Crossword Cybersecurity plc (CCS) 2018年年度報告「LSE」.pdf

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1、CROSSWORDCYBERSECURITYANNUAL REPORT&ACCOUNTS2018PLCFor more information STRATEGIC REPORTChairmans Statement 2Chief Executive Officers Statement 4Performance Review 6Principal Risks 7CORPORATE GOVERNANCEThe Board 14Corporate Governance Report 17Directors Report&Statement of Directors Responsibilities

2、 29Independent Auditors Report 32FINANCIAL STATEMENTSConsolidated Financial Statements 38Notice of AGM 57Company Information 59CONTENTSCrossword Cybersecurity plc is the parent company of the Crossword group of companies which focuses on the cyber security sector.The Groups strategy is the developme

3、nt and commercialisation of university research based cyber security related software and cyber security consulting.Revenue is generated by selling the Software as a Service products direct to end user companies or via partners.This is supported by Crosswords team of expert cyber security consultant

4、s,who leverage years of experience in national security,defence and commercial cyber intelligence and operations to provide advice on cyber security risk and mitigation,strategy,assessment and transformation and other cyber security related matters.1STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSHIGH

5、LIGHTSManagementTeamstrengthenedwiththeadditionoffulltimeFinanceDirectorandHRManagerOver1,000universitybasedcybersecurityresearchprojectsfromUK,Europe,USAandAustraliaidentifiedContinuedtoengagewithresearchintensiveuniversitypartnerstoexplorecommercialisationopportunitiesMOUwithIPGroupplctocommercial

6、isecybersecurityintellectualproperty2successfulofficemovesCROSSWORDCYBERSECURITYAIM Admission14 Dec 2018(Fundraise2.0m*)*Totalraisedin20184.16mTRANSITIONED FROM R&D TO REVENUE GENERATINGPipeline build to 1.4m in over 30 companies in a wide range of sectorsSaaSRevenuedoublesConsultingRevenuealmostdou

7、blesRizikon Assurance salesactivitysignificantlyscalesup.ByzGen Ltd receivesafurther1.5minvestmentfromRegulatoryFinanceSolutionsLtd.Nixer enhancedtoprovidemitigationagainstcredentialstuffing.CyberOwl selectedtojoingovernmentinitiative,LORCA,whichaimstoconnectvendorswithcorporatesrequiringsolutionsto

8、majorsecuritychallenges.2CROSSWORD CYBERSECURITY PLC ANNUAL REPORT AND ACCOUNTS 2018ChairmansStatement“The last twelve months have been very exciting for Crossword and the Board is geared up for significant growth over the coming period.“The financial year ending 31 December 2018 marked a transforma

9、tional year for Crossword Cybersecurity plc,culminating in the Companys successful admission to AIM,the London Stock Exchanges growth market.In this report,I set out high level reflections on the year and on finance and governance,with the CEOs Report that follows providing a more detailed review of

10、 the business,together with the financial and operational commentary.ClearStrategyCrossword has a clear strategy of building a significant intellectual property based,AIM quoted cyber security business.Crossword is a technology commercialisation business focusing on cyber security.The Group develops

11、 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 rel

12、ationships 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 2m in the process.Managements goals for the future are exciting and ambitious.The Board is fully supportive of Manage

13、ment in executing its growth plans for the business over the coming year and creating sustainable shareholder value.FinanceDuring 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 Dire

14、ctor,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.3STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSREVENUE1.07mIncreased 45%from 737k in 2017We strengt

15、hened the Group Balance Sheet during 2018 with two funding rounds,in March and December,totalling 4.16m.I would like to thank shareholders for their continued support for Crosswords strategy.StrongBoardandGovernanceThe Directors fully understand the importance of high standards of corporate governan

16、ce and I refer you to the Chairmans 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 Exchanges requirement for all AIM listed companies to adopt and comply with a r

17、ecognised corporate governance code appropriate to the nature,complexity and scale of the Group.In addition,we ensure that we maintain high standards throughout the Group by operating a robust framework of controls,and more details can be found in the Directors Report.The Board believes that,to deli

18、ver our corporate strategy,generate shareholder value on a sustainable basis and safeguard all of our stakeholders long-term interests,effective corporate governance is essential.PromisingOutlookThe last twelve months have been very exciting for Crossword and the Board is geared up for significant g

19、rowth 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 except

20、ional 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,suppl

21、iers and shareholders for their continued support.With your support,we are confident that we will deliver on Crosswords potential over the coming months and years.SirRichardDearloveKCMGOBE12 April 20194CROSSWORD CYBERSECURITY PLC ANNUAL REPORT AND ACCOUNTS 2018ChiefExecutiveOfficersStatementAs Chief

22、 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 comp

23、any 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,havin

24、g raised 4.16m 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 been awarded the accolade of NEX Exchange Company of the Year.The Companys admi

25、ssion 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 2.16m earlier in the year(March),providing the capital to recruit the sales team and,on admission to AIM,it raised a further 2m to support

26、 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 Gr

27、oup,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 Crosswords Finance Director,joining the Board in June.Mary has ove

28、r 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,wher

29、e the Companys 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 b

30、uilding up relationships with universities conducting interesting cyber security research and now has worked with or has memoranda of understanding with fourteen universities.The Companys scientific team has identified over 1,000 cyber security projects from universities in the UK,Europe and the USA

31、 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,Cr

32、ossword 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 Nixers functionality into defending against credential stuffing attacks.Nixer is expe

33、cted to launch late in 2019.Additionally,a product proposal continues to be developed for Cyber AI.TOTAL FUNDS RAISED4.16m5STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSAs part of preparing different commercialisation options,Crossword signed a memorandum of understanding(MoU)with 1Bn market cap,mai

34、n 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 create

35、s 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 Companys lead product,Rizikon Assurance,quickly built up to 1.4m o

36、f 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 Servi

37、ces,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,Britains largest independent manufacturer

38、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,Crosswords consulting business,with its mix of blue-chip

39、 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 i

40、ncrease their cybersecurity resilience,along with consulting support to Crossword Cybersecurity plcs 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 C

41、oventry University and the University of Warwick respectively,and both of these companies were successful in raising additional investment during 2018.ByzGen raised an additional 1.5m in 2018,bringing the total amount raised to 2m.CyberOwl secured an additional 1m.Crossword has commercial revenue ge

42、nerating 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 sectors total revenue was 5.7Bn as at FY 2015/16 and it has continued growing since then.Crossword estimates

43、 that the potential addressable market for Rizikon Assurance alone is 300m 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.Crosswords success is a direct function of the comm

44、itment 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 enabled us to achieve fantastic results this year,as we prepare for the next stage of our growth journey.TomIlubeCBEChiefExecutiveOfficerCrosswordCyb

45、ersecurityPLC12 April 20196CROSSWORD CYBERSECURITY PLC ANNUAL REPORT AND ACCOUNTS 2018PerformanceReviewFinancialReviewFINANCIAL POSITIONCrossword Cybersecurity plc finished the year with a strong cash balance of 2.2m.RESULTSYear on year revenue increased by 45%to 1.07m,with SaaS(Software as a Servic

46、e)revenue increasing by more than 100%.For the first time Crossword reported a(small)gross profit.Total Comprehensive Loss for the year was 2.2m.Total cost of sales and administrative expenses increased by over 1.3m,driven mainly by staff costs and professional fees.Total staff costs increased by ov

47、er 560k,due to increases in staff numbers.Increases were across many departments,with the primary objective to achieve commercialisation of Rizikon.During 2018,the sales team was increased by five staff in April,our Finance Director joined in May and the HR Manager came on board in August.85%of the

48、514k increase in professional fees was due to fees relating to the AIM listing.Property related expenses increased by 88k.During 2018,both the UK and Polish offices moved.The UK office,which continues to be located in Richmond,Greater London,relocated in April 2018,from a serviced office to a sublet

49、,with the capacity to allow for future growth in staff numbers.The Polish office,which continues to be located in Krakow,Poland,relocated in August 2018,to a leased property which also provides capacity for future growth.Other costs such as training,travel,telephone,IT etc,increased,primarily as a r

50、esult of the increase in staff numbers.FUNDS RAISEDOn admission to AIM on 14 December 2018,Crossword raised 2.0m.Earlier in the year,in March 2018,Crossword raised 2.16m.CASHFLOWSNet cash inflows in 2018 were 1.7m.Excluding proceeds from issue of ordinary shares,net cash outflows were 2.3m (1.1m in

51、2017).TAXATIONThe Group continues to claim Research and Development tax credits,with 192k accounted for in 2018(98k in 2017).KPIsAs part of the new phase of commercialisation,the Group has introduced KPIs which are measured monthly.These include:Pipeline for Rizikon Assurance,measured gross and weig

52、hted,number of opportunities,and expected close date;Pipeline for Consulting,measured gross and weighted,number of opportunities,and expected close date;Contracts signed per month;Average contract value;Chargeability of Consulting staff;Recoverability of Consulting clients;Staff numbers by division.

53、As budgets were not established for these metrics for 2018,and there are no comparable figures,these KPIs will be reported in the 2019 Annual Report.7STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSPrincipalRisksThe Board has overall responsibility for ensuring that risk is appropriately managed throu

54、ghout the business.The Board is aware of the need to conduct regular risk assessments to identify any deficiencies in the controls currently operating over all aspects of the Company.Risks to the achievement of strategic objectives are identified by the Executive Committee.The degree of risk is eval

55、uated with reference to the impact and probability of the risk,considering inherent and residual risk.The Executive considers the nature and extent of the risks,the threat of such risks becoming reality,the ability to reduce the incidence and impact on its business if the risk materialises,and the c

56、osts and benefits resulting from operating relevant controls.A Risk Register is prepared and regularly reviewed by the Executive Committee,and shared with the Audit Committee for independent review and robust challenge.The Risk Register includes a plan for mitigation of risks above the risk appetite

57、 of the business.RisksrelatingtotheGroupandtheindustryinwhichitoperatesINTELLECTUAL PROPERTY ACQUISITION AND DEVELOPMENTCrossword acquires intellectual property(IP)rights from universities via licensing and IP transfer arrangements and then develops this IP into commercial products.Failure to secure

58、 good quality IP deals and to quickly and appropriately meet new cyber security challenges,will make it difficult for the Group to generate new products.The success of this strategy depends on the ability of Crossword to source suitable IP and use its expertise in business management,marketing and p

59、roduct development to build solutions attractive to its potential customer base.Ultimately,Crossword will only succeed if it is able is to design,develop and sell new software solutions in a timely fashion that deliver operational reliability and effectiveness.TECHNOLOGICAL CHANGESGenerally,product

60、markets are exposed to rapid technological change,changes in use,changes to customer requirements and preferences,services employing new technologies and the emergence of new industry standards and practices.The Group operates in a market with such changes which have the potential to render the Grou

61、ps existing technology and products obsolete or uncompetitive.To successfully remain competitive,the Group must ensure continued product improvement and the development of new markets and capabilities to maintain a pace congruent with changing technology.This added strain may stretch the Companys ca

62、pital resources which may adversely impact the revenues and profitability of the Company.The Companys success is dependent on the ability to effectively respond and CROSSWORD CYBERSECURITY PLC ANNUAL REPORT AND ACCOUNTS 20188PrincipalRiskscontinuedadapt to technological changes and changes to custom

63、er preferences.There can be no assurance that the Company will be able to effectively anticipate future technological changes or changes in customer preferences.Furthermore,there is also no assurance that the Company will have sufficient financial resources to effectively respond in a timely manner

64、if such a change is anticipated.REPUTATIONAL RISKSAs a cyber security company,Crossword is very conscious of its external reputation.If the Group is compromised as a result of a cyber incident,it would impact its clients confidence.Crossword has an experienced cyber security expert acting as its Chi

65、ef Information Security Officer(CISO)and a strong technical team who actively seek to mitigate threats.Nonetheless,should an event take place which adversely affects the reputation of the Group,its future prospects and value could suffer.COMPETITIONThere is no guarantee against new entrants or curre

66、nt competitors providing superior technologies,products or services to the market.There is no certainty that new entrants or current competitors will not provide equivalent products for a lower price.The Company may be forced to make changes to one or more of its products or to its pricing strategy

67、to effectively respond to changes in customer preferences in order to remain competitive.This may impact negatively on the Companys financial performance.The Groups consulting division operates in an environment that includes large international accounting firms and consultancies and a number of sma

68、ller niche players.There are very low start-up costs for any new entrant into the market and the Group cannot prevent any person or organisation from seeking to compete with it.There is a risk that an existing competitor or a new entrant may,over time,be able to win work from the Groups existing and

69、 future customers.In addition,larger competitors may,in the future,adopt more aggressive expansion strategies,which could include hiring additional experienced consultants and changing their business model and service offering to one that is directly comparable to that of the Group.This could,in the

70、ory,result in a material loss of customers from the Group to larger competitors and,therefore,have a material adverse impact on the financial performance of the Group.KEY SYSTEM FAILURE,DISRUPTION OR INTERRUPTIONThe Companys reliance on technology exposes it(the Company)to a significant risk in the

71、event that such technology,or the Companys systems,experience damage,interruption or failure in some form.A malfunctioning of the Companys technology and systems,or those of key parties,could result in a diminished confidence in the Companys services,resulting in a consequential material adverse eff

72、ect on the Companys operations and results.DEPENDENCE ON THIRD PARTIES AND BUSINESS CONTINUITYKey components of Crosswords technology platform may be dependent upon the continuing availability of a particular supplier.The software development environment or data processing platforms may become unava

73、ilable for an extended period of time,thereby disrupting customers experience of Crosswords products and services.Crosswords business is at risk from disruption of key systems and assets upon which it depends.The functioning of the IT systems on which it relies could be disrupted for reasons STRATEG

74、IC REPORTGOVERNANCEFINANCIAL STATEMENTS9either within or beyond its control,including,but not limited to:accidental damage;disruption to the supply of utilities or services;security breaches;extreme weather events;systems failure or workforce actions.There is a risk that such disruption may material

75、ly and adversely affect Crosswords ability to offer services to customers and,therefore,materially and adversely affect its reputation,performance or financial condition.ABILITY TO RECRUIT AND RETAIN SKILLED PERSONNELThe Company believes that it has the appropriate incentive structures to attract an

76、d retain the calibre of employees and contractors necessary to ensure the efficient management and development of the Company.However,any difficulties encountered in hiring,and retaining,appropriate employees and/or contractors and the failure to do so,or a change in market conditions that renders c

77、urrent incentive structures lacking,may have a detrimental effect upon the trading performance of the Company.The ability to attract new employees and contractors with the appropriate expertise and skills cannot be guaranteed.FINANCIAL CONTROLS AND INTERNAL REPORTING PROCEDURESThe Companys future gr

78、owth and prospects will depend on its ability to manage growth and to continue to maintain,expand and improve operational,financial and management information systems on a timely basis,whilst at the same time maintaining effective cost controls.Any damage to,failure of or inability to maintain,expan

79、d and upgrade effective operational,financial and management information systems and internal controls in line with the Companys growth could have a material adverse effect on the Companys business,financial condition and results of operations.GeneralbusinessrisksTAXATION RISKThe Company is subject

80、to taxation and the application of such taxes may change over time due to changes to legislation,regulations or interpretations by the relevant tax authorities.Whilst no material changes are anticipated in such taxes,any such changes may have a material adverse effect on the Companys financial condi

81、tion and results of operations.The continuing status of the ordinary shares as a qualifying holding for VCT and EIS purposes will be conditional,amongst other things,on the qualifying conditions being satisfied throughout the period of ownership.There can be no assurance that the Company will contin

82、ue to conduct its activities in a way that will secure or retain qualifying status for VCT and/or EIS purposes.COUNTERPARTY CREDIT RISKThere is a risk that parties with whom the Company trades or has other business relationships(including partners,customers,suppliers,subcontractors and other parties

83、)may become insolvent.This may be as a result of general economic conditions or factors specific to that company.In the event that a party with whom the company trades becomes insolvent,this could have an adverse impact on the revenues and profitability of the Company.CROSSWORD CYBERSECURITY PLC ANN

84、UAL REPORT AND ACCOUNTS 201810PrincipalRiskscontinuedLEGAL RISKLegal risks include the inability to enforce security arrangements,an absence of adequate protection for intellectual property rights,an inability to enforce foreign judgements relating to contracts entered into by the Company that are g

85、overned by law outside England and Wales,absence of a choice of law,and an inability to refer disputes to arbitration or to have a limited choice with regard to arbitration rules,venue and language.Mitigation measures for these risks may also be limited.INSURANCE RISKThere can be no certainty that t

86、he Groups insurance cover is adequate to protect against every eventuality.The occurrence of an event for which the Group did not have adequate insurance cover could have a materially adverse effect on the Groups business,revenue,financial condition,profitability,results,prospects and/or future oper

87、ations.ECONOMIC CONDITIONSThe Group could be affected by unforeseen events outside its control including economic and political events and trends,inflation and deflation or currency exchange fluctuations,potentially driven by Brexit.Any economic downturn,either globally or locally,in any area in whi

88、ch the Group operates may have an adverse effect on the demand for the Groups products and services.A more prolonged economic downturn may lead to an overall decline in the volume of the Groups activities and sales,restricting the Groups ability to realise a profit.The markets in which the Group off

89、ers its services are directly affected by many national and international factors that are beyond the Groups control.CURRENCY EXCHANGE RISKThe Groups functional currency is sterling.One subsidiary,Crossword Cybersecurity Sp.Z.o.o is based in Poland.Crossword Cybersecurity Sp.Z.o.o,where the function

90、al currency is zloty,accounts for approximately 16 per cent of the total costs of the business.Exposure to this and other exchange rates may affect the Companys results.The Company may consider implementing policies to limit its currency exposure,and will consider currency hedging instruments when t

91、hey prove to be available and cost effective.Market OpportunitySTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS11Intentionally Left BlankCROSSWORDCYBERSECURITYCREATINGCYBERSECURITYPRODUCTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS2018 ANNUALREPORT&ACCOUNTS2.CORPORATE GOVERNANCEREVENUE1.07m14CROSSW

92、ORD CYBERSECURITY PLC ANNUAL REPORT AND ACCOUNTS 2018TheBoardSirRichardDearloveKCMGOBE,Non-ExecutiveChairmanAppointment Date:1st September 2016SkillsandExperience:Sir Richard brings to the Board extensive experience across government,education and global business.Sir Richard joined MI6 in 1966 under

93、taking various overseas and head office roles before being promoted to Chief of the Secret Intelligence Service in 1999.He retired from the Service in 2004.Externalappointments:Sir Richard is presently Chair of Trustees of University of London,Chairman of Ascot Underwriting Limited at Lloyds of Lond

94、on and a Director of Kosmos Energy,the New York Stock Exchange listed oil and gas exploration Company.He also holds several advisory roles.MaryDowd,FinanceDirectorAppointment Date:14th June 2018SkillsandExperience:Mary was most recently Chief Operating Officer for Europe,the Middle East and Africa,a

95、nd previously Chief Financial Officer at Cordium Consulting Group Limited,a leading provider of governance,risk and compliance services,with operations in London,Hong Kong,Malta,New York,Boston and San Francisco.Mary brings over 20 years experience of working alongside business leaders.She has demon

96、strated a track record of managing finance teams to ensure timely delivery of relevant financial information to all stakeholders,providing clear leadership,continuous process improvement,and excellent communication.She also brings to Crossword extensive experience of working in acquisitive businesse

97、s and providing transactional support.Mary graduated from University College Galway,Ireland and has a post graduate Diploma in Business Studies from the same university.She is an associate member of the Chartered Institute of Management Accountants.Externalappointments:None.ThomasIlubeCBE,ChiefExecu

98、tiveOfficerAppointment Date:6th March 2014SkillsandExperience:Tom is founder and CEO of Crossword.Tom served as Chief Information Officer of Egg Banking plc,which at the time was a pioneering main market listed UK internet bank.Tom chaired the UK Government Technology Strategy Boards Network Securit

99、y Innovation panel.He was a member of the High Level Expert Group on Cyber security at the International Telecommunication Union(ITU),a Geneva based UN-agency.He was awarded a Doctor of Science(Honoris Causa)by City,University of London,an Honorary Doctor of Technology by the University of Wolverham

100、pton and was appointed a CBE in the 2018 Birthday Honours for services to Technology and Philanthropy.Externalappointments:Non-Executive Director of the BBC,member of Royal Bank of Scotlands Technology Advisory Board and Advisory Fellow of St Annes College,Oxford.RuthAnderson,IndependentNon-Executiv

101、eDirectorAppointment Date:1st February 2018SkillsandExperience:Ruth has over 15 years experience in the fields of security,intelligence,cybercrime and risk management.She brings to the Board extensive experience across defence and law enforcement sectors and within financial services,developing and

102、implementing cyber risk governance frameworks.Ruth is currently head of Technology Risk at Lloyds Banking Group.She was previously a Director of Cyber in the Financial Services Department of KPMG.She served as the Head of Specialist Operational Support and also as the Head of Intelligence at the Chi

103、ld Exploitation and Online Protection Centre,where she delivered the first ever strategic threat assessment on child abuse in the online environment.Prior to this,Ruth served in intelligence and security in the British Army.Externalappointments:None.The Directors in office during the year and at the

104、 date of this report are as shown below:STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS15ProfessorDavidStupples,Non-ExecutiveDirectorAppointment Date:16th June 2014SkillsandExperience:David is currently Director of the Centre for Cyber and Security Sciences at City University London.In his early care

105、er,he was employed as an engineer in signals intelligence in the Royal Air Force followed by a period of intensive research into surveillance systems at the Royal Signal and Radar Establishment,Malvern.He spent three years developing highly secure communications for surveillance satellites for Hughe

106、s Aircraft Corporation in the United States of America.Later,he became a senior partner with PA Consulting Group where he undertook surveillance and intelligence systems research for Ministry of Defence(Navy)and was responsible for consultancy in secure communications and surveillance systems for wo

107、rld-wide clients.Since 2003,David has been researching internet security at City University focused on cyber terrorism and organised cyber crime for both the UK Government and commercial companies.However,he still maintains an active interest in radar surveillance research.Externalappointments:Profe

108、ssor Stupples is a member of the Defence Scientific Advisory Council(DSAC)and the Defence Procurement Agencys Independent Advisory Board on Systems Integration.DrDavidSecher,IndependentNon-ExecutiveDirectorAppointment Date:16th June 2014SkillsandExperience:David is an international expert in intelle

109、ctual property technology transfer and research management.His experience includes Japan,Jordan,South Africa,Brazil,Chile,Australia,Argentina,India,Saudi Arabia and Lebanon as well as Europe and the USA.Dr Secher is a Life Fellow and until recently was Senior Bursar at Gonville&Caius College,Cambrid

110、ge where he was responsible for the investment of a 210 million endowment.David is Patron of PraxisAuril(formerly PraxisUnico)and Past Chairman of PraxisUnico.Until 31 October 2013,he was co-founder and chairman of Praxis Courses Limited,the leading UK technology transfer training programme.He serve

111、d as Director of Research Services,University of Cambridge where he was responsible for creating and directing a new division of 80 staff,for designing and implementing an IP policy for the University and for technology transfer throughout the University resulting in 2 million licensing revenue,40 n

112、ew licences and six spin outs per year.David was Chief Executive of N8 Limited,a consortium of eight research led universities in the North of England,securing initial funding of 6m from Regional Development Agencies.His earlier career was in molecular biology research with MRC Laboratory of Molecul

113、ar Biology,Celltech Limited and Cancer Research Campaign(now Cancer Research UK).Dr Secher held or was named on three patents and is the holder of the Queens Award for Enterprise Promotion(2007)for creating“environments that favour enterprise,specialising in the practical aspects of commercialising

114、the results of academic research”.Externalappointments:Dr Secher is a Director of Cambridge KT Ltd,Trustee of Cambridge United Charities and Chairman of Fitzwilliam Museum(Enterprises)Ltd.16CROSSWORD CYBERSECURITY PLC ANNUAL REPORT AND ACCOUNTS 2018AndyGueritz,IndependentNon-ExecutiveDirectorAppoint

115、ment Date:21st September 2015SkillsandExperience:Andy is an experienced Senior Advisor with a successful track record in helping clients improve and transform their business by managing technology better and creating new technology-based ventures.As a Vice President at marchFIRST(formerly Mitchell M

116、adison Group),Andy led the European B2B e21 Commerce Strategy and IT Strategy Practices.Before becoming a consultant,he attained Board level responsibility in a successful career in software development and systems implementation.At K2 Systems plc(subsidiary of 4Front Technology Inc.),he was Custome

117、r Service and Development Director,responsible for all client service and delivery operations,amongst other roles.Notable systems implemented in his time at K2/4Front include,bespoke procurement,telesales and billing systems;a call centre based on workflow and CTI technologies;and a client-server in

118、surance claims handling system,incorporating document image processing.Prior to 4Front,Andy was a Development Executive at McDonnell Douglas Information Systems and also worked for Marconi Defence Systems on a number of electronic warfare and guided weapons projects.Andy is a Chartered Fellow of the

119、 BCS(FBCS),Chartered IT Practitioner(CITP),Chartered Engineer(C.Eng),Fellow of the IET(FIET),and a European Engineer registered at FEANI.He holds a First Class Honours degree in Electrical and Electronic Engineering with Computer Science from Queen Mary University of London.Externalappointments:None

120、.GordonMatthew,Non-ExecutiveDirectorAppointment Date:24th June 2015SkillsandExperience:Until recently,Gordon was Interim Managing Director at Arden Group Limited,a mid-market unified communications and IT services provider.Arden was successfully sold to Babble Cloud on 19 October 2018.He recently be

121、came Non-Executive Chairman of Flow Communications Limited,experts in designing,building,implementing and supporting customers global IT infrastructure requirements.Previously,Gordon served as Chief Executive Officer of Azzurri Communications Limited and was responsible for ensuring that it met its

122、financial and growth targets.He has served as the Chief Executive Officer of Ramesys(later RedSky IT)Holdings Limited where he was responsible for the successful turnaround,growth and exit of the business through two significant transactions in December 2005 and January 2007.Gordon has over 20 years

123、 IT experience with broad experience of software applications,services,large bespoke developments and telecommunications.He also spent five years at Software AG(UK)where he oversaw all aspects of product and service delivery.Externalappointments:Gordon currently acts as Non-Executive Consultant to A

124、dventoris Limited and Ensign Communications Limited.Gordon was the Non-Executive Chairman of Intrinsic Technology Limited from October 2011 to August 2017,m-hance Limited from May 2014 to August 2016,and Science Warehouse from June 2016 to February 2018.Gordon is also Non-Executive Chairman at Flow

125、Communications Ltd.TheBoardcontinuedSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS17CorporateGovernanceReportChairmansIntroductionThe Directors acknowledge the importance of high standards of corporate governance and have adopted the principles set out in the Quoted Companies Alliance Corporate Gove

126、rnance Code for Small and Mid-Size Quoted Companies(the“QCA Code”)2018,given the Groups size and the constitution of the Board.The QCA Code sets out a standard of minimum best practice for small and mid-size quoted companies,particularly AIM companies.The Chairman and the Board accept the importance

127、 and responsibility of setting good corporate culture,values and behaviours.The Board also acknowledges its responsibility in delivering the long-term success of the Company for the benefit of shareholders and other stakeholders.This Corporate Governance Report describes how the Company has applied

128、the principles and standards set out in the Code during the year and,to the extent it has not done so,any deviations from them.It is the Boards view that the Company has complied with all of the provisions of the Code during the year ended 31 December 2018.Principle1:Establishastrategyandbusinessmod

129、elwhichpromotelong-termvalueforshareholdersThe Companys strategy report is on pages 2 to 11 of this report.The Companys objective is to be the European leader in commercialising cyber security research originating from universities.The Company does this by acquiring IP rights through licences from u

130、niversities and working with the university partners to develop the research concept into a fully-fledged commercial product that it then takes to market.Where appropriate,Crossword will transfer the IP to separate companies in which it will retain a commercial interest.So far,Crossword has been ins

131、trumental in the development of two such companies,ByzGen Limited and CyberOwl Limited.Principle2:SeektounderstandandmeetshareholderneedsandexpectationsCrossword is committed to engaging with its shareholders to ensure that its strategy,business model and performance is clearly understood.The Compan

132、y communicates with shareholders and potential investors through a variety of channels,including regular financial reporting,direct contact with its major shareholders and release of regulatory announcements,which are available on its website.Regulatory announcements include details of the Companys

133、website and the relevant contact at the Company,as well as its professional advisors.The Annual General Meeting(AGM)provides another opportunity for dialogue between shareholders and the Board.The Chair of the Board and of the Committees,together with other Directors,routinely attend the AGM and are

134、 available to answer questions raised by the shareholders.At the meeting,each vote,the number of proxy votes received for,against and withheld is announced.The results of the AGM are subsequently published on the Companys website and released via a regulatory information service provider.A range of

135、corporate information,including all Company announcements,is also available to shareholders,investors and the public on the Companys corporate website,.18CROSSWORD CYBERSECURITY PLC ANNUAL REPORT AND ACCOUNTS 2018Principle3:Takeintoaccountwiderstakeholderandsocialresponsibilitiesandtheirimplications

136、forlong-termsuccessApart from our shareholders,our most important stakeholder groups are our employees,our partners,our clients and the universities we work with.The Board receives regular updates from executives on stakeholder feedback and their potential impact on our business to enable them to un

137、derstand and consider this feedback in decision-making.The Board understands that maintaining the support of all its stakeholders is paramount for the long-term success of the Company.EMPLOYEESCrossword aims to provide an environment which will attract,retain and motivate its team.The Company has a

138、small number of permanent staff employed across the UK and Poland and,therefore,employee engagement with the senior management,who pride themselves on their availability and flexibility,is frequent through daily discussions and meetings.Staff are encouraged to give regular feedback in relation to th

139、eir needs,interests and expectations on away days,general discussions or one-to-one meetings with their line managers.These can then be addressed at the fortnightly management meeting with all senior members of the team,where further actions will be discussed.Furthermore,the team engages in a weekly

140、 call where staff are able to communicate with all levels of the team across both countries.Crossword reviews its processes and policies,which are guided by the principles of fairness and integrity,to make continuous improvements for its staff.The Company is currently exploring further methods of ob

141、taining feedback from its staff,including employee opinion surveys,exit interviews in the event people decide to leave the business,and follow up interviews with new employees.Crossword is supportive of the career development of its employees and provides training programmes and Masters opportunitie

142、s where appropriate.CROSSWORDS PARTNERSCrossword develops mutually beneficial commercial relationships with companies to support sourcing and commercialising cyber security intellectual property originating from university research projects,and evaluating potential routes to distributing and reselli

143、ng its products.Crossword recognises that the establishment of a close working relationship with its partners is essential for its long-term success.Crossword maintains its relationship with its partners through regular meetings,mutual understanding and aligned objectives.Feedback from partners is c

144、ommunicated to the relevant teams and the Board as appropriate.UNIVERSITIESCrossword has excellent connections with universities in the UK and elsewhere through members of the Board and Management,who include some of the most highly regarded experts in IP commercialisation and the cyber security sec

145、tor.Crossword maintains regular interaction with the universities with which it engages.This is predominantly achieved by digital means(e.g.frequent email exchanges and video calls),in which both parties can feedback to one another to ensure their needs are being met.The team also has face-to-face m

146、eetings with academics and works alongside universities at various events,such as talks and conferences.This continuous engagement with universities is paramount to the long-term success of the Company,due to its principal objective.CorporateGovernanceReportcontinuedSTRATEGIC REPORTGOVERNANCEFINANCI

147、AL STATEMENTS19Principle4:Embedeffectiveriskmanagement,consideringbothopportunitiesandthreats,throughouttheorganisationAUDIT,RISK AND INTERNAL CONTROLFinancial controlsThe Company has an established framework of internal financial controls,the effectiveness of which is regularly reviewed by the Exec

148、utive Management,the Audit Committee and the Board,in light of an ongoing assessment of significant risks facing the Company.The Board is ultimately responsible for the effectiveness of the Groups system of internal controls.Its key strategy has been to establish financial reporting procedures that

149、provide the Board of Directors with a reasonable basis upon which to make judgements as to the financial position and prospects of the Group.Executive Directors and Non-Executive Directors have been appointed by the Board to assist with the implementation of this strategy and report progress to the

150、Board.The Audit Committee has the primary responsibility for monitoring the quality of internal controls to ensure that the financial performance of the Group is properly measured and reported on.It receives and reviews reports from the Groups management and external auditors relating to the interim

151、 and annual accounts and the accounting and internal control systems in use throughout the Group.The Audit Committee meets not less than three times in each financial year and has unrestricted access to the Groups external auditors.Regular budgeting and forecasting is conducted to monitor the Compan

152、ys ongoing cash requirements and cash flow forecasts are circulated to the Board.The Company has a Risk Register which identifies the potential possibility and impact of risks associated with the Company and allocates an owner to mitigate each risk.The Risk Register is updated by the Finance Directo

153、r and reviewed by the Executive team,the Audit Committee and the Board.Non-financial controlsThe Board has ultimate responsibility for the Groups system of internal control and for reviewing its effectiveness.However,any such system of internal control can provide only reasonable,but not absolute,as

154、surance against material misstatement or loss.The Board considers that the internal controls in place are appropriate for the size,complexity and risk profile of the Group.The principal elements of the Groups internal control system include:Close management of the day-to-day activities of the Group

155、by the Executive Directors;An organisational structure with defined levels of responsibility,which promotes entrepreneurial decision-making and rapid implementation whilst minimising risks;Central control over key areas such as capital expenditure authorisation and banking facilities;A comprehensive

156、 annual budgeting process producing a detailed integrated profit and loss,balance sheet and cash flow,which is approved by the Board;and Detailed monthly reporting of performance against budget.The Group continues to review its system of internal control to ensure compliance with best practice,whils

157、t also having regard to its size and the resources available.STANDARDS AND POLICIESThe Board is committed to maintaining appropriate standards for all the Companys business activities and ensuring that these standards are set out in written policies.Key examples of such standards and policies includ

158、e:Anti-bribery and Corruption Policy Information Security Policy Data Protection Policy Share Dealing Code.All policies are documented and senior managers are responsible for monitoring the compliance of these policies.APPROVAL PROCESSAll contracts are required to be reviewed and signed by a Directo

159、r of the Company.20CROSSWORD CYBERSECURITY PLC ANNUAL REPORT AND ACCOUNTS 2018Principle5:MaintainingtheBoardasawell-functioning,balancedteam,ledbytheChairCOMPOSITION,QUALIFICATION AND INDEPENDENCE OF THE BOARDThe Board comprises of six Non-Executive and two Executive directors.The names and responsi

160、bilities of the current Directors,together with their biographical details,are set out on page 14.The Board considers each of the Non-Executive Directors to be independent in character and judgement.Two of the Non-Executive Directors do not meet the strict criteria for independence set out in the QC

161、A Code,due to their ownership of ordinary shares and their participation in the Companys share option arrangements,as part of their remuneration arrangements.The Board considers that the ownership of shares and participation in the Companys share options to certain of the Non-Executive Directors enc

162、ourages the alignment of their interests with those of the Companys shareholders and are not material enough to compromise their independence,character and judgement.Therefore,the Company considers all Non-Executive Directors to be independent for the purposes of the QCA Code.The Non-Executive Direc

163、tors provide independent,robust and constructive challenge to the Executive Management and monitor the performance of the management team in delivering the agreed objectives.All Directors have disclosed their other significant commitments and confirmed that they have sufficient time to discharge the

164、ir duties effectively.APPOINTMENT AND TENUREThe Board makes decisions regarding the appointment and removal of Directors and there is a formal,rigorous and transparent procedure for appointments,some of which has been delegated to the Nomination Committee.Appointments are made on merit,taking accoun

165、t of the balance of skills,experience and knowledge required.The Companys Articles of Association require that all Directors retire by rotation at regular intervals and that any new Directors appointed during the year must stand for election at the AGM immediately following their appointment.Princip

166、le6:Ensurethat,betweenthem,theDirectorshavethenecessaryup-to-dateexperience,skillsandcapabilitiesThe names and responsibilities of the current Directors,together with their biographical details,are set out on pages 14-16.The Board believes that its composition brings a desirable range of skills and

167、experience in light of the Groups challenges and opportunities following Admission,while at the same time ensuring that no individuals or a small group of individuals can dominate the Boards decision making.The current Board,although considered to have a sufficient level of skills in all areas of th

168、e business,is always looking to improve and further its knowledge of the industry.All Directors receive regular and timely information on the Groups operational and financial performance and on technical issues.INDUCTIONUpon appointment,all Directors are provided with training in respect of their le

169、gal,regulatory and governance responsibilities and obligations,in accordance with the UK regulatory regime.The induction includes face-to-face meetings with Executive Management and site visits to orientate and familiarise the new Directors with Companys industry,organisation,business,strategy,comme

170、rcial objectives and key risks.The Board is kept up to date on legal,regulatory and governance matters at Board meetings.Additional training is available on request,where appropriate,so that Directors can update their skills and knowledge as applicable.25+75+ADIVERSITYFemale 25%Male 75%CorporateGove

171、rnanceReportcontinuedSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS21INDEPENDENT ADVICE All Directors are able to take independent professional advice in the furtherance of their duties,if necessary,at the Companys expense.In addition,the Directors have direct access to the advice and services of th

172、e Company Secretary and Finance Director.Principle7:EvaluateBoardperformancebasedonclearandrelevantobjectives,seekingcontinuousimprovementBOARD EVALUATIONGiven the Companys recent admission to AIM,the Directors did not consider it appropriate to undertake an evaluation of the Board and its Committee

173、s during the year under review.The Board has put in place a formal process for the annual performance evaluation of the Board,its committees and individual Directors going forward.Such evaluation of the Board and its committees will primarily be undertaken by the Nominations Committee.The Committee

174、will regularly review the structure,size and composition(including the skills,knowledge,independence,experience and diversity)of the Board and make recommendations concerning plans for succession for both Executive and Non-Executive Directors and in particular for the key roles of Chairman and Chief

175、 Executive Officer.Principle8:PromoteacorporateculturethatisbasedonethicalvaluesandbehavioursThe Board is committed to promoting a strong ethical and values driven culture throughout the Company and has a people-oriented ethos where hard-work and commitment is recognised.During 2018 Crossword appoin

176、ted a HR Manager to oversee the culture,values and behaviour of the Company and the Executive team is transparent with their staff regarding the behaviours they expect of each other.Crossword also recognises that employees will have interests outside work and consequently supports flexibility around

177、 these interests.Principle9:Maintaingovernancestructuresandprocessesthatarefitforpurposeandsupportgooddecision-makingbytheBoardTHE ROLE OF THE BOARDThe Board is responsible for the long-term success and strategic leadership of the Group It is responsible for reviewing,formulating and approving the s

178、trategy of the Group and its subsidiaries,corporate actions and overseeing the Groups progress towards its goals.In addition,it also approves the annual and interim results and monitors the exposure to key business risks.The Boards full responsibilities are set out in a schedule of matters reserved

179、for the Board.The matters reserved for the attention of the Board include:The approval of interim and annual financial statements,dividends and significant changes in accounting practices;Review of bi-monthly financial statements;Board membership,reviewed by NOMAD,and powers including the appointmen

180、t and removal of Board members,determining the terms of reference of the Board and establishing the overall control framework;AIM related issues including the approval of communications to the London Stock Exchange and communications with shareholders will be dealt with by the Market Disclosure Comm

181、ittee and reviewed by the NOMAD,or delegated by the Board to the Executive Directors;Senior management,remuneration,contracts,and the grant of share options will be addressed by the Remuneration Committee;Key commercial matters where the financial commitment is in excess of 50,000 per annum;Taking o

182、f loans or other credit;Financial matters including the approval of the budget and financial plans and performance against such plans and budgets;Approval of the appointment of the current period auditor,year-end audited statutory accounts and audit related queries addressed by the Audit Committee;R

183、isk management review;Changes to the Companys capital structure,its business strategy,acquisitions and disposals of businesses,and capital expenditures outside of budget approval;and Other matters including,but not limited to,health and safety policy,insurance and legal compliance.22CROSSWORD CYBERS

184、ECURITY PLC ANNUAL REPORT AND ACCOUNTS 2018ROLE OF THE CHAIRMAN AND CHIEF EXECUTIVE OFFICERThere is a clear division of responsibility at the head of the Company.The Chairman is responsible for running the business of the Board and for ensuring appropriate strategic focus and direction,whilst the Ch

185、ief Executive Officer is responsible for proposing the strategic focus to the Board,implementing it once approved,and overseeing the management of the Company through the Executive Team.The Chief Executive Officer is also responsible for communicating with shareholders,assisted by the Finance Direct

186、or.This separation of responsibilities is clearly defined and agreed by the Board.BOARD AND COMMITTEE MEETINGSThe Board meets at least six times each year,in accordance with its scheduled meeting calendar(these may be supplemented by additional meetings as and when required)to review,formulate and a

187、pprove the Groups strategy,budgets,corporate actions and oversee the Groups progress towards its goals.At each meeting,the Board considers a number of matters,which include technical,operational,financial,risk and corporate governance reports,in addition to an update from its Committees,where applic

188、able.Any Director can challenge proposals and decisions are taken democratically after discussion.Any Director who feels that any concern remains unresolved after discussion may ask for that concern to be noted in the minutes of the meeting,which are then circulated to all Directors.Specific actions

189、 arising from such meetings are agreed by the Board or relevant committee and then followed up by Management.The table below sets out the attendance record of individual Directors at the scheduled and unscheduled Board meetings held during the year:NameBoard MeetingAudit CommitteeRemuneration Commit

190、teeSir Richard Dearlove4/8-Thomas Ilube8/8-Mary Dowd*5/6-Ruth Anderson7/8-David Stupples5/8-2/2David Secher8/81/12/2Gordon Matthew4/81/1-Andy Gueritz8/81/12/2*Appointed during the year.The Group has established an Audit Committee,a Remuneration Committee,a Nomination Committee and a Market Disclosur

191、e Committee,each with formally delegated duties and responsibilities outlined within terms of reference reviewed and approved by the Board on an annual basisFrom time to time,separate committees may be set up by the Board to consider specific issues when the need arises.The Board and its Committees

192、are supported by the Company Secretary,who ensures that the Board receives regular and timely information ahead of each meeting.A formal agenda is produced for each meeting and the Company Secretary distributes papers several days before meetings take place to provide the Board with sufficient time

193、to consider the matters to be discussed.Each Committee has access to such resources,information and advice as it deems necessary,at the cost of the Company,to enable it to discharge its duties.CorporateGovernanceReportcontinuedSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS23Principle10:Communicateho

194、wtheCompanyisgovernedandisperformingbymaintainingadialoguewithshareholdersandotherrelevantstakeholdersThe Board attaches considerable importance to the maintenance of constructive relationships with shareholders and its other stakeholders.As mentioned above,the Company communicates with shareholders

195、 through the Annual Report and accounts,full-year and half-year results announcements,the AGM and one-to-one meetings with large existing or potential new shareholders.The Company regularly releases regulatory and other announcements covering operational and corporate matters.A range of corporate in

196、formation(including all Company announcements)is also available to shareholders,investors and the public on the Companys corporate website, including:Our Articles of Association and admission document;A detailed account of how we have applied the principles of the QCA Code;Latest Crossword Cybersecu

197、rity news and press releases;Annual and Interim Reports.The Board receives regular updates on the views of shareholders through briefings from the Chief Executive Officer,Finance Director and the Companys brokers.The Company is currently exploring further methods of obtaining feedback from its staff

198、,including employee opinion surveys,exit interviews in the event people decide to leave the business,and follow up interviews with new employees.AuditCommitteeReportI am pleased to present the Committees report for the year ended 31 December 2018.The following pages provide an insight into how the C

199、ommittee discharged its responsibilities during the year and the key topics that it considered in doing so.The role of the Audit Committee is to monitor the integrity of the Groups Financial Statements,including its annual and half-yearly reports and any other formal statements relating to its finan

200、cial performance.It monitors and reviews the effectiveness of the Groups system of internal financial control systems that identify,assess,manage and monitor financial risks,and other internal control and risk management systems.COMMITTEE MEMBERSHIP AND GOVERNANCEThe Audit Committee is comprised of

201、two independent non-executive directors,currently David Secher and Andrew Gueritz,and David Secher is considered by the Board to have recent and relevant financial experience.The Committee as a whole has competence relevant to the sector in which the Company operates.At the request of the Chair of t

202、he Committee,the Chief Executive Officer,Finance Director and other members of the senior management team are also invited to attend meetings.The Audit Committee will meet not less than three times in each financial year and has unrestricted access to the Groups external auditors.The Committee works

203、 to a planned programme of activities focused on key events in the annual financial reporting cycle and standing items that it considers regularly under its Terms of Reference.PRINCIPAL ACTIVITIES DURING THE YEARThe Committee held one meeting during the year and considered the following:June 2018 si

204、x month Interim Accounts review.The Committee is planning the following activities during 2019;Review the Companys procedures for detecting fraud;Review the Companys systems and controls for the prevention of bribery and receive reports on non-compliance;Review the adequacy and security of the Compa

205、nys arrangements for its employees to raise concerns,in confidence,about possible wrongdoing in financial reporting or other matters.The Committee shall ensure that these arrangements allow proportionate and independent investigation of such matters and appropriate follow up action;Review and approv

206、e the FY19 external audit plan,including the proposed materiality threshold,the scope of the audit,the significant audit risks and fees;Risk review and challenge the Risk Register,and consider the risk appetite of the business.The Committee members attendance at meetings during the year is set out o

207、n page 22 above.24CROSSWORD CYBERSECURITY PLC ANNUAL REPORT AND ACCOUNTS 2018EXTERNAL AUDITOR MHA MacIntyre Hudson has been the external auditor of the Group since 2014.The continued appointment of MHA MacIntyre Hudson is reviewed by the Committee each year,taking into account the relevant legislati

208、on,guidance and best practice appropriate for a Company of its size,nature and stage of development.The Committee considers a number of areas when reviewing the external auditor appointment,namely its performance in discharging the audit,the scope of the audit and terms of engagement,its independenc

209、e and objectivity,and its reappointment and remuneration.The breakdown of fees between audit and non-audit services paid to MHA MacIntyre Hudson during the financial year is set out in Note 6 to the Groups Consolidated Financial Statements.The non-audit fees relate to tax advice.The Audit Committee

210、is satisfied that it was appropriate for the external auditor to carry out this work,and that it did not impair its independence or objectivity.INTERNAL AUDITThe Group does not have an internal audit function.The Audit Committee presently considers this is appropriate,given the close involvement of

211、the Executive Directors and senior management on a day-to-day operational basis.However,the need for an internal audit function will be kept under review by the Audit Committee on behalf of the Board.DavidSecherChair,AuditCommittee12 April 2019CorporateGovernanceReportcontinuedSTRATEGIC REPORTGOVERN

212、ANCEFINANCIAL STATEMENTS25NominationCommitteeReportThe Nomination Committee is responsible for reviewing the composition of the Board taking into account the skills,experience and diversity of the Directors in light of the challenges and opportunities facing the Company and makes recommendations for

213、 the appointment and reappointment of Board members.COMMITTEE MEMBERSHIP AND GOVERNANCEThe Nomination Committee is chaired by Andrew Gueritz and its other members are Ruth Anderson,Gordon Matthew and David Stupples.The Committee will meet at least twice a year and as otherwise required and comprises

214、 of not less than three members,at least two of whom are independent Non-Executive Directors.SUCCESSION PLANNING AND BOARD EVALUATIONThe Nomination Committee recognises the importance of succession planning for Board renewal and in relation to key members of the executive team.However,given the Comp

215、anys recent admission to AIM on 14 December 2018,the Committee is yet to review or discuss the succession plans for the Companys key Executives and Board members or conduct an evaluation of the Board and Committees.Going forward,the Committee will seek to develop and review on a regular basis the su

216、ccession planning for both the Board and key members of Management.DIVERSITYThe Company has not adopted a formal policy on diversity and,therefore,has no measurable objectives to disclose.Appointments,including appointments to the Board and senior management positions are made on merit,taking accoun

217、t of the balance of skills and experience required.KEY AREAS OF FOCUS FOR 2019:Review the structure,size and composition(including the skills,knowledge,experience and diversity)of the Board and make recommendations to the Board as appropriate;Review the time commitment and independence of the Non-Ex

218、ecutive Directors;Put in place succession plans for both Executive and Non-Executive Directors and,in particular,for the key roles of Chair and Chief Executive Officer;and Conduct an internal evaluation of the Board,its Committees and individual Directors,using questionnaires.AndrewGueritzChair,Nomi

219、nationCommittee12 April 201926CROSSWORD CYBERSECURITY PLC ANNUAL REPORT AND ACCOUNTS 2018RemunerationCommitteeReportThe Remuneration Committee is responsible for determining and agreeing with the Board the framework or broad policy for the remuneration of all Executive Directors,the Chairman of the

220、Board,including pension rights and any compensation payments,and such other members of the senior management as it is designated to consider.In addition,the Committee makes recommendations to the Board on proposals for the granting of share options and other equity incentives,pursuant to any employe

221、e share option scheme or equity incentive plans in operation from time to time.COMMITTEE MEMBERSHIP AND GOVERNANCEThe Remuneration Committee is a formal committee of the Board and has powers delegated to it under the Articles of Association.Its remit is set out in Terms of Reference formally adopted

222、 by the Board which are reviewed annually.The Remuneration Committee is currently comprised of:Andrew Gueritz(as Chair),David Secher,David Stupples and Ruth Anderson.The Committee meets at least once in each financial year and held two meetings during the year.The Committee members attendance at mee

223、tings during the year is set out on page 22 above.LETTER OF APPOINTMENT,SERVICE CONTRACTS AND TERMINATIONThomas IIube(Chief Executive Officer)Tom Ilube is appointed as Chief Executive Officer under an executive service contract dated 1 April 2014(as amended).The employment commenced on 1 April 2014

224、and will continue unless terminated by either party giving twelve months written notice.The Company may terminate the contract without notice(or with payment in lieu of notice)if,inter alia,Tom is guilty of gross misconduct,commits a serious breach of the employment contract,commits a criminal offen

225、ce,is declared bankrupt or becomes of unsound mind.The Company may,after giving or receiving notice of termination,immediately end the employees employment and make payment in lieu of salary with no other benefit for the remaining period of notice.Mary Dowd(Finance Director)Mary Dowd is employed as

226、Finance Director under an employee service contract dated 10 May 2018.The employment commenced on 16 May 2018 and will continue unless terminated by either party giving six months written notice.The Company may terminate the contract on shorter notice if the employee is absent from work for an exten

227、ded period through sickness or injury and may terminate without notice(or with payment in lieu of notice)if,inter alia,Mary is guilty of gross misconduct,commits a serious breach of the employment contract,commits a criminal offence,is declared bankrupt or becomes of unsound mind.The Company may,aft

228、er giving or receiving notice of termination,immediately end the employees employment and make payment in lieu of salary with no other benefit for the remaining period of notice.Following termination of employment,Mary is subject to certain restrictions for a period of six months,including a restric

229、tion on dealing with the Companys customers and suppliers and from working for a competing business.Non-Executive DirectorsAll Non-Executive Directors,including the Chairman serve on the basis of letters of appointment which are terminable by three months written notice and are available for inspect

230、ion at the Companys registered office.Subject to continued satisfactory performance,the Board does not think it appropriate at this time to limit the term of appointment of the Non-Executive Directors.The Executive Directors service contracts are also available for inspection at the Companys registe

231、red office.CorporateGovernanceReportcontinuedSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS27The remuneration of the Directors who served during the year was as follows:Directors remunerationBasic Salary and feesBonus000Taxable benefits000EmployersPension contributions000Total000Executive DirectorsT

232、homas IIube CBE115,00010,0004,133703129,836Mary Dowd62,9498,47726971,695Non Executive DirectorsSir Richard Dearlove25,00025,00050,000Ruth Anderson6,0006,000Andrew Gueritz6,0006,000Gordon Matthew12,00012,000David Secher6,0006,000David Stupples12,00012,000Total244,94918,47729,133972293,531DIRECTORS SH

233、AREHOLDINGS AND SHARE INTERESTSThe table below sets out the Directors interests in the ordinary shares of the Company as at 31 December 2018.There have been no changes in the current Directors interests in shares or options granted by the Company between the end of the financial year and 12 April 20

234、19.NameNumber of Issued Ordinary Shares%of Issued Shares Thomas Ilube*1,382,11229.53%Dr David Secher26,3650.56%David Stupples5,2630.11%*Thomas Ilubes shareholding is made up of 1,251,668 shares held by him personally and 130,444 held by Share Nominees Limited on his behalf.Thomas Ilube,his brother R

235、oland Ilube and his sisters Susan Gill and Elizabeth Leonard(together the“Concert Party”)are deemed to be acting in concert for the purposes of the Takeover Code.The Concert Party owns in aggregate 1,408,739 Ordinary Shares representing 30.10 per cent.of the Companys Share Capital.SHARE OPTION AND I

236、NCENTIVISATION PROPOSALSThe Board considers employee share ownership to be an important part of its strategy for employee incentivisation and retention.The Group has established share option programmes that entitle certain employees to purchase shares in the Company.These were issued in July 2014,No

237、vember 2014,July 2015,December 2015,January 2016,June 2016,September 2016,June 2017,January 2018,May 2018,July 2018 and October 2018.There are no performance conditions attaching to these options.In addition,the Company has established a share option programme in Crossword Consulting Limited and 27,

238、000 options were issued to employees of that Company.The Company intends to put in place an incentive arrangement for Stuart Jubb,the Managing Director of Crossword Consulting Limited,which is designed to incentivise him with entrepreneurial-style rewards commensurate with the achievement of a growt

239、h in enterprise value of that Company.28CROSSWORD CYBERSECURITY PLC ANNUAL REPORT AND ACCOUNTS 2018The Directors hold the following shares under option:NameDate of grantNumber of Ordinary Shares under optionExercise PriceVesting ConditionsExpiry DateSir Richard Dearlove03/10/1613,1581.90(1)03/10/26S

240、ir Richard Dearlove25/05/186,7573.70(1)25/05/28Dr David Secher18/07/1415,0000.54(1)17/07/24Professor David Stupples18/07/1435,0000.54(1)17/07/24Gordon Matthew20/07/155,0001.90(1)19/07/25Mary Dowd24/10/187,9363.15(1)24/10/28Total82,851(1)Option Shares to vest in three equal tranches on the first,seco

241、nd and third anniversary of the date of grant.In addition,the Company has issued 66,993 options to members of staff and a former Director,John Bottomley.NON TAX-ADVANTAGED SHARE OPTION PLANEMI Share Option PlanThe Company has established an enterprise management incentive share option plan under sch

242、eme rules dated 21 May 2014(“EMI Option Plan”)for the purposes of recruiting and retaining its staff.The Company may grant an Option intended to be a qualifying option under the Income Tax(Earnings and Pensions)Act 2003(“ITEPA 2003”)(“EMI Option”)to any eligible employee it chooses,subject to the li

243、mitations and conditions of the EMI Option Plan.EMI Options may not be granted where prohibited by law or any corporate governance code which applies to the Company or after the tenth anniversary of the date of the EMI Option Plan.Crossword Consulting Limited share option schemeCrossword Consulting

244、Limited(“Consulting”)has established a non tax-advantaged share option plan under scheme rules dated 2 January 2018(“Consulting Option Plan”),whereby Consulting may grant a right to acquire ordinary shares of 0.01 each in the capital of Consulting(“Consulting Option(s)”)to any individual who is an e

245、mployee of,director of,adviser to or consultant of Consulting from time to time(save where prohibited by law or any corporate governance code which applies to Consulting).AndrewGueritzChair,RemunerationCommittee12 April 2019CorporateGovernanceReportcontinuedSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEM

246、ENTS29DirectorsReport&Statementof DirectorsResponsibilitiesDirectorsReportThis Directors Report includes the information required to be included under the Companies Act 2006 or,where provided elsewhere,an appropriate cross-reference is given.The Corporate Governance Report approved by the Board is p

247、rovided on pages 17 to 28 and incorporated by reference into this Directors Report.Principalactivity,reviewofthebusinessandfuturedevelopmentsCrossword Cybersecurity plc(8927013)is a public company,limited by shares,incorporated in the United Kingdom under the Companies Act,with operations in the UK

248、and Poland.Its shares are traded on AIM,a sub market of the London Stock Exchange(AIM).The Company has two principal areas of activity,being(i)the development and commercialisation of university research based cyber security related software and(ii)cyber security consulting.More details on the strat

249、egy,nature of the Groups operations and future developments are set out in the Strategic report on pages 5 to 11.SharecapitalandrightsattachingtothesharesThe number of shares in issue as at 31 December 2018 was 4,680,396 ordinary shares of 0.05,each with one vote.In accordance with applicable laws a

250、nd the Companys Articles of Association,holders of ordinary shares are entitled to:Receive shareholder documentation including the notice of any general meeting;Attend,speak and exercise voting rights at general meetings,either in person or by proxy;and A dividend,where declared and paid out of prof

251、its available for such purposes.On a return of capital on a winding up,holders of ordinary shares are entitled to participate in such a return.ArticlesofAssociationThe Companys Articles of Association can only be amended by special resolution and are available at https:/ ResearchanddevelopmentThe Gr

252、oup has worked with 14 research intensive university partners,including academics from Imperial College London,the Universities of Bristol,Warwick,Edinburgh,Surrey and South Wales,EPFL(Switzerland)and the Massachusetts Institute of Technology(MIT)to identify promising cyber security intellectual pro

253、perty from research that the Company considers meets emerging real-world challenges.Crossword has identified over 1,000 cyber security research projects from universities worldwide.Over the last four years,the Group has signed memoranda of understanding and agreements with fourteen universities to e

254、xplore potential commercialisation opportunities or work with them on cyber security research ideas.The Groups specialist cyber security product development and software engineering teams in Richmond,Greater London,in the UK and in Krakow,Poland,work with its university partners to develop the resea

255、rch concept into a fully-fledged commercial product that it will then take to market.Its current portfolio of products comprises Rizikon Assurance,a SaaS platform designed to help larger organisations manage third-party assurance at scale with a particular focus on cyber security and Rizikon Standar

256、d,a Cyber-risk and GDPR compliance assessment tool aimed at small to medium companies.The Group also has a third product,Nixer,a version of which is currently undergoing testing.Nixer is a machine-learning based product aimed at protecting against Application-layer DDoS attacks and the growing menac

257、e of automated attack tools.The Group has continued to develop Nixer and the latest version of the product includes protection against other threats including credential stuffing.PowersofDirectorsThe Directors may exercise powers subject to applicable legislation and regulations and the Companys Art

258、icles of Association.The Directors in office at the date of this Annual Report are shown on pages 14 to 16.DirectorsconflictofinterestThe Board may authorise,to the fullest extent permitted by law any matter which,if not so authorised,would or may result in a Director infringing his or her duty to a

259、void a situation in which he/she can have a direct or indirect interest that conflicts,or possibly may conflict,with the interests of the Company and which may reasonably be regarded as likely to give rise to a conflict of interest.The Company has effective procedures in place to monitor and deal wi

260、th conflicts of interest.The Board is aware of the other commitments and interests of its Directors,and changes to these commitments and interests are reported to and,where appropriate,agreed with the rest of the Board.30CROSSWORD CYBERSECURITY PLC ANNUAL REPORT AND ACCOUNTS 2018DirectorsInsurancean

261、dIndemnityThe Group maintains Directors and Officers liability insurance which gives appropriate cover for any legal action brought against its Directors.In accordance with Section 234 of the Companies Act 2006,qualifying third party indemnity provisions are in place for the Directors in respect of

262、liabilities incurred as a result of their office to the extent permitted by law.PurchaseofownsharesThe Company has not acquired any of its own shares in the period to 31 December 2018,nor in the period up to the date of approval of this Annual Report.Post-balancesheeteventsThere were no post balance

263、 sheet events of note.DividendThe Directors do not intend that the Company will declare a dividend in the near term,but instead channel the available cash resources into funding the expansion of the Group.The Board intends to commence the payment of dividends only when it becomes commercially pruden

264、t to do so,having regard to the Groups earnings,financial position,cash requirements and availability of distributable profits,as well as the provisions of relevant laws and/or generally accepted accounting principles from time to time.PoliticaldonationsNo political donations have been made during t

265、his financial year.GoingconcernThe Groups business activities,together with the factors likely to affect its future development,performance and financial position,are contained within the Strategic Report.In addition,the notes to the Group financial statements include details on the Companys objecti

266、ves,policies and processes for managing its capital;its financial risk management objectives,its exposures to credit risk and liquidity risk.The Directors have,at the time of approving the financial statements,a reasonable expectation that the Company continues to have adequate resources to continue

267、 in operational existence for the foreseeable future.Thus,they continue to adopt the going concern basis of accounting in preparing the Annual Report and financial statements.PrincipalshareholderTom Ilube is the Companys ultimate controlling party,holding a total of 1,382,112 ordinary shares,represe

268、nting 29.53 per cent.of the voting rights attached to the current issued share capital of the Company.Of the 1,382,112 shares held,1,251,668 shares are held by Tom Ilube directly and 130,444 shares are held on his behalf by Share Nominees Limited.ExternalAuditorThe Directors confirm that,so far as e

269、ach is aware,there is no relevant audit information of which the Groups Auditors are unaware.Each of the Directors has taken all the steps he or she should have taken as a Director to make himself or herself aware of any relevant audit information and to establish that the Groups Auditors are aware

270、of that information.AnnualGeneralMeetingThe Annual General Meeting of the Company will be held on the 9th of May,2019 at 3pm at 60 Gracechurch Street,London EC3V 0HR.The Notice of Meeting will be available to view on the Companys website in advance of that meeting.ApprovalofDirectorsReportThis Direc

271、tors Report,including the Corporate Governance Statement,was approved for and on behalf of the Board on 12 April 2019.BenHarberCompanySecretary12 April 2019DirectorsReport&Statementof DirectorsResponsibilitiescontinuedSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS31StatementofDirectorsResponsibiliti

272、esinrespectoftheAnnualReportandtheFinancialStatementsThe Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.Company law requires the Directors to prepare financial statements for each financial year.Under that law

273、the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards(IFRSs),as adopted by the European Union,and parent company financial statements,in accordance with International Financial Reporting Standards,(IFRSs),as adopted by the Europ

274、ean Union.Under Company law,the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the Group and parent company for that period.In preparing the financial statements,the Directors are require

275、d to:Select suitable accounting policies and then apply them consistently;Make judgements and accounting estimates that are reasonable and prudent;State whether applicable IFRSs,as adopted by the European Union,have been followed for the Group financial statements and IFRSs,as adopted by the Europea

276、n Union,have been followed for the Company financial statements,subject to any material departures disclosed and explained in the financial statements;and Prepare the financial statements on the going concern basis,unless it is inappropriate to presume that the Group and parent company will continue

277、 in business.The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and parent companys transactions and disclose with reasonable accuracy at any time the financial position of the Group and parent company and enable them to ensure tha

278、t the financial statements and the Directors Remuneration Report comply with the Companies Act 2006 and,as regards the Group financial statements,Article 4 of the IAS Regulation.They are also responsible for safeguarding the assets of the Group and parent company and,hence,for taking reasonable step

279、s for the prevention and detection of fraud and other irregularities.The Directors are responsible for the maintenance and integrity of the parent companys website.Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in oth

280、er jurisdictions.ResponsibilityStatementoftheDirectorsinrespectoftheAnnualReportandAccountsThe Directors consider that the Annual Report and accounts,taken as a whole,is fair,balanced and understandable and provides the information necessary for shareholders to assess the Group and parent companys p

281、osition,performance,business model and strategy.Each of the Directors,whose names and functions are listed in the Corporate Governance Section confirm to the best of our knowledge,that:The parent company and Group financial statements,prepared in accordance with International Financial Reporting Sta

282、ndards as adopted by the European Union and Article 4 of the IAS Regulation,give a true and fair view of the assets,liabilities,financial position and profit or loss of the Company and the undertakings included in the consolidation as a whole;and The Annual Report includes a fair review of the devel

283、opment and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole,together with a description of the principal risks and uncertainties that they face;and The Annual Report and accounts,taken as a whole,is fair,balanced and unde

284、rstandable and provides the information necessary for the shareholders to assess the Group and parent companys position,performance,business model and strategy.The strategic report includes a fair review of the development and performance of the business and the position of the Group and parent comp

285、any,together with a description of the principal risks and uncertainties that it faces.This Statement of Responsibilities and the Annual Report as a whole were approved by the Board on 12 April 2019.TomIIubeChiefExecutiveOfficer12 April 201932CROSSWORD CYBERSECURITY PLC ANNUAL REPORT AND ACCOUNTS 20

286、18We have audited the financial statements of Crossword Group plc.The financial statements that we have audited comprise:Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Company Statement of Financial Position Group Statement of Changes in Equity Company St

287、atement of Changes in Equity Group Cash Flow Statement Notes 1 to 19 of the financial statements,including Accounting Policies.The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards(IFRSs),as adopted by the Europ

288、ean Union.In our opinion:The financial statements give a true and fair view of the state of the Groups and of the parent companys affairs,as at 31 December 2018,and the Groups profit for the year then ended;The financial statements have been properly prepared,in accordance with International Financi

289、al Reporting Standards(IFRS),as adopted by the European Union;and The financial statements have been prepared in accordance with the requirements of the Companies Act 2006.BasisforopinionWe conducted our audit in accordance with International Standards on Auditing(UK)(ISAs(UK)and applicable law.Our

290、responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report.We are independent of the Group,in accordance with the ethical requirements that are relevant to our audit of the financial statements in the

291、UK,including the FRCs Ethical Standard as applied to listed entities,and we have fulfilled our ethical responsibilities in accordance with those requirements.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.Conclusionsrelatingtogoin

292、gconcernWe have nothing to report in respect of the following matters in relation to which the ISAs(UK)require us to report to you where:The Directors use of the going concern basis of accounting in the preparation of the financial statements is not appropriate;or The Directors have not disclosed in

293、 the financial statements any identified material uncertainties that may cast significant doubt about the Groups or the parent companys ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised

294、 for issue.KeyauditmattersKey audit matters are those matters that,in our professional judgement,were of most significance in our audit of the financial statements of the current period,and include the most significant assessed risks of material misstatement(whether or not due to fraud)that we ident

295、ified.These matters included those matters which had the greatest effect on:the overall strategy,the allocation of resources in the audit;and directing the efforts of the engagement team.These matters were addressed in the context of our audit of the financial statements as a whole,and in forming ou

296、r opinion thereon,and we do not provide a separate opinion on these matters.IndependentAuditorsReportTotheMembersofCrosswordGroupplcSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS33REVENUE RECOGNITIONKey matterAs described in the accounting policy note 1.2,IFRS 15 provides a five-step model to be app

297、lied to contract with customers.Revenue is recognised in line with meeting certain performance obligations as set out in these contracts,as and when they are met.Being the first year of application,this has been a key area of focus for the audit due to its material significance.How the scope of our

298、work responded to the key matterOur procedures included the evaluation of contracts held with customers from which key performance obligations could be identified.Subsequently,these were reviewed against the amount of revenue recognised on a contract by contract basis.In addition,we performed substa

299、ntial analytical procedures on revenue in the year to understand any changes in the revenue profile and corroborate any irregularities.Key observations Following our audit procedures,we found that revenue had been recorded appropriately and was free from material misstatement.Ourapplicationofmateria

300、lityOur definition of materiality considers the value of error or omission on the financial statements that would change or influence the economic decision of a reasonably knowledgeable person.Materiality is used in planning the scope of our work,executing that work and evaluating the results.Group

301、materiality that we used in the current year was 10,650 which was determined on the basis of 1%of Group revenue.This was then also considered on a Company basis,also being 1%of revenue.AnoverviewofthescopeofourauditIn scoping our Group audit we first obtained an understanding of the Group and its en

302、vironment,including its internal control environment.We also assessed the risks of material misstatement at the Group level.As part of our audit work we have tested the consolidation process.We have also performed those audit procedures of the remaining components necessary for us to reduce the risk

303、s of material misstatement to an acceptable level.The audit of Crossword Consulting Limited and the parent company Crossword Cybersecurity Plc was performed by us and we have acted as the Group engagement team in directing the audit of Crossword Cybersecurity Sp Z.o.o.Our work in this respect was pe

304、rformed in accordance with the International Standards on Auditing,specifically ISA 600(UK).OtherinformationThe directors are responsible for the other information.The other information comprises the information included in the Annual Report and Accounts,other than the financial statements and our a

305、uditors report thereon.Our opinion of the financial statements does not cover the other information and,except to the extent otherwise explicitly stated in our report,we do not express any form of assurance conclusion thereon.In connection with our audit of the financial statements,our responsibilit

306、y is to read the other information and,in doing so,consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.If we identify such material inconsistencies or apparent material

307、misstatements,we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information.If,based on the work we have performed,we conclude that there is a material misstatement of this other information,we are required to re

308、port that fact.We have nothing to report in this regard.34CROSSWORD CYBERSECURITY PLC ANNUAL REPORT AND ACCOUNTS 2018IndependentAuditorsReportcontinuedTotheMembersofCrosswordGroupPLCOpinionsonothermattersprescribedbytheCompaniesAct2006In our opinion,based on the work undertaken in the course of the

309、audit:the information given in the strategic report and the directors report for the financial year for which the financial statements are prepared is consistent with the financial statements;and the strategic report and the directors report have been prepared in accordance with applicable legal req

310、uirements.MattersonwhichwearerequiredtoreportbyexceptionIn light of the knowledge and understanding of the Group and the parent company and its environment obtained in the course of the audit,we have not identified material misstatements in the strategic report and the directors report.We have nothi

311、ng to report in respect of the following matters in relation to which the Companies Act 2006 requires is to report to you if,in our opinion:adequate accounting records have not been kept,or returns adequate for our audit have not been received by branches not visited by us;or the financial statement

312、s are not in agreement with the accounting records and returns;or certain disclosures of directors remuneration specified by law are not made;or we have not received all the information and explanations we require for our audit.ResponsibilitiesofdirectorsAs explained more fully in the directors resp

313、onsibilities statement,the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view,and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from

314、material misstatement,whether due to fraud or error.In preparing the financial statements,the directors are responsible for assessing the Groups and the parent companys ability to continue as a going concern,disclosing,as applicable,matters related to going concern and using the going concern basis

315、of accounting unless the directors either intend to liquidate the Group or the parent company or to cease operations,or have no realistic alternative but to do so.AuditorsresponsibilitiesfortheauditofthefinancialstatementsOur objectives are to obtain reasonable assurance about whether the financial

316、statements as a whole are free from material misstatement,whether due to fraud or error,and to issue an auditors report that includes our opinion.Reasonable assurance is a high level of assurance,but is not a guarantee that an audit conducted in accordance with ISAs(UK)will always detect a material

317、misstatement when it exists.Misstatements can arise from fraud or error and are considered material if,individually or in aggregate,they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.As part of an audit in accordance with I

318、SAs(UK),we exercise professional judgement and maintain professional scepticism throughout the audit.We also:Identify and assess the risks of material misstatement of the financial statements,whether due to fraud or error,design and perform audit procedures responsive to those risks,and obtain audit

319、 evidence that is sufficient and appropriate to provide a basis for our opinion.The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error,as fraud may involve collusion,forgery,intentional omissions,misrepresentations,or the override of intern

320、al control.Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the Groups internal control.Evaluate the appropriateness of accounting p

321、olicies used and reasonableness of accounting estimates and related disclosures made by the directors.STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS35 Conclude on the appropriateness of the directors use of the going concern basis of accounting and,based on the audit evidence obtained,whether a mate

322、rial uncertainty exists related to events or conditions that may cast significant doubt on the Groups or the parent companys ability to continue as a going concern.If we conclude that a material uncertainty exists,we are required to draw attention in our auditors report to the related disclosures in

323、 the financial statements or,if such disclosures are inadequate,to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditors report.However,future events or conditions may cause the Group or the parent company to cease as a going concern.Evaluate the

324、overall presentation,structure and content of the financial statements,including the disclosures,and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.Obtain sufficient appropriate audit evidence regarding the financial info

325、rmation of the entities or business activities within the Group to express an opinion on the consolidated financial statements.We are responsible for the direction,supervision and performance of the Group audit.We remain solely responsible for our audit opinion.We communicate with those charged with

326、 governance regarding,among other matters,the planned scope and timing of the audit and significant audit findings,including any significant deficiencies in internal control that we identify during our audit.UseofourreportThis report is made solely to the Companys members,as a body,in accordance wit

327、h Chapter 3 of Part 16 of the Companies Act 2006.Our audit work has been undertaken so that we might state to the Companys members those matters we are required to state to them in an auditors report and for no other purpose.To the fullest extent permitted by law,we do not accept or assume responsib

328、ility to anyone other than the Company and the Companys members as a body,for our audit work,for this report,or for the opinions we have formed.RajeevShaunakFCA(SeniorStatutoryAuditor)MHAMacIntyreHudsonCharteredAccountants&StatutoryAuditorsNew Bridge Street House30-34 New Bridge StreetLondon EC4V 6B

329、JCROSSWORDCYBERSECURITYRIZIKONCYBER RISK SUPPLIER ASSURANCESTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS2018 ANNUALREPORT&ACCOUNTS3.FINANCIAL STATEMENTSNIXERA MACHINE LEARNING CREDENTIAL STUFFING&APPLICATION DDOS PLATFORMCROSSWORD CYBERSECURITY PLC ANNUAL REPORT AND ACCOUNTS 2018Consolidated Financ

330、ial Statements38Consolidated Statement of Comprehensive Income12 Months12 Monthsendedended31st December31st December20182017NotesRevenue21,067,609736,546Cost of Sales3(1,013,521)(1,062,350)Gross Profit(Loss)54,088(325,804)Other operating income-research&development tax credits192,14997,716Administra

331、tive expenses3(2,335,228)(956,126)Share based payments4(45,751)(50,875)Finance income-bank interest receivable3,727976Finance costs-other interest payable(1,237)(1,402)Loss for the year/period before taxation(2,132,252)(1,235,515)Tax expense7(8,052)(4,730)Loss for the Year/Period(2,140,304)(1,240,24

332、5)Other Comprehensive IncomeItems that may be reclassified to profit or loss:Foreign Exchange Translation Gain(Loss)(13,542)4,265Total Comprehensive Loss(2,153,846)(1,235,980)Earnings Per Share14(0.55)(0.39)All results are derived from continuing operationsFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REP

333、ORT39Statement of Financial Position as at 31 DecemberGroupCompanyGroupCompany2018201820172017NotesNon-Current AssetsTangible assets812,0664,58312,408Intangible assetsInvestments in other unlisted investment&subsidiary93111,048311,048Total non-current assets12,09715,63112,4391,048Current AssetsTrade and other receivables10559,387848,204175,580447,503Cash and cash equivalents152,222,7062,213,071490