Defenx PLC (LON:DFX), the mobile security software company, have today announced a long-term strategic partnership with BV-Tech SpA (“BV-Tech”), a leading independent Italian corporate IT and cyber security solutions provider, comprising, in part, a software acquisition by Defenx and cash subscription by BV-Tech. The directors of the Company (“Directors”) believe the software acquisition will significantly enhance Defenx’s product portfolio and, together with the proposed strategic partnership, enable the Company to penetrate the European corporate market to generate high-quality, recurring revenues in the medium term.
Highlights
· Conditional acquisition of a bespoke version of BV-Tech’s encrypted voice and messaging software (the “Software”) for €2.65 million (£2.26 million) to be settled through the issue of 1,982,222 new ordinary shares of 1.8 pence (“Ordinary Shares”) at 114 pence per share (the “Consideration Shares”) upon the acceptance by Defenx of the Software, expected to be within two months of this announcement.
· Cash subscription by BV-Tech for 861,666 new Ordinary Shares at 114 pence per share (the “Subscription Shares”), representing a 6.5 per cent. premium to the Company’s closing mid-market price on 10 April 2017, to raise €1.15 million (£0.98 million) before expenses.
· Following the issue of the Consideration Shares and Subscription Shares, BV-Tech will become Defenx’s largest shareholder, with approximately 24.8 per cent. of the Company’s then enlarged share capital. BV-Tech is subject to a 12 month lock-in and further 12 month orderly marketing undertaking.
· BV-Tech has also entered into a relationship agreement with the Company to regulate the relationship between them on an arm’s length and normal commercial basis and providing BV-Tech with the right to nominate two Directors to the board of the Company, for as long as its holds in excess of 20 per cent. of the Ordinary Shares.
· BV-Tech and the Company propose to enter into a collaboration agreement to formalise each party’s commitments to the long-term strategic partnership, which will include assisting Defenx in accessing the Italian corporate market.
Andrea Stecconi, Chief Executive Officer of Defenx Plc, commented: “We are delighted to have reached the agreement with BV-Tech, which represents a truly transformational deal for Defenx. The acquisition enhances our product portfolio and together with the proposed Collaboration Agreement, will provide the potential to access a large number of major corporate customers, which, together with the BV-Tech sales force and expertise, is expected to accelerate our move into the corporate market.
“We believe the cash investment by BV-Tech, at a substantial premium to the current share price, is a strong endorsement of our strategy. As well as welcoming BV-Tech as a substantial shareholder, we look forward to working with the entire BV-Tech team and their nominated board directors, in developing a close and productive mutual relationship.”
The company also announced today its unaudited preliminary results for the year ended 31 December 2016.
Financial Highlights
· Fifth year of profitable growth – 58% year-on-year growth in revenue to €7.09 million (2015: €4.49 million) with a 10% increase in average revenue per user (ARPU).
· 88% growth in operating profits (before transaction costs) to €1.84 million (2015: €0.98 million).
· Strong cash generation (before development costs) of €2.32 million in operating cash inflow (2015: €1.02 million outflow).
· Shareholder approved placing and subscription raised €1.53 million net of expenses.
Operational Highlights
· Acquisition of Memopal, a cloud backup and synchronisation business, was successfully completed and brings new IP, customers and significantly increased internal development and customer support capacity.
· Enhanced product portfolio with the launch of Defenx Mobile Security Suite for Windows 10 Mobile, Defenx Privacy Advisor, Defenx Parental Control and the acquisition of Memopal Cloud Backup + Sync.
· Eight new channel partners added in the year bringing many potential new end-users and driving our geographical expansion into key markets.
Post year end
· Long-term strategic partnership with BV-Tech, a leading independent corporate IT and cyber security solutions provider in Italy, which the directors believe will significantly enhance Defenx’s product portfolio and enable the Company to penetrate the corporate market to generate high quality, recurring revenues in the medium term.
Andrea Stecconi, Chief Executive Officer, commented: “2016 has been a year of significant progress for Defenx, our first full year as a public company following our IPO in December 2015. I believe that Defenx is in a strong position to continue its strategy to launch new products, enter new markets and broaden its management team in 2017; continuing to grow revenues and profits over the coming year in the ever-exciting mobile security software market. I would like to take this opportunity to thank our people and shareholders whose hard work and support have facilitated the growth achieved in 2016.”
