,048 
                                                   -----------------  --------------  ---------------  --------------- 
 Current Assets 
 Trade and other receivables                                 559,387         848,204          175,580          447,503 
 Cash and cash equivalents                                 2,222,706       2,213,071          490,090          463,603 
 Total current assets                                      2,782,093       3,061,276          665,670          911,106 
                                                   -----------------  --------------  ---------------  --------------- 
 TOTAL ASSETS                                              2,794,190       3,076,907          678,109          912,154 
                                                   =================  ==============  ===============  =============== 
 Attributable to the owners of the 
 Share Capital                                               234,022         234,022          159,173          159,173 
 Share premium account                                     7,513,906       7,513,906        3,555,522        3,555,522 
 Other reserves                                               96,626          77,101           50,875         50,875 
 Retained earnings                                    (5,327,370)       (4,999,370)     (3,187,066)      (2,947,789) 
 Translation of foreign operations                           (6,013)               -            7,529                - 
 Total equity                                              2,511,172       2,825,659          586,033          817,781 
                                                   -----------------  --------------  ---------------  --------------- 
 Current Liabilities 
 Trade and other payables                                    283,018         251,248           92,076           94,373 
 Total current liabilities                                   283,018         251,248           92,076           94,373 
                                                   -----------------  --------------  ---------------  --------------- 
 Total Liabilities                                           283,018         251,248           92,076           94,373 
                                                   -----------------  --------------  ---------------  --------------- 
 Total Equity & Liabilities                                2,794,190       3,076,907          678,109          912,154 
                                                   =================  ==============  ===============  =============== 
 Statement of Changes in Equity                                Group         Company            Group          Company 
 As At                                                          2018            2018             2017             2017 
 Share Capital                                                   GBP             GBP              GBP              GBP 
 At 1st January                                              159,173         159,173          156,015          156,015 
 Issue of shares                                              74,849          74,849            3,158            3,158 
 At 31st December                                            234,022         234,022          159,173          159,173 
                                                   -----------------  --------------  ---------------  --------------- 
 Share Premium 
 At 1st January                                            3,555,522       3,555,522        3,413,416        3,413,416 
 Issue of shares                                           3,958,384       3,958,384          142,106          142,106 
 At 31st December                                          7,513,906       7,513,906        3,555,522        3,555,522 
                                                   -----------------  --------------  ---------------  --------------- 
 Equity Reserve 
 At 1st January                                               50,875          50,875                -                - 
  Employee share schemes - value of 
   employee services                                          45,751          26,226           50,875           50,875 
 At 31st December                                             96,626          77,101           50,875           50,875 
                                                   -----------------  --------------  ---------------  --------------- 
 Retained Earnings 
 At 1st January                                       (3,187,066)       (2,947,789)     (1,946,821)      (1,975,150) 
 Total Comprehensive loss for the 
  period                                              (2,140,304)       (2,051,581)     (1,240,245)        (972,639) 
 At 31st December                                        (5,327,370)     (4,999,370)      (3,187,066)      (2,947,789) 
                                                   -----------------  --------------  ---------------  --------------- 
 Translation of Foreign Operations 
 At 1st January                                                7,529               -            3,264                - 
 Translation of Foreign Operations                          (13,542)               -            4,265                - 
 At 31st December                                            (6,013)               -            7,529                - 
                                                   -----------------  --------------  ---------------  --------------- 
 At 1st January                                              586,033         817,781        1,625,874        1,594,281 
 Total Comprehensive loss for the 
  Period                                                 (2,153,846)     (2,051,581)      (1,235,980)        (972,639) 
 Issue of shares                                           4,033,233       4,033,233          145,264          145,264 
 Share based Payments                                         45,751          26,226           50,875           50,875 
 At 31st December                                          2,511,172       2,825,659          586,033          817,781 
                                                   =================  ==============  ===============  =============== 
                                                           12 Months                        12 Months 
                                                               ended                            ended 
 Consolidated Statement of Cashflows                   31st December                    31st December 
 Years                                      Notes               2018                             2017 
 Cashflows From Operating Activities                             GBP                              GBP 
 Loss for the year / period                              (2,140,304)                      (1,240,245) 
 Movement in trade and other receivables                   (383,807)                            2,574 
 Movement in trade and other payables                        190,942                         (12,004) 
 Depreciation and amortisation                                 5,592                            5,474 
 Non cash employee benefits                                   45,751                           50,875 
 Net Cashflow from Operating Activities                  (2,281,826)                      (1,193,326) 
                                                   -----------------                  --------------- 
 Cashflow From Investing Activities 
 Purchase of tangible assets                                 (5,250)                         (15,657) 
 Purchase of shares in other unlisted 
  investment                                                       -                                - 
 Net Cashflow from Investing Activities                      (5,250)                         (15,657) 
                                                   -----------------                  --------------- 
 Cashflows From Financing Activities 
 Proceeds from issue of ordinary 
  shares                                                   4,033,233                          145,264 
                                                   -----------------                  --------------- 
 Net Cash Inflow from Financing 
  Activities                                               4,033,233                          145,264 
                                                   -----------------                  --------------- 
 Net Increase in Cash & Cash Equivalents                   1,746,158                      (1,063,719) 
 Foreign Currency Translation Difference                    (13,542)                            4,903 
 Cash and Cash Equivalent at the beginning 
  of the period                                              490,090                        1,548,906 
 Cash and Cash Equivalent at the 
  end of the period                                        2,222,706                          490,090 
                                                   =================                  =============== 

Notes to the Financial Information

   1          Accounting Policies 
   1.1        The group and its operations 

Crossword Cybersecurity plc (the "Company") is a company incorporated on 6 March 2014 in the United Kingdom under the Companies Act 2006. The Company is the parent company of the Crossword group of Companies focusing on the cybersecurity sector. The principle activities are the development and commercialisation of university research-based cyber security related software and cybersecurity consulting.

The financial information includes the results of the Company and its subsidiaries (together referred to as the "Group" and individually as "Group entities".

The principal accounting policies applied in the preparation of the financial information are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

   1.2        Basis of preparation of financial information 

The financial information has been prepared in accordance with the requirements of the London Stock Exchange plc AIM Rules for Companies and in accordance with International Financial Reporting Standards ("IFRS") and IFRS Interpretations Committee ("IFRS IC") interpretations as adopted by the European Union and the Companies Act 2006 applicable to companies reporting under IFRS.

The financial information has been prepared on the historical cost. The preparation of financial information in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. Changes in assumptions may have a significant impact on the financial information in the year the assumptions changed. Management believes that the underlying assumptions are appropriate. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial information are disclosed in note 1.16.

Changes in accounting policy and disclosures

The Group has adopted the following new and amended IFRSs from 1 January 2018 prospectively in the consolidated financial information. There has not been a material impact to the Group when adopting these new and amended IFRSs:

IFRS9 - Financial Instruments; Classification and measurement, applicable for financial years beginning on/after 1January 2018

IFRS15 - Revenue from contracts with customers, applicable for financial years beginning on/after 1 January 2018.

IFRS 9 Financial instruments

The Group adopted IFRS 9 Financial Instruments as issued by the IASB in July 2014 with a date of transition of 1 January 2018, which resulted in no adjustments to the carrying value of financial assets and liabilities at the date of transition.

IFRS 15 Revenue from Contracts with Customers

IFRS 15 Revenue from Contracts with Customers was issued in 2014 and was endorsed by the EU in 2016. IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue.

IFRS 15 provides a single, principles-based five-step model to be applied to all contracts with Customers:

1) identify the contract with the Customer;

2) identify the performance obligations in the contract, introducing the new concept of "distinct";

3) determining the transaction price;

4) allocating the transaction price to the performance obligations in the contracts, on a relative stand-alone selling price basis; and

5) recognise revenue when (or as) the entity satisfies its performance obligation.

IFRS 15 also introduces new guidance on, amongst other areas, combining contracts, discounts, variable consideration and contract modifications. It requires that certain costs incurred in obtaining and fulfilling customer contracts be deferred on the balance sheet and amortised over the period an entity expects to benefit from the customer relationship.

Management has conducted a detailed analysis of the impact of IFRS 15 on the Group which has shown that the recognition of revenue will be consistent with the transfer of risks and rewards to the customer under IAS 18. Management have concluded following this assessment that the implementation of IFRS 15 has not resulted in any impact to revenue in the Group's consolidated financial information.

The following standards and interpretations were issued by the IASB and IFRS IC but have not been adopted either because they were not endorsed by the EU at 30 June 2018 or they are not yet mandatory and the Group has not chosen to early adopt.

IFRS16 - Leases, applicable for financial years beginning on/after 1 January 2019

IFRS 16 replaces IAS 17 Leases and will primarily change lease accounting, with lessor accounting under IFRS 16 expected to be similar to lessor accounting under IAS 17. Lessee accounting under IFRS 16 will be similar in many respects to IAS 17 accounting for finance leases, but is expected to be substantively different to existing accounting for operating leases.

Where a contract meets IFRS 16's definition of a lease and the Group acts as a lessee, lease agreements will give rise to the recognition of a non-current asset representing the right to use the leased item, and a loan obligation for future lease payables on the Group's balance sheet.

Lease costs will be recognised in the form of depreciation of the right-of-use asset and interest on the lease liability, which may impact the phasing of operating profit and profit before tax, compared to existing cost profiles and presentation in the income statement, and will also impact the classification of associated cash flows.

The impact of IFRS 16-Leases will require the Group to record its current property leases and qualifying technology contracts on the balance sheet giving rise to a right to use asset and a corresponding lease obligation. The leases impacted are currently treated as operating expenses. The change in recognition is expected to increase depreciation charges and lead to a reduction in lease costs in the income statement. Future commitments of the Group's two commitments under current operating leases are outlined in note 12 which gives some indication of the impact on the Group going forward, however, as IFRS 16 is effective for the first time for the financial year commencing 1 January 2019, a full assessment of the standard has not yet been made but it is expected that the standard will not have a material impact on the future results of the Group.

Other standards and interpretations yet to be adopted include:

IFRS 17 'Insurance Contracts'

Amendments to IFRS 2 'Share Based Payments

Amendments to IFRS 11 'Accounting for Acquisition of Interests in Joint Operation'

Amendments to IFRS 9 'Prepayment Features with Negative Compensation'

Amendments to IAS 40 'Transfer of Investment Property'

And are not expected to have a material impact of the future results of the Group.

   1.3        Going Concern 

The financial information have been prepared on a going concern basis which the directors believe to be appropriate as the Group have sufficient funds to finance its operations for the next 12 months from the approval of this financial information.

   1.4        Basis of consolidation 

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. Control exists when then the Group has the power, directly or indirectly ,to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group.

All intra-group transactions balances income and expenses are eliminated on consolidation. Uniform accounting policies are applied by the Group entities to ensure consistency.

   1.5        Revenue 

Revenue comprises the fair value of consideration received or receivable for licence income and the rendering of services in the ordinary course of the Group's activities. Revenue is shown net of value added tax and trade discounts. Income is reported as follows:

(a) Licence income

Technology and product licensing revenue represents amounts earned for licenses granted under licensing agreements, including up-front payments. Revenues relating to up-front payments are recognised when the obligations related to the revenues have been completed.

Revenues for maintenance and support services are recognised in the accounting periods in which the services are rendered.

(b) Rendering of Services

Services relate to implementation and deployment fees for the technology and products licensed to customers. Revenue is recognised in the accounting periods in which the services are rendered.

   1.6        Functional and presentation currency 

The presentation currency of the Group is pounds sterling (GBP). The functional currency of the Company is pounds sterling. The functional currency of the Company's polish subsidiary is Polish Zloty (PLN)

   1.7        Foreign currency transactions 

Transactions in foreign currencies are translated to GBP at the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to GBP at the exchange rate at that date.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to GBP at the exchange rate at the date that the fair value was determined.

Foreign exchange differences arising on translation are recognised in the statement of comprehensive income.

On consolidation, the assets and liabilities of foreign operations are translated into GBP at the rate of exchange at the reporting date. Their statements of profit or loss are transacted at exchange rates at the dates of transaction.

The exchange differences arising upon consolidation on retranslation from a functional currency other than GBP are recognised as a separate component of equity

   1.8        Property, plant and equipment 

Property, plant and equipment is stated at purchase price less accumulated depreciation and impairment losses. The cost includes all expenses directly related to the purchase of a relevant asset.

All other repair and maintenance costs are charged to the income statement for the period during the reporting period in which they are incurred.

   1.9        Depreciation 

Each item of property, plant and equipment is depreciated using the straight line method over the estimated useful life and depreciation charge is included in the income statement for the period.

The depreciation is charged to the income statement for the period and determined using the straight line method over the estimated useful life of the item of property, plant and equipment.

The expected useful lives of property, plant and equipment in the reporting and comparative periods are as follows:

Useful lives in years

               Computers        3.33 
               Furniture & fittings          3.33 
   1.10      Impairment of non-financial assets 

The residual value of an asset is the estimated amount that the Group would currently obtain from disposal of the asset less the estimated costs of disposal, if the asset was already of the age and in the condition expected at the end of its physical life.

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. Items costing less than GBP2,000 per individual asset are written off in the period of acquisition.

At the end of each reporting period management assesses whether the indicators of impairment of property, plant and equipment exists.

The carrying amounts of property, plant and equipment and all other non-financial assets are reviewed for impairment if there is any indication that the carrying amount may not be recoverable.

For the purpose of impairment testing the recoverable amount is measured by reference to the higher of value in use

(being the net present value of expected future cashflows of a relevant cash generating unit) and fair value less costs to sell

(the amount obtainable from the sale of an asset or cash generating unit in an arm's length transaction between knowledgeable, willing parties who are independent from each other less the costs of disposal)

Where there is no binding sale agreement or active market, fair value less costs to sell is based on the best information available to reflect the amount the group would receive for the cash generating unit.

A cash generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.

If the carrying amount of the asset exceeds its recoverable amount, the asset is impaired and an impairment loss is charged to the income statement so as to reduce the carrying amount in the statement of financial position to its recoverable amount.

A previously recognised impairment loss is reversed if the recoverable amount increases as a result of a reversal of the conditions that originally resulted in the impairment.

This reversal is recognised in profit or loss for the period and is limited to the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised in prior years.

   1.11      Financial Instruments 

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the statement of comprehensive income.

All financial instruments are classified in accordance with the principles of IFRS 9 Financial Instruments.


Financial Assets

Classification of financial assets

Debt instruments that meet the following conditions are subsequently measured at amortised cost:

-- the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

-- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Debt instruments that meet the following conditions are subsequently measured at FVTOCI:

-- the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets; and the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets; and

-- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

By default, all other financial assets are subsequently measured at FVTPL.

Amortised cost and effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period.

For financial instruments other than purchased or originated credit-impaired financial assets, the effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) excluding expected credit losses, through the expected life of the debt instrument, or, where appropriate, a shorter period to the gross carrying amount of the debt instrument on initial recognition. For purchased or originated credit-impaired financial assets, a credit-adjusted effective interest rate is calculated by discounting the estimated future cash flows, including expected credit losses, to the amortised cost of the debt instrument on initial recognition.

The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. On the other hand, the gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance.

Impairment of financial assets

The Company recognises a loss allowance for expected credit losses on financial assets that are measured at amortised cost. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.

Expected credit loss measurement

IFRS 9 outlines a 'three-stage' model for impairment based on changes in credit quality since initial recognition as summarised below:

-- A financial instrument that is not credit-impaired on initial recognition is classified in "Stage 1" and has its credit risk continuously monitored by the Company.

-- If a significant increase in credit risk ("SICR") since initial recognition is identified, the financial instrument is moved to "Stage 2" but is not yet deemed to be credit-impaired.

-- If the financial instrument is credit-impaired, the financial instrument is then moved to "Stage 3".

-- Financial instruments in Stage 1 have their ECL measured at an amount equal to the portion of lifetime expected credit losses that result from default events possible within the next 12 months. Instruments in Stages 2 or 3 have their ECL measured based on expected credit losses on a lifetime basis.

-- A pervasive concept in measuring ECL in accordance with IFRS 9 is that it should consider forward-looking information.

-- Purchased or originated credit-impaired financial assets are those financial assets that are credit-impaired on initial recognition. Their ECL is always measured on a lifetime basis (Stage 3).


Financial liabilities and equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company entity are recognised at the proceeds received, net of direct issue costs.

Financial liabilities

All financial liabilities are subsequently measured at amortised cost using the effective interest method or at ""Fair Value Through Profit or Loss"" (""FVTPL"").

Financial liabilities at FVPL

Financial liabilities are classified as at FVTPL when the financial liability is 1) contingent consideration of an acquirer in a business combination to which IFRS 3 applies, 2) held for trading, or 3) it is designated as at FVTPL.

Financial liabilities subsequently measured at amortised cost

Financial liabilities that are not 1) contingent consideration of an acquirer in a business combination, 2) held-for-trading, or 3) designated as at FVTPL, are subsequently measured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.

Derecognition of financial liabilities

The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in the statement of comprehensive income.

   1.12      The Group could be exposed to risks that arise from its use of financial instruments. 

Risks in relation to financial assets include:

-1.12.1 Market risk

Market risk covers foreign exchange risk, price risk and interest rate risk.

As the majority of the Group's transactions are either in Sterling or in Polish Zloty the Group considers its exposure to foreign exchange risk to be minimal.

There are no derivatives and hedging instruments.

The Group is not exposed to price risk given that no securities are held under financial assets

The Group is not exposed to interest rate or cash flow risk due to the fact that the Group has no borrowing or complex financial instruments.

-1.12.2 Credit risk

Credit risk is considered to be the risk of financial loss incurred by the Group in the event that a customer or counterparty to an asset fails to meet contractual obligations.

The Group does not consider credit risk to be significant given the type of services it provides.

-1.12.3 Liquidity risk

Management monitor rolling forecasts of the Group's liquidity reserves, cash and cash equivalents on the basis of expected cash flows and therefore monitors liquidity risk sufficiently.

   1.13      Research and development 

Research and development expenditure is written off as incurred.

   1.14      Taxes 

Income Taxes include all taxes based upon the taxable profits of all Group companies. Other taxes not based on income such as property and capital taxes are included within operating expenses or financial expenses according to their nature.

Deferred income tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial information.

Deferred income tax assets relating to the carry-forward of unused tax losses are recognised to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilised.

Current and deferred income tax assets are offset when the income taxes are levied by the same taxation authority and when there is a legally enforceable right to offset them.

   1.15      Share Based Payments 

On occasion, the Company has made share-based payments to certain Directors and employees by way of issue of share options. The fair value of these payments is calculated by the Company using the binomial option valuation model.

The expense, where material, is recognised on a straight-line basis over the period from the date of award to the date of vesting, based on the company's best estimate of the number of shares that will eventually vest.

   1.16      Capital management 

The Group considers its capital to comprise of its equity share capital, share premium, foreign exchange reserve, share options reserve and capital redemption reserve, less its accumulated losses. Quantitative detail is shown in the consolidated statement of changes in equity.

The directors' objective when managing capital is to safeguard the Group's ability to continue as a going concern in order to provide returns for the shareholder and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The directors monitor a number of KPIs at both the Group and individual subsidiary level on a monthly basis. As part of the budgetary process, targets are set with respect to operating expenses in order to effectively manage the activities of the Group. Performance is reviewed on a regular basis and appropriate actions are taken as required. These internal measures indicate the performance of the business against budget/forecast and to confirm that the Group has adequate resources to meet its working capital requirements.

   1.17      Critical accounting estimates and judgements and key sources of estimation uncertainty 

Estimates and judgements are continually evaluated and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The following are the key estimates that the directors have made in the process of applying the Group's accounting policies and have the most significant effect on the amounts recognised in the financial information. There are no further critical accounting judgements.

Going concern

The Group's business model is being developed and its operations have incurred a net loss in each period reported within this Financial Information whilst the Group's products and services are bought to market. Operations have been supported by cash flow from customers and issue of Equity such that the directors believe it is appropriate to adopt the going concern basis of preparation.

The directors have considered the group's future and forecast business and cash requirements and have determined that the current cash resource is sufficient to enable the group's going concern for a period of twelve months from the date of approval of these financial information

Estimated impairment of assets

The Group tests annually whether goodwill has suffered any impairment. All other assets are tested for impairment where there are indicators of impairment.

The recoverable amount of cash generating units have been determined based on value in use calculations. The use of this method requires the estimate of future cash flows expected to arise from the continuing operation of the cash generating unit and the choice of a suitable discount rate in order to calculate the present value. Actual outcomes could vary significantly from these estimates. The estimates used are shown in note 8.

Fair value of options granted to employees

The Group uses a combination of the Black-Scholes model and Binomial model in determining the fair value of options granted to employees under the Group's various share schemes. The determination of the fair value of options requires a number of assumptions. The alteration of these assumptions may impact charges to the income statement over the vesting period of the award. Details of the assumptions used are shown in note 4.

   1.18      Investments 

Shares in subsidiary undertakings are stated at cost less provision for impairment. Provision is made against investments where diminution in value is considered to be permanent

   2          Revenue and segmental information 

An analysis of the Group's revenue for each period for its continuing operations, is as follows:

   GBP                                      Group              Company                  Group                Company 
                                             2018                 2018                   2017                   2017 
                                              GBP                  GBP                    GBP                    GBP 
 Revenue from the sale of 
  goods/licenses                           66,373               66,373                 26,900                 26,900 
 Revenue from the rendering of 
  related to goods/licenses                30,336               30,336                141,554                141,554 
 Revenue from development services        402,227              402,227                267,030                267,030 
 Revenue from Consulting                  568,673                    -                301,062                      - 
 Total Revenue                          1,067,609              498,936                736,546                435,484 
                                      -----------  -------------------  ---------------------  --------------------- 

The IFRS 8 Operating segments requires the Group to determine its operating segments based on information which is provided internally. Based on the internal reporting information and management structures within the Group, it has been determined that there are two geographic operating segments (UK and Poland) supported by one centralised cost segment (UK and Poland) and one revenue segment (UK). Reporting on this basis is reviewed by the Board of directors which is the chief operating decision-maker and is responsible for the strategic decision-making of the Group.

No analysis of net assets by geographic segment is provided as the net assets are principally all within the UK.

   3          Earnings & Diluted Earnings per share 

Earnings per share is calculated by dividing the loss for the period attributable to ordinary equity shareholders of the parent by the weighted average number of ordinary shares outstanding during the year.

During the year the calculation was based on the loss for the year of GBP2,132,252 (2017: GBP1,235,515) divided by the weighted average number of ordinary shares of 3,853,254 (2017: 3,158,318).

Diluted earnings per share is calculated by dividing the loss of the year by the weighted average number of ordinary shares outstanding during the year plus unexercised share based payments. The weighted average number of ordinary shares used in the calculation of diluted earnings per share was 4,725,481 (2017: 3,277,481).

   4          Related Party Transactions 
                                                               2018      2017 
 CyberOwl Limited - Crossword Cybersecurity plc 
  has an investment in CyberOwl Limited 
   Tom Ilube is an Non Executive Director of CyberOwl 
 Percentage Holding                                           9.88%   11.069% 
 Revenue from development services GBP                      165,806   153,222 
 Balance Outstanding GBP                                     15,960    14,340 
 Byzgen Limited - Crossword Cybersecurity has a 
  licencing agreement with Byzgen Limited 
   Tom Ilube is an Non Executive Director of Byzgen 
 Revenue from development services and licence agreement 
  GBP                                                       236,421   113,808 
 Balance Outstanding GBP                                     18,656    20,768 
                                       2018     2017 
 Subsidiary Transactions 
 Crossword Cybersecurity Limited 
 Services received from GBP          47,802        - 
 Balance payable to GBP               5,380        - 
 Services supplied to GBP           147,153   45,121 
 Balance Due from GBP                68,351   20,971 
 Crossword Cybersecurity SP Z.o.o 
 Services received from GBP          551,198   335,256 
 Balance payable to GBP               45,149    30,441 
 Services supplied to GBP                  -         - 
 Balance Due from GBP                      -         - 

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 or visit



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April 15, 2019 02:00 ET (06:00 GMT)

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