Interim Report Stockholm, October 19 th, Third Quarter, first nine Months 2015

Transcription

1 Interim Report Stockholm, October 19 th, 2015 Third Quarter, first nine Months 2015 The group s consolidated revenues for the third quarter amounted to 5 882,9 (n.a.) TEUR. Operating profit for the third quarter amounted to 1 000,1 (n.a.) TEUR. Consolidated profit has during the third quarter been subject to a depreciation of 9,7 (n.a) TEUR. Profit after taxes for the third quarter amounted to 1 016,0 (n.a.) TEUR of which there was a minority interest of 21.6 (n.a.) TEUR. Earnings per share amounted to (n.a.). Net investments amounted to 1 565,2 (n.a.) TEUR. Consolidated shareholders' equity amounted to 3 107,8 (n.a.) TEUR, which corresponds to an equity ratio of 33,3 (n.a.) percent. This interim report is a translation from the original interim report which was submitted in Swedish. In any and all legal considerations, the interim report in Swedish serves as Cognosec AB (publ) official report. FOR ADDITIONAL INFORMATION, PLEASE CONTACT: Magnus Stuart IR Contact, Cognosec AB Telephone: E-post: magnus.stuart@chieftain.se ABOUT COGNOSEC Cognosec AB (publ) is engaged in cyber security and conducts its operations through the Swedish parent company and primarily through subsidiaries in South Africa, Kenya, and the United Arab Emirates. The Group delivers services and technology licenses in order to enhance their clients' protection against unwanted intrusion and to prevent various forms of information theft. The parent company is domiciled in Stockholm, Sweden. Cognosec had pro forma revenues of approximately TEUR in The Company has resolved to apply for listing on NASDAQ OMX First North Stockholm during the third quarter of For more information, please visit 1

2 Comments by Kobus Paulsen, Chairman of Cognosec AB Group Dear Shareholders, It is with satisfaction and joy I provide you with my comments on Cognosec s second interim report which presents the Company's results from the third quarter and the first nine months of the Our revenues are growing strongly - the group's total sales during the third quarter exceeded 5.8 million, - it is also the business with good profitability: Profit for the third quarter amounted to EUR 1.0 million. Cognosec s board has decided to bring forward the publication of the financial statements of these results to ensure that all current and potential shareholders are informed about the strong earnings performance of our business. Especially against the background that Cognosec s offer to subscribe for shares extended and that the listing on the Nasdaq First North is planned in November. The results speak for themselves: Cognosec s business is scalable, with good profitability, we have a multi-product strategy and works in multiple jurisdictions, in markets that we know has a huge potential. This quarter, we signed our largest customer contract ever: a large South African bank with a fullscale expansion of our products and services over three years. I am very proud to announce this, and that our planned listing on NASDAQ First North will give us a stronger international position with greater force in the marketing of our services. We are setting up our base in Stockholm. They give us the opportunity to develop both client and other cooperative relationships in the Scandinavian market. In the Middle East and Africa, we have created a new brand name for our business as "Credence Security" (formerly ARM). This allows us to better harmonize our offering to the various markets. Geographically, we have also established an office in London. We will shortly announce the appointment of the CEO there. The Board and management believe that Cognosec is well positioned to create interesting business opportunities. The Group's business has been through recent progress, opened to strong revenue growth with a minimum sustained profitability in the fourth quarter of The next report is submitted at the year-end report for 2015, which is scheduled for February 25, London in October 2015 J A (Kobus) Paulsen, Chairman of the Board 2

3 BUSINESS OVERVIEW MARKETS The market for cyber security is fueled, as in recent years, by a multiple technological advancements such as linking telephony and internet with an organizations internal systems and internal networks. In 2015, this trend has been reinforced and Cognosec notes that demand remains strong for services from the Company's subsidiaries in Africa and the Middle East. In Europe, the market is still strong, but customers exhibit a higher level of maturity. It also means that growth rate is different than for the Company s markets in Africa and the Middle East. PROJECTS AND DELIVERIES During the third quarter, deliveries from the group s subsidiary s have increased. Especially DRS has increased its sales, and during September signed an agreement for a three-year extension of a Cybersecurity mission for a leading South African bank. The agreement is comprehensive and significant to Cognosec. The Group's subsidiary in the United Arab Emirates has been renamed CREDENCE SECURITY. Delivered volumes have increased during the third quarter. Cognosec has begun work to establish independent operations in London during the third quarter. A new CEO for Cognosec UK will soon be appointed and announced. SUBSIDIARY SALES PERFORMANCE Allocation between the Groups various subsidiaries are listed in the table below: TEUR July-Sept Share July-Sept Share Jan-Sept Share Jan-Sept Share Jan-Dec diff % diff % OVERVIEW SALES 2015 % 2014 % 2015 % DRS LTD (South Africa) 4 203,5 71,5 n.a. n.a. n.a ,1 69,8 n.a. n.a. n.a. n.a. ARM LTD (South Africfa) 268,1 4,6 n.a. n.a. n.a ,1 8,8 n.a. n.a. n.a. n.a. Credence Security LTD (UAE) 1 093,3 18,6 n.a. n.a. n.a ,9 16,3 n.a. n.a. n.a. n.a. PTF (Kenya) 318,1 5,4 n.a. n.a. n.a. 619,0 5,1 n.a. n.a. n.a. n.a. Cognosec AB (Sweden) 0,0 0,0 n.a. n.a. n.a. 0,0 0,0 n.a. n.a. n.a. n.a. Total for Period 5 882,9 100,0 n.a. n.a. n.a ,1 100,0 n.a. n.a. n.a. n.a. Of the Group's total sales revenue two-thirds originates from income from sale of technology licenses and one third of income from sale of advisory services. This distribution differs between various Group subsidiaries. Subsidiaries ARM in South Africa and ARM United Arab Emirates has a higher proportion of revenue from sale of technology licenses. CUSTOMERS The company will in its next interim report provide with detailed information. No detailed information is given in this interim report. TECHNOLOGY PARTNERS Several of the Group's employees in London and Vienna, trained at the Group's technology partners in the period. This has resulted in that we have increased the number of multi-certified employees. CONSOLIDATED ORDER BOOK No detailed information is provided under this heading for the operations during the first nine months. 3

4 FINANCIAL INFORMATION 4

5 FINANCIAL INFORMATION INTERIM REPORT COMPARATIVE FIGURES As both parent company Cognosec AB and the Group lacks relevant comparison to corresponding periods in 2014, this interim report provides comparison to the first half year Please note that Cognosec reported its first and second quarters in its previous interim report as a combined half-year result (six months). PROFIT FOR THE PERIOD THE GROUP Net sales for the third quarter amounted to ( in first half year 2015) TEUR. Profit after tax for the third quarter amounted to (693.7 first half year) TEUR. Minority interest amounts to 21,6 TEUR (168.0 first half year 2015) Depreciation for the period amounts to 9.7 TEUR (33.7 first half year). Cash flow for the period amounted to TEUR (931.6 first six months). The parent company's profit for the first six months amounted to (0.0) TEUR. FINANCIAL POSITION THE GROUP The Group had at September 30, cash and cash equivalents amounting to ( June 30, 2015) TEUR. The equity ratio was 33.3 percent (36.1 at June 30, 2015) The Groups equity amounted to ( ) TEUR, which represents (0.009) per share. During the first nine months of 2015 the Group has not paid any dividends on shares to shareholders. Cognosec Group had per 30 September 2015 no liabilities to banks or credit institutions. INVESTMENTS THE GROUP Consolidated net investments in assets during the third quarter amounted to TEUR 80.2 (45.8) for intellectual property rights, and to TEUR for acquisition of shears in subsidiaries. Of the net investments, 75.0 TEUR represents acquisition of intellectual property from Cognosec GmbH, in accordance with the agreement signed on June 1 and reported in the previous half year report. Reported goodwill in connection with the interim financial statements is subject to depreciation of 5%. INCOME TAXES No taxes have been paid during the period. The Group's deferred tax asset amounts as of September 30 to 12.0 TEUR (13.8 TEUR of June 30.) EMPLOYEES OF COGNOSEC THE GROUP The Group's employees are employed by the operational subsidiaries: 1. ARM (AFRICA) LTD (African Risk Mitigation) 2. PROFESSIONAL TECHNOLOGIES LTD 3. CREDENCE SECURITY (UAE) 4. Dynamic Recovery Services DRS (SA) In addition, the parent company Cognosec AB has a CEO and an IR-Officer. Both are hired on consulting contracts. The Group's average number of employees as of September 30 amounted to eighty three, including two employees on consulting contract basis. South Africa 57 Kenya 17 United Arab Emirates 7 Sweden 2 LIQUIDITY GUARANTEE Cognosec AB has in preparation for the planned listing and trading of Cognosec shares on Nasdaq First North made an agreement with Mangold Fondkommission AB to act as liquidity provider. CERTIFIED ADVISOR Cognosec AB has in preparation for the planned listing and trading of Cognosecs shares on Nasdaq First North made an agreement with Eminova Fondkommission AB to serve as Certified Advisor. TRANSACTIONS WITH RELATED PARTIES UC Group which is controlled by Cognosecs principal owner, JA Paulsen, currently provides services to Cognosec. These services are under the Board's opinion provided on fair market conditions and the cost amounts up to and including December 2015 to an amount not expected to exceed EUR. SHARE DATA Cognosec AB (publ) is a public company whose share register is subject to record date. The Company's share register is maintained by Euroclear Sweden AB. The Company's registered share capital at September 30, 2015, amounted to SEK and million shares with a quota value of SEK. 5

6 In addition, there is an ongoing, paid-up new share issue of 2.8 million shares, which will increase the Company s share capital by SEK. RISKS AND UNCERTAINTIES Inherent risks and uncertainties for Cognosec AB covering business risks concerning the delivery of contracted projects and payment of these financial risks (such as risks related to currency, interest rates, counterparties, future capital), market risks (e.g. competition, changes in demand) and risks related to the local conditions in the countries in which the Group conducts its business infrastructure and the risk of delays due to various disturbances in the delivery of contracted projects. ACCOUNTING PRINCIPLES The interim report for the Group has been prepared in accordance with the Annual Accounts Act and the Swedish Accounting Standards Board BFNAR 2012: 1 on Annual report, and consolidated financial statements (K3) as well as the Swedish Securities Market Act. The parent company has in preparation of this interim report applied the same accounting and valuation principles as for the Group. For annual reports of 2013 and 2014, all financial statements are prepared in accordance with the Accounting Act and the BFNAR INTERIM REPORTS Third quarter of 2015 is the second occasion when Cognosec AB (publ) submits an interim report as a public company. For this reason, the report provides no relevant figures of comparison for the third quarter and the first nine months of It is the Company's intention to continue to provide interim reports on a quarterly basis and in this format. Details of the reporting schedule are shown in the presentation below. SIGNIFICANT EVENTS AFTER THE END OF REPORTING PERIOD Cognosec have submitted an application for listing on the Nasdaq First North. ELECTION COMMITTEE AND ANNUAL GENERAL MEETING Cognosec AB has not made any decisions on an Election Committee. The Company plans to hold its Annual General Meeting for fiscal year 2015 in Stockholm in May in FINANCIAL CALENDAR Year-end report 2015 February 25, 2016 First quarter of 2016 May 16, 2016 Second quarter 2016 August 26, 2016 Third quarter of 2016 October 18, 2016 CERTIFICATION AND SIGNATURES The Board of Directors and the CEO certifies that the summarized interim report gives a true and fair view of the Company and the Group's business, its operating results and financial position as well as to reflect the material risks and uncertainties that the Group and the Group Companies face going forward. This report has been subject to a general review by the auditor. Stockholm October 19, 2015 The Board of Cognosec AB (publ), corporate identity number Jacobus Paulsen David Blunkett Patrick Boylan Chairman Daniel Holden Neira Jones Magnus Stuart 6

7 GROUP PROFIT AND LOSS (Thousend Euros) July-Sept Jan-Sept Jan-June Net Revenue 5 882,9 n.a ,1 n.a ,2 n.a. Cost of Sold Goods ,3 n.a ,0 n.a ,7 n.a. Gross Profit 1 958,6 n.a ,1 n.a ,6 n.a. Sales Costs -586,9 n.a ,5 n.a ,6 n.a. Administration Costs -361,9 n.a. -788,2 n.a. -426,3 n.a. Development Costs 0,0 n.a. 0,0 n.a. 0,0 n.a. Other Costs 0,0 n.a. 0,0 n.a. 0,0 n.a. Depreciation -9,7 n.a. -42,9 n.a. -33,2 n.a. Total Operating Cost -958,4 n.a. 0,0 n.a. 0,0 n.a. Operating Profit 1 000,1 n.a. -2,0 n.a. -3,6 n.a. Finance Net. Other Net Financial Instruments and Claims 0,0 n.a. 0,0 n.a. 0,0 n.a. Other Financial Income 14,3 n.a. 19,3 n.a. 4,9 n.a. Net Interest and Equivalent Items 1,5 n.a. -2,0 n.a. -3,6 n.a. Total Finance Net 15,9 n.a. 17,2 n.a. 1,3 n.a. Profit after Financials 1 016,0 n.a ,7 n.a. 693,7 n.a. Tax (Period) 0,0 n.a. 0,0 0 0,0 0 Profit (Period) 1 016,0 n.a ,7 n.a. 693,7 n.a. Total net Profit for the Period 1 016,0 n.a ,7 n.a. 693,7 n.a. Attributable to Parent 994,4 n.a ,1 0,0 525,7 0,0 Minority interest 21,6 n.a. 189,6 0,0 168,0 0,0 Profit/share before dilution 0,0041 n.a. 0,0062 n.a. 0,0021 n.a. Profit/share after dilution 0,0040 n.a. 0,0061 n.a. 0,0021 n.a. COMPANY PROFIT AND LOSS (Thousend Euros) July-Sept Jan-Sept Jan-June Net Revenue 0,0 n.a. 0,0 n.a. 0,0 n.a. Cost of Sales -50,0 n.a. -50,0 n.a. 0,0 n.a. Gross Profit -50,0 n.a. -50,0 n.a. 0,0 n.a. Depreciation -1,9 n.a. -1,9 n.a. 0,0 n.a. Total Operating Cost -1,9 n.a. -1,9 n.a. 0,0 n.a. Operating Profit -51,9 n.a. -51,9 n.a. 0,0 n.a. Net Finance 0,0 n.a. 0,0 n.a. 0,0 n.a Profit after Financial Items -51,9 n.a. -51,9 n.a. 0,0 n.a. Taxes 0,0 n.a. 0,0 n.a. 0,0 n.a. Profit for the Period -51,9 n.a. -51,9 0 0,0 n.a. 7

8 CASH FLOW ANALYSIS (Thousend Euros) GROUP jan-sept jan-sept jan-sept jan-sept Operating Profit 1 692,5 0-51,9 0 Adjustments non C/F items 42,9 n.a. 1,9 n.a. Operating Cash Flow 1 735,4 n.a. -50,0 n.a. Paid Taxes -0,5 n.a. 0,0 n.a. Changes in Working Capital ,3 n.a. 85,7 n.a. Cash Flow from Operating Activities 32,6 n.a. 35,7 n.a. Acqusition of Fixed Assets -126,0 n.a. -74,8 n.a. Investments in Current Assets , ,0 n.a. Sale of Fixed Assets 0,0 n.a. 0,0 n.a. Cash Flow from Investment Activities ,2 n.a ,8 n.a. New emissions 1 439,2 n.a ,2 n.a. Increase of Long Term Debt 0,0 n.a. 0,1 n.a. Amortization of Debt 0,1 n.a. 0,0 n.a. Interest Payment -2,0 n.a. 0,0 n.a. Cash Flow from Financing Activities 1 437,3 n.a ,3 n.a. Cash Flow from the Period -95,3 n.a. 0,2 n.a. Opening Cash 368,0 n.a. 19,9 n.a. FX-diff Period -28,5 n.a. 0,1 n.a. Closing Cash Position 244,1 n.a. 20,3 n.a. 8

9 BALANCE SHEETS (Thousend Euros) GROUP ASSETS 30-sep 31-dec 30-jun 30-sep 31-dec 30-jun Fixed Assets 0,0 0,0 0,0 0,0 0,0 0,0 Material Assets 99,4 n.a. 112,3 0,0 n.a. 0,0 Intangible Assets 72,9 n.a. 0,0 72,9 n.a. 0,0 Financial Assets Investment 0,0 n.a. 0, ,9 n.a ,9 Goodwill 349,6 n.a. 359,0 0,0 n.a. 0,0 Claims on Subsidiaries 0,0 n.a. 0,0 0,0 n.a. 0,0 Deferred Tax 12,0 n.a. 13,8 0,0 n.a. 0,0 Other Long Term Claims 311,2 n.a. 311,2 311,2 n.a. 311,2 Total Fixed Assets 845,1 n.a. 796, ,9 n.a ,0 Current Assets Inventory (PIP) 1 359,6 n.a. 294,9 0,0 n.a. 0,0 Short Term Claims 563,3 n.a. 0,0 39,2 n.a. 39,2 Trade 6 215,1 n.a ,8 1,4 n.a. 1,4 Other Claims 109,4 n.a. 125,8 0,0 n.a. 0,0 Cash & Bank 244,1 n.a ,4 20,3 n.a. 20,3 Total Current Assets 8 491,6 n.a ,9 60,9 n.a. 60,9 TOTAL ASSETS 9 336,6 n.a , ,8 n.a ,9 GROUP DEBT AND EQUITY CAPITAL 30-sep 31-dec 30-jun 30-sep 31-dec 30-jun Equity Capital 0,0 n.a. 0,0 0,0 n.a. 0,0 Share Capital 66,2 n.a. 90,6 66,2 n.a. 66,2 Share Premium 1 399,8 n.a , ,0 n.a ,0 Balanced Profits 341,8 n.a. -6,8-11,2 n.a. -11,3 Period Profit/Loss 994,4 n.a. 525,7-51,9 n.a. 0,0 Equity without determining influence 305,7 n.a. 284,2 0,0 n.a. 0,0 Total Equity 3 107,8 n.a , ,1 n.a ,9 Longterm Debt 0,0 n.a. 0,0 0,0 n.a. 0,0 Shortterm debt Interim Debt 0,0 n.a. 0,0 0,0 n.a. 0,0 Intragroup Debt 0,0 n.a. 0,0 74,8 n.a. 0,0 Suppliers 6 021,6 n.a ,1 56,0 n.a. 6,0 Tax Debt 109,0 n.a. 69,8 0,0 n.a. 0,0 Prepaid Expenses 0,0 n.a. 0,0 0,0 n.a. 0,0 Adjustments 98,3 n.a. 101,0 0,0 n.a. 0,0 Total Short Term Debt 6 228,8 n.a ,9 130,7 n.a. 6,0 TOTAL DEBT AND EQUITY 9 336,6 n.a , ,9 n.a ,9 9

10 CHANGES IN EQUITY CAPITAL (Thousend Euros) GROUP jan-sept jan-sept jan-sept jan-sept Equity Capital - Opening Balance 20,2 n.a. 15,7 n.a. New Emission 1 439,2 n.a ,2 n.a. Cost of Emissions 0,0 n.a. 0,0 n.a. Emission - Under registration 0,0 n.a. 0,0 n.a. Profit from the Period 1 520,1 n.a. -51,9 n.a. Foreign Exchange-Differential -177,1 n.a. 0,0 n.a. Equity Balance - Closing Balance 2 802,4 n.a ,0 n.a. 10