Further to the announcement of 29 January 2018, Defenx PLC (AIM:DFX), the cyber-security software group, provides the following update for the year ended 31 December 2017 (“FY17”).
Key points
-- Consolidated revenues for FY17 materially below prior year -- Cloud Backup revenues of approximately EUR0.52 million, a modest full year-on-year increase -- Refocused strategy to deliver cloud storage solutions to corporate customers -- Funding options under active consideration with continued support from BV-Tech
Alessandro Poerio, Chief Executive Officer of Defenx, commented: “Since joining the board as CEO last November, I have worked hard to focus the Group’s limited resources where they can best deliver value and cash in the short term. The refocused strategy, centred on our existing cloud storage technology, addresses real demand from the corporate and public administration markets. Yet there is plenty of hard work ahead of us to ensure we deliver competitive products and support customers to re-build our business. I hope to provide future updates as we build our team and stabilise the Group’s funding.”
Financial performance
As previously advised and for the reasons set out in the announcement of 25 October 2017, trading in the second half of FY17 was materially below expectations due to the cancellation of confirmed orders, some of which had been invoiced in the first half of FY17.
The Group is not yet able to report its revenues for the year ended 31 December 2017 pending the outcome of audit work in respect of its Security segment sales and re-iterates the previous statement that consolidated revenues will be materially below those in the prior year ended 31 December 2016. Accordingly, the Group will report a significant loss, including one-off charges, for the full year ended 31 December 2017.
Revenues for Cloud Backup products (arising from the acquisition of Memopal in August 2016) were approximately EUR0.52 million (5 months ended December 2016: EUR0.20 million), reflecting a modest full year-on-year increase.
It remains the Group’s intention to early adopt IFRS15 Revenue from contracts with customers for its FY17 results, which is expected to have an impact on the results for FY17 and the prior year comparatives.
Refocused strategy
The board is now looking to implement a strategic plan, defenx 2020, which will see the Group build on its existing cloud backup product with a focus on corporate customers. This strategy reflects the changing competitive landscape, growing demand for cloud-based services, feedback from existing and potential customers and the support of the Company’s largest shareholder, BV-Tech SpA (“BV-Tech”).
Progress continues in bringing the Group’s development activities in house with the support of BV-Tech. In parallel, a detailed review is currently underway to fully understand the previously announced performance and back-end integration issues and determine how best to deliver value from the Group’s investment in security products.
We are encouraged by the sales pipeline and recent wins including a new contract to deliver enterprise cloud to an existing customer and leader in digital solutions for the professional adviser and SME markets in Italy. Invoicing is expected to start in the second quarter and we hope to grow the sales and operational team once the Group’s finances have been stabilised.
Funding
Since the announcement of 29 January 2018, there has been no material change in respect of the collection of trade debtors arising from the Group’s security product sales. Management continues to pursue all options, including legal proceedings.
As at 26 February 2018, the Group had EUR0.66 million of cash and undrawn facilities of approximately EUR0.76 million (consisting of a GBP450,000 supply chain facility, EUR229,000 invoice discounting facilities and an overdraft of EUR20,000). The Group is actively exploring funding options and BV-Tech continues to be supportive.
