REG - Smarttech247 Group - Interim results
30/04/2024 07:00
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RNS Number : 4933M Smarttech247 Group PLC 30 April 2024
Certain information contained within this Announcement is deemed by the
Company to constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014 ("MAR") as applied in the United Kingdom. Upon
publication of this Announcement, this information is now considered to be in
the public domain.
30 April 2024
Smarttech247 Group PLC
("Smarttech247", the "Group" or the "Company")
Interim results
Smarttech247 (AIM: S247), a multi-award-winning provider of AI-enhanced
cybersecurity services providing automated managed detection and response for
a portfolio of international clients, today announces its unaudited interim
results for the six months ending 31 January 2024.
Operational highlights
· Continued growth of the customer base in the UK, Europe and the USA
· New multi-year contracts secured:
o Two-year agreement with a global aviation company worth circa €360,000
in total
o New two-year agreement with an existing Government of Ireland department
customer, worth circa €400,000 in total
o Extension of agreement with AutoNation, an established customer, for
another three years
o Three-year agreement with a global pharmaceutical solutions organisation,
based in the USA, worth circa €900,000 in total
· Technology partnerships established with global software and
technology companies including Amazon and Splunk
· Further development of the Group's technology and product offering
· Sale operations are now well-established leading to a growing sales
pipeline
· Numerous awards and industry recognition
· Appointment of Sascha Maier, CISO at SV Group to the Advisory
Board
Post-period end
· New multi-year contracts secured:
· Three-year agreement with a global packaging company, worth
circa €1 million in total
· Three-year contract with a large banking and insurance organisation
worth €720,000 in total
· A new additional three-year agreement with an existing global
pharmaceutical solutions client, based in the USA, worth circa $2.1 million in
total
· New technology partnerships with Google and Cisco
· Launch of NoPhish features for Google Mail and Threathub 2.0
· Successful Zero Day Con 2024 conference held in March 2024 with over
600 senior security executives and speakers from the FBI, NCIS and other
industry leaders
· Launched new AI features in VisionX
· Appointment of Jason Rice, VP of Sales, Forcepoint to the Advisory
Board
· New products released, including MDR for the Mid-Market and a Managed
Data Detection and Response product
Financial highlights
· Revenues increased by 17.4% to €5.4 million (six months to 31
January 2023: €4.6 million)
· Adjusted EBITDA of €125K (see note 4) which is lower than the prior
period due to investments made to support future growth (six months to 31
January 2023: €1,146K)
· Growing sales pipeline
· Significant cash balance of €4.5 million available at the period
end to fund growth (31 July 2023: €6.0 million)
· Increasing institutional shareholder base
Raluca Saceanu, Chief Executive Officer of Smarttech247, commented:
"I am pleased to update the market on Smarttech247's continued revenue growth
and performance for the six months to 31 January 2024. As the cybersecurity
landscape continues to evolve and we see new threats daily, we are signing new
contracts, expanding our business pipeline and adapting our product offerings
and technology to ensure we can meet our clients' vital cybersecurity needs.
"Furthermore, we are well funded to support our expansion strategy. We are
actively progressing the delivery of our new products and traction with
international customers is continuing to develop as evidenced by our growing
sales pipeline. I am therefore positive about the prospects for the second
half of FY2024 and for the year as a whole.
"The Board remains committed to delivering value to our shareholders and I
look forward to updating the market in due course as we progress through this
financial year."
- Ends -
For further information please contact:
Smarttech247 Group PLC Tel: +353 21 206 6033
Ronan Murphy, Executive Chairman
Raluca Saceanu, Chief Executive Officer
Nicholas Lee, Finance Director
SPARK Advisory Partners Limited - Nominated Adviser Tel: + 44 (0) 20 3368 3550
Mark Brady / Adam Dawes
Shard Capital - Broker Tel: +44 (0) 20 7186 9900
Damon Heath
Fortified Securities - equity adviser
Tel: +44 (0) 7493 989014
Guy Wheatley, CFA
Yellow Jersey PR Tel: +44 (0) 20 3004 9512
Sarah Hollins / Annabelle Wills / Bessie Elliot
About Smarttech247
Smarttech247 is a multi-award winning automated MDR (Managed Detection &
Response) company. Its platform is trusted by international organisations and
provides threat intelligence with managed detection and response to provide
actionable insights, 24/7 threat detection, investigation and response.
The Company's services are geared towards proactive prevention, and it
achieves this by utilising the latest in cloud, big data analytics and machine
learning, along with an experienced incident response team. Smarttech247's
offices are located in Ireland, United Kingdom, Romania, Poland and the USA.
The Company was admitted to trading on AIM on 15 December 2022.
For further information please visit www.smarttech247.com
(http://www.smarttech247.com)
Chief Executive Officer's statement
Introduction
During the period under review, Smarttech247 has continued to make significant
progress, focusing on building out its platform and developing new products.
Operational review
Contracts
It has been a successful start to the Company's 2024 financial year with
multiple new contracts signed as highlighted below.
In August 2023, as part of Smarttech247's new partnership with Abnormal
Security, which is discussed further below, a multi-year contract worth circa
€360,000, over two years, was won with a global organisation within the
aviation industry sector.
In October 2023, the Company also won a contract from an existing Government
of Ireland department customer, worth €400,000 over two years. As part of
this contract, Smarttech247 is leveraging its strategic partnership with IBM
to provide its IBM QRadar Security Information and Event Management (SIEM)
solution. The technology is designed to provide security teams with
centralised visibility into enterprise-wide security data. This resource
empowers Smarttech247 clients with actionable insight into the most critical
threats, enabling more effective threat management, near real-time visibility
and the production of detailed data access and user activity reports.
AutoNation, an existing client of Smarttech247, which is also the largest
automotive retailer in the United States, extended its existing partnership
with the Group for a further three years which is a testament to the success
of the ongoing relationship. Furthermore, AutoNation's Vice President and
CISO, Chip Regan, recently explained in a case study why Smarttech247 was the
obvious choice when it came to its cybersecurity needs and, specifically, how
partnering with Smarttech247 has allowed AutoNation to achieve a granular
level of security and monitoring on a scale that suits such a large, global
enterprise.
In November 2023, Smarttech247 secured a new contract with a global
pharmaceutical solutions organisation, based in the USA, worth circa
€900,000 over three years to deploy its AI-enhanced VisionX platform that
will help the client strengthen its security structure.
Post-period end, Smarttech247's email security tool NoPhish tool was expanded
to users of Google Mail. Previously only available on Microsoft Outlook,
NoPhish is designed to empower users in the fight against phishing and other
email-based threats. By integrating with Google Mail this expansion provides
comprehensive email security solutions for a wider audience.
Also, in March 2024, the Group announced a new contract with a global
packaging company, worth approximately €1 million over three years. This
contract utilises both Smarttech247's VisionX platform as well as its email
security tool NoPhish, underscoring their versatility and advanced
capabilities. In April 2024, a new additional three-year contract with an
existing global pharmaceutical solutions client, based in the USA, worth circa
$2.1 million in total was announced.
In summary, the Group continues to win a number of multi-year contracts with
prestigious organisations, often in competition with much larger global
organisations. These contracts both provide validation of the service that
Smarttech247 can provide and clear reference points for new customers whilst
expanding the Group's global market presence. Combining the VisionX MDR
platform with the managed services offering creates competitive
differentiation for the Group and major new customers have highlighted such
factors as the reason for selecting Smarttech247.
The majority of new contracts are also multi-year thereby providing certainty
of recurring revenue. In addition, a high percentage of product related
revenue, whilst shorter term in nature and not technically recurring, are
regularly renewed.
Partnerships
During the period, the Group has established a number of significant strategic
partnerships with some of the world's leading software and technology
companies.
In August 2023, the Group was approved to list its VisionX platform on the
Amazon Web Services ("AWS") Marketplace. This listing is expected to provide a
host of benefits such as exposure to a large customer base, streamlined
purchasing processes and scalability.
Smarttech247 also announced a strategic partnership with Abnormal Security, a
leading behavioural AI-based email security platform. Unlike traditional
secure email gateways, Abnormal Security takes a different approach to
stopping email attacks. The cloud-native API architecture ingests thousands of
signals across multiple platforms to build a baseline of the known-good
behaviour of every employee and vendor in an organisation based on
communication patterns, sign-in events and thousands of other attributes. It
then applies advanced AI models including natural language processing ("NLP")
and behavioural analytics to detect abnormalities in email behaviour that
indicate a potential threat and prevent attacks from reaching end users.
Abnormal Security will be integrated into Smarttech247's comprehensive MDR
service, VisionX, to provide
a unified and proactive security solution. The Company has already signed its
first contract, as a result of this partnership, with a global aviation
organisation.
In October 2023, Smarttech247 secured a partnership with Splunk Inc. (NASDAQ:
SPLK), a cybersecurity and observability leader. This partnership utilises
Smarttech247's VisionX platform and this collaboration will leverage its
capabilities alongside Splunk's solutions to offer unparalleled security
efficiencies.
Post-period end in March 2024, the Group announced a strategic partnership
with Google with a view to extending Smarttech247's existing suite of
solutions by integrating cutting-edge technologies from Google Chronicle into
its flagship platform, VisionX, as part of its comprehensive MDR offering. As
part of this arrangement, Google's advanced SIEM (Security Information and
Event Management) and SOAR (Security Orchestration, Automation, and Response)
capabilities will be available on Smarttech247's VisionX platform.
Google Chronicle is a cybersecurity company which forms part of the Google
Cloud Platform. It is a cloud-native, AI-powered service that is designed to
help businesses analyse, retain, and search large volumes of data to detect
cyber threats. By integrating Google Chronicle's SIEM and SOAR capabilities,
organisations will have access to threat detection, response, and automation
functionalities, leveraged by Google's technology, ensuring proactive defence
against sophisticated cyber threats, enabling swift and effective incident
response.
Also post period end, Smarttech247 has partnered with Cisco Systems Inc.
(NASDAQ: CSCO) ("Cisco") to deliver a complete security solution for threat
prevention, detection, investigation and response. Cisco delivers
software-defined networking, cloud and security solutions to companies
worldwide and recently completed its acquisition of cybersecurity firm Splunk
Inc., with which Smarttech247 already has a strategic partnership agreement.
This new partnership will see Smarttech247 integrate Cisco's security
technologies into its AI-enhanced cybersecurity services, offering clients an
even more comprehensive and robust defence against evolving cyber threats.
Cisco's range of security technologies for network, device, user and cloud
security will integrate with Smarttech247's existing suite of cybersecurity
solutions. These technologies, combined with Splunk's cybersecurity
capabilities gained in the recent acquisition, will enhance Smarttech247's
VisionX platform, allowing organisations to proactively secure their digital
assets and mitigate risks effectively.
Smarttech247 continues to work with several leading industry players whose
products can be incorporated within its MDR platform as required. These
partners include Forcepoint, Microsoft, IBM and Crowdstrike.
Technology platform
Smarttech247 has continued to enhance and progress its technology platform and
product offering.
Towards the end of 2023, the Group launched a new version of VisionX, the
Company's managed detection and response platform. This new version offers a
very different functionality in that it is multi-tenancy and has a completely
new User Interface - this is a very important element of the VisionX platform
as it is heavily relied upon by product users to enable them to assess the
effectiveness of their security operations in real-time. This new design
offers users an intuitive approach that simplifies complex security
operations. With improved functionality, advanced analytics, threat hunting
and customisable dashboards, customers will gain unprecedented insights into
their organisation's security posture.
In January 2024, the Company announced the launch of Aio, its VisionX AI
assistant, which will provide enhanced AI features including risk analysis and
more rapid incident responses enabling organisations to leverage AI and
intelligent automation to enhance their security operations.
Also in January 2024, the Company launched a version of VisionX dedicated to
mid-sized businesses with a view to expanding the Group's addressable market
and to enable mid-sized businesses to benefit from the same level of security
which is often only available to larger enterprises.
Post-period end, Smarttech247's email security tool NoPhish tool was extended
to users of Google Mail. Previously only available on Microsoft Outlook,
NoPhish is designed to empower users in the fight against phishing and other
email-based threats. By integrating with Google Mail this expansion provides
comprehensive email security solutions for a wider audience.
NoPhish employs advanced analysis algorithms to evaluate the content and
legitimacy of the reported emails, offering instant feedback to the user. In
cases where an email is identified as suspicious or malicious, NoPhish takes
proactive measures by automatically removing the email from the user's inbox,
thereby mitigating the risk of accidental exposure to harmful content.
The Group has also continued to develop its threat and vulnerability software,
Threathub. Threathub allows organisations to manage their risk continuously by
providing them with automated threat modelling and dynamic risk governance
capabilities. The Group is currently building a sales pipeline for this
product.
People and platform
The Group has continued to increase its headcount to provide the necessary
capacity for future revenue growth and support continued product development.
This in itself is a significant achievement given the demand for suitably
qualified high-quality personnel in the sector. Furthermore, the Company now
has a new highly experienced sales team in place which will support the
Group's revenue growth going forward.
During the period, Sascha Maier was appointed to the Group's Advisory Board.
Sascha is currently the Group Chief Information and Security Officer at SV
Group, a leading hospitality and catering group in Europe. In this role, he
oversees the Cyber Resilience strategy for the entire group, including all
brands, subsidiaries, and the foundation.
Post-period end, Jason Rice, Vice President of Sales at Forcepoint, was
appointed to the Group's Advisory Board. Jason has over 20 years of enterprise
software experience supporting Fortune 2000 organisations to identify the
appropriate technology that improves service, secures data and reduces risk.
Industry awards and profile
In October 2023, Smarttech247 was awarded the 'Email Security Solution of the
Year' title at The Computing Security Awards 2023 for its product NoPhish.
This cutting-edge solution operates in real-time, detecting and responding to
phishing attempts. By analysing reported emails and identifying malicious
elements, such as attachments or URLs, NoPhish enables organisations to stay
ahead of cyber threats. Phishing remains a critical concern for companies
globally and NoPhish offers clients a defence through its proactive approach
and intelligence.
Other award nominations during this period include being named as a Deloitte
Fast 50 Technology Company for 2023, becoming a finalist for the 'Scale Up of
the Year' award at the Tech Industry Alliance Awards and a nomination for the
'Cyber Security Solution Provider of the Year' at the 2023 EU Cyber Awards.
In December 2023, the Group published its cybersecurity report, "Global
Cybersecurity: Perspectives and Trends for 2024". This document reported that
there had been a 50% increase in cyber-attacks during 2023 and highlighted
critical issues in cybersecurity, offering strategic perspectives on emerging
threats, industry trends, and the geopolitical dynamics expected to shape the
threat landscape throughout 2024. The report also finds that external
malicious actors account for 83% of data breaches and financial motives are
still the driving force behind over 94% of actual breaches.
Post-period end on 6 March 2024, Smarttech247 hosted its Zero Day Con 2024
conference for the third time. This event brings together leading technology
firms, industry experts and government officials to allow business leaders to
learn more about the latest cybersecurity trends. This year was again a very
successful conference with over 600 international cybersecurity industry
participants attending, including senior security executives and speakers from
the FBI, NCIS and other industry leaders.
Financial review
In terms of financial performance, revenues have increased by 17.4% over the
prior comparable period to 31 January 2023 as a result of the winning of
several new contracts and the full-period impact of contracts won in the
previous period. Annual revenue is generally more weighted towards the second
half of the year as demonstrated by the results for FY2023. For example,
where product sales are made and there is an expectation that these products
will be renewed, the expected renewals are more heavily weighted towards the
second half of the year. Gross profit has increased as a result of increased
sales and stable profit margins.
Operating costs have increased compared to the prior period, principally as a
result of the significant growth in headcount as part of the build out of the
platform, investment in the sales team and the increased costs associated with
being an AIM-quoted company. Furthermore, this period includes additional
amortisation of certain products that have been developed internally and have
been carried as intangible assets. This amortisation cycle only commenced in
the second half of FY2023 in line with the Group's accounting policies so
there was no comparable amortisation charge in the comparable period of H1
FY2023. Certain of the Group's costs continue to be capitalised as they
relate to product development, in accordance with the Group's accounting
policies. This period also includes a higher non-cash charge in connection
with last year's option awards as a result of the awards made to employees in
April and May 2023.
Adjusted EBITDA and operating loss have been calculated in order to exclude
one off charges relating to the Group's IPO in December 2022. Also, items
such as the costs associated with the issue of options have also been added
back given that they are one off non-cash items (see note 4).
As a result of investment being made now to achieve future growth, adjusted
EBITDA for this current period is lower and operating loss higher than for the
previous period. However, in considering the likely impact of this on the year
as a whole, it should be noted that operating costs are relatively evenly
spread over the year, whereas as described above, revenues tend to be weighted
towards the second half of the year thereby leading to a lower operating
result in the first half of the financial period compared to the second.
Cash has reduced over the period due to the small positive EBITDA generated
during the period offset by the continued investment in the development of
products and technologies which is clearly necessary and important for a
company in this sector. Whilst the cash has reduced during the period, the
Group still retains a substantial balance at the period end and is therefore
very well positioned to fund its continued growth going forward.
During the period and post-period end, the Group's institutional shareholder
base has been growing and currently includes investors such as Premier Miton
Group plc and William Currie Investments Limited.
Outlook
Cyber-attacks are on the increase with serious consequences for the companies
involved. Smarttech247's combination of artificial intelligence-led managed
detection and response capabilities can help to significantly reduce the
impact and help manage the situation. With the threat landscape growing in
complexity, exacerbated by geopolitical tensions, the Company is well
positioned at the intersection of three major evolving growth markets;
security threat incidents, cloud adoption and cyber-security data generation.
Cloud mitigation is causing companies to redesign its systems, leading to new
cyber-security requirements which Smarttech247 can provide. There are
therefore clear opportunities for the future growth of the Group using the
platform that has been established.
The Group has continued its positive momentum into the 2024 financial year
with increasing revenues in the first half of the year. Furthermore, with
multiple new partnerships and contract wins, management is positive about the
prospects for the second half of FY2024 and the year as a whole.
Raluca Saceanu
Chief Executive Officer
30 April 2024
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 January 2024
Unaudited Unaudited
Six months to 31 Jan 2024 Six months to 31 Jan 2023
€'000
€'000
Note
Continuing operations
Revenue 5,350 4,622
Cost of sales (1,819) (1,397)
Gross profit 3,531 3,225
Operating expenses 4 (4,110) (2,587)
IPO associated costs - (1,058)
Other operating income - 48
Operating loss (579) (372)
Investment income - 1
Other losses - (4)
Finance costs 5 (22) (75)
Loss before taxation (601) (450)
Income tax (52) (118)
Loss for the year from continuing operations (653) (568)
Total profit for the year attributable to equity holders of the parent
Other comprehensive income (6) (148)
Total comprehensive income for the year attributable to equity holders of the (659) (716)
parent
Basic and diluted earnings per share - euro 6 (0.53) (0.86)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 January 2024
Note Unaudited
31 Jan 2024 31 July 2023
€'000
€'000
Non-current assets
Intangible assets 7 5,312 3,934
Property, plant and equipment 195 153
Right-of-use asset 9 298 331
Financial assets 1,164 1,162
Total non-current assets 6,969 5,580
Current assets
Trade and other receivables 8 3,467 6,423
Cash and cash equivalents 4,509 6,062
Total current assets 7,976 12,485
TOTAL ASSETS 14,945 18,065
Equity attributable to owners of the parent
Share capital 11 1,436 1,436
Share premium 11 6,365 6,365
Share based payment reserve 12 982 554
Other reserves 13 (1,215) (1,215)
Foreign exchange reserve 28 34
Retained earnings 3,656 4,309
Total equity 11,252 11,483
Non-current liabilities
Lease liability 9 218 260
Total non-current liabilities 218 260
Current liabilities
Trade and other payables 10 3,384 6,231
Lease liability 9 91 91
Total current liabilities 3,475 6,322
Total liabilities 3,693 6,582
TOTAL EQUITY AND LIABILITIES 14,945 18,065
CONSOLIDATED STATEMENT OF CASHFLOWS
For the six months ended 31 January 2024
Unaudited Unaudited
Six months to 31 Jan 2024 Six months to 31 Jan 2023
€'000 €'000
Cash flow from operating activities
Loss for the period (653) (568)
Adjustments for:
Interest payable 5 63
Lease liability finance charge 17 11
Share based payments 428 334
Impact of foreign exchange - 190
Depreciation and amortisation 276 121
IPO costs settled in shares - 826
CLN settlement costs - 126
Fair value loss on revaluation of shares - 3
Changes in working capital:
(Increase) / decrease in trade and other receivables 2,992 3,045
Increase / (decrease) in trade and other payables (2,887) (1,352)
Net cash inflow from operating activities 178 2,799
Cash flow from investing activities
Purchase of intangible fixed assets (1,588) (1,144)
Purchase of tangible fixed assets (79) (59)
Purchase of financial assets - (1)
Net cash outflow from investing activities (1,667) (1,204)
Cash flows from financing activities
Proceeds from the issue of shares - 3,072
Repayment of lease liabilities (59) (22)
Net cash inflow/ (outflow) from financing activities (59) 3,050
Net increase in cash and cash equivalents (1,548) 4,645
Cash and cash equivalents at beginning of period 6,062 2,358
Foreign exchange impact on cash (5) -
Cash and cash equivalents at the end of the period 4,509 7,003
Significant non-cash items in the prior period comprised:
- Settlement of convertible loan note through issue of shares of
€2,716,060
- Issue of shares to the EBT to value of €122,036
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 January 2024
Share Capital Share Premium SBP Reserve Other Reserve Foreign Exchange Reserve Retained Earnings Total
€'000 €'000 €'000 €'000 €'000 €'000 €'000
At 1 August 2023 - - - 23 34 4,476 4,533
Loss for the period - - - - - (167) (167)
Total comprehensive loss for the period - - - - - (167) (167)
Transaction with owners
Capital reorganisation 1,012 - - (1,012) - - -
Issue of shares to settle acquired CLN 159 2,577 - - - - 2,736
Issue of shares 265 4,108 - - - - 4,373
Acquisition of Smart Securities - - - (226) - - (226)
Share based payments - - 554 - - - 554
Share issue costs - (320) - - - - (320)
Total transactions with owners 1,436 6,365 554 (1,238) - - 7,117
Balance at 31 July 2023 - (audited) 1,436 6,365 554 (1,215) 34 4,309 11,483
Profit for the period - - - - - (653) (653)
Other comprehensive loss - - - - (6) - (6)
Total comprehensive loss for the period - - - - (6) (653) (659)
Transaction with owners
Share based payments - - 428 - - - 428
Total transactions with owners - - 428 - - - 428
Balance at 31 January 2024 - (unaudited) 1,436 6,365 982 (1,215) 28 3,656 11,252
NOTES TO THE INTERIM FINANCIAL STATEMENTS
For the six months ended 31 January 2024
1. GENERAL INFORMATION
Smarttech247 Group plc is a public company incorporated in the United Kingdom
and listed on the Alternative Investment Market. The registered address is 165
Fleet Street, London, United Kingdom, EC4A 2DY. The principal activity of the
company (the "Company") and its subsidiaries (the "Group") is the provision of
threat intelligence with managed detection and response to provide actionable
insights, 24/7 threat detection, investigation and response.
2. BASIS OF PREPARATION
This unaudited condensed consolidated interim financial statements for the six
months ended 31 January 2023 and 31 January 2024 have been prepared in
accordance with IFRS accounting policies as applied at 31 July 2023, including
IAS 34 'Interim Financial Reporting'.
The interim report does not include all the notes of the type normally
included in an annual financial report. Accordingly, this report should be
read in conjunction with the annual report for the year ended 31 July 2023,
which was prepared under UK adopted international accounting standards (IFRS),
and any public announcements made by Smartech247 Group plc during the interim
reporting period and since.
There are no new standards, interpretations and amendments which are not yet
effective in these financial statements, that are expected to have a material
effect on the Group's future financial statements.
The financial information does not contain all of the information that is
required to be disclosed in a full set of IFRS financial statements. The
financial information for the six months ended 31 January 2023 and 31 January
2024 is unaudited and does not constitute the Group or Company's statutory
financial statements for those periods.
The interim financial information has been prepared under the historical cost
convention. The financial information and the notes to the historical
financial information are presented in euros, the functional and presentation
currency of the Group, and presented to the nearest €'000, except where
otherwise indicated.
Merger accounting and consolidated financial statements
The Company was incorporated on 29 September 2022 with one £0.01 ordinary
share and on 18 November 2022, became the parent company of the Group when it
issued 87,499,999 £0.01 ordinary shares in exchange for 100% of the ordinary
shares in Zefone Limited. This is not considered to be a business combination
within the scope of IFRS3 as the transaction was between entities under common
control. This is a key judgement and, as a transaction where there was no
change in the shareholders or holdings, is accordingly accounted for using
merger accounting with no change in the book values of assets and liabilities
and no fair value accounting applied.
Intercompany transactions and balances between group companies are therefore
eliminated in full. The equity presented is that of Smarttech247 Group plc
with the difference on elimination of Zefone Limited's capital being shown as
a merger reserve.
A subsidiary is an entity over which the Group has control. The Group controls
an entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns
through its power over the entity.
Share based payments
The Group has made awards of warrants and options on its unissued share
capital to certain parties in return for services provided to the Group. The
valuation of these warrants involved making a number of critical estimates
relating to price volatility, future dividend yields, expected life of the
options and interest rates. These assumptions have been integrated into the
Black Scholes Option Pricing model and the Monte Carlo valuation model to
derive a value for the share-based payments. These assumptions are described
in more detail in note 12.
Share premium
The share premium account includes any premiums received on the initial
issuing of the share capital. Any transaction costs associated with the
issuing of shares are deducted from the share premium account, net of any
related income tax benefits.
Going concern
The Directors have considered the principal risks and uncertainties facing the
business, along with the Group's objectives, policies and processes for
managing its exposure to financial risk. In making this assessment the
directors have prepared cash flows for the foreseeable future, being a period
of at least 12 months from the date of approval of this financial information.
The Group's forecasts and projections based on the current trends in trading
and after taking account of the funds held at the period end of €4.5
million, show that the Group will be able to operate within the level of its
cash reserves.
The Directors therefore have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable
future and consider the going concern basis to be appropriate.
3. SEGMENT REPORTING
The following information is given about the Group's reportable segments:
The Chief Operating Decision Maker is the executive Board of Directors. The
Board reviews the Group's internal reporting in order to assess performance of
the Group. Management has determined the operating segment based on the
reports reviewed by the Board.
The Board considers that during the periods ended 31 January 2024 and 31
January 2023 the Group operated in the single business segment of Managed
Detection and Response capabilities to global organisations.
4. OPERATIONAL EXPENSES
The operating loss for the period is after charging:
Unaudited Unaudited
Six months to 31 Jan 2024 Six months to 31 Jan 2023
€'000
€'000
Amortisation of intangible fixed assets (210) (79)
Depreciation of right-of-use assets (33) (25)
Depreciation of tangible fixed assets (33) (18)
Share based payments - employee options (428) (260)
CLN settlement cost - (126)
(704) (508)
In the prior period, included within operational expenses or separately
disclosed as IPO associated costs are certain one-off costs that principally
relate to IPO costs, issue of share options and CLN settlement costs.
2024 2023
€'000
€'000
Operating loss (579) (372)
Add back:
IPO costs - 1,058
Share based payments 428 260
CLN settlement costs - 126
Total one-off costs 428 1,072
Less Other operating income - (48)
Adjusted operating profit/(loss) (151) 1,024
Add back depreciation and amortisation 276 122
Adjusted EBITDA 125 1,146
The charge for share based payments relates to the issue of share options to
employees as part of the Group share option scheme. Also, as part of the
listing, the outstanding convertible loan notes were converted into equity
which incurred a one-off associated cost in the comparative period.
5. FINANCE COSTS
Unaudited Unaudited
Six months to 31 Jan 2024 Six months to 31 Jan 2023
€'000
€'000
Interest on financial liabilities 5 63
Finance charge on lease liabilities 17 12
22 75
6. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share is calculated by
dividing the profit or loss for the period by the weighted average number of
ordinary shares in issue during the period.
Six months to 31 Jan 2024 (unaudited) Six months to 31 Jan 2023 (unaudited)
Loss for the period from continuing operations - €'000 (653) (568)
Weighted number of ordinary shares in issue 124,078,982 66,082,356
Basic and diluted earnings per share from continuing operations - euro (0.53) (0.86)
The weighted average number of ordinary shares in issued for the prior year
has been used as the total number of shares issued for the purchase of Zefone
Limited as if those shares were on issue during the prior period.
There is no difference between the diluted loss per share and the basic loss
per share as there were no securities in issue at 31 January 2023 that would
have a dilutive effect on earnings per share.
7. INTANGIBLE ASSETS
Website & Software licences Development costs Total €'000
€'000
€'000
Cost
At 31 August 2022 (audited) 1,227 1,533 2,760
Additions - 2,625 2,625
At 31 July 2023 (audited) 1,227 4,158 5,385
Additions - 1,588 1,588
At 31 January 2024 (unaudited) 1,227 5,746 6,973
Amortisation
At 31 July 2022 (audited) 912 109 1,021
Charge for the year 241 189 430
At 31 July 2023 (audited) 1,153 298 1,451
Charge for the period 24 186 210
At 31 January 2024 (unaudited) 1,177 484 1,661
Net book value
31 July 2023 (audited) 74 3,860 3,934
31 January 2024 (unaudited) 50 5,262 5,312
8. TRADE AND OTHER RECEIVABLES
31 January 2024 31 July 2023 (audited)
€'000
(unaudited)
€'000
Trade receivables 2,290 5,194
Accrued revenue 17 53
Tax and other receivables 440 278
Director's current account 63 57
Prepayments 657 841
3,467 6,423
9. LEASES
The Group had the following lease assets and liabilities:
31 January 2024 31 July 2023 (audited)
€'000
(unaudited)
€'000
Right-of-use assets
Properties 298 331
298 331
Lease liabilities
Current 91 91
Non-current 218 260
309 351
10. TRADE AND OTHER PAYABLES
31 January 2024 31 July 2023 (audited)
€'000
(unaudited)
€'000
Trade creditors 485 3,183
Corporation tax 263 220
Other taxation and social security 293 753
Accruals 79 56
Deferred income 2,061 1,869
Other payables 203 150
3,384 6,231
11. SHARE CAPITAL
Number of £0.01 shares Share Capital Share premium
€'000 €'000
One £0.01 share issued on incorporation 1 - -
Shares issued on exchange for Zefone Limited shares 87,499,999 1,012 -
Shares issued on conversion of convertible loan note at £0.1760 13,646,441 158 2,577
Shares subscribed for by EBT 10,546,713 122 -
Placing shares issued at £0.2966 12,385,828 144 4,108
Share issue costs - - (320)
Balance at 31 July 2023 124,078,982 1,436 6,365
Balance at 31 January 2024 124,078,982 1,436 6,365
The shares with a nominal value of €1,012,462 (£875,000) issued in exchange
for 2 £1 shares in Zefone Limited with a nominal value of £2 results, on
elimination of the difference, in a credit to a merger reserve (within other
reserves) of €1,012,462 (£875,000) in accordance with the merger accounting
principles as set out in note 2.
During the prior period, the Company established an Employee Benefit Trust
("EBT") and issued 10,546,713 shares to the EBT at nominal value.
12. SHARE BASED PAYMENT RESERVE
( )
31 January 2024 31 July 2023 (audited)
€'000
(unaudited)
€'000
Advisor warrants issued
Opening balance 107
Issued during the period (1) - 107
Closing balance 107 107
Employee options issued
Opening balance 447 -
Issued during the period (2, 3) 428 447
Closing balance 875 447
982 554
( )
(1) On 15 December 2022, 863,115 warrants were issued to advisors and have
been fair valued in accordance with IFRS 2. The warrants have an exercise
price of £0.2966 and a time to expiry of 4 years from grant.
(2) On 30 November 2022, 4,541,290 employee options were granted under the
Group's LTIP. These options have different vesting conditions based on
performance milestones that can be viewed below.
(3) On 28 April 2023 and 23 May 2023 2,425,291 and 177,195 employee options
were granted under the Group's LTIP. These options have different vesting
conditions based on performance milestones as outlined below.
13. MERGER RESERVES
31 January 2024 (unaudited) 31 July 2023 (audited)
€'000
€'000
Merger reserve (1,215) (1,215)
(1,215) (1,215)
On 18 November 2022, the Company became the parent company of the Group when
it issued 87,499,999 £0.01 ordinary shares in exchange for 100% of the
ordinary shares in Zefone Limited. Zefone Limited has been shown as the
continuing entity. Intercompany transactions and balances between group
companies are therefore eliminated in full. The equity presented is that of
Smarttech247 Group plc with the difference on elimination of Zefone Limited's
capital of €1,012,462 (£875,000) being shown as a merger reserve.
In the prior period, Zefone Limited acquired Smart Systems Security Limited
for €1,190 (£1,000) with the total identifiable net liabilities acquired
being €225,000, resulting in €226,000 being recorded to the merger
reserve.
14. EVENTS SUBSEQUENT TO PERIOD END
There were no events subsequent to the period end that require disclosure.
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