TIDMFLX
RNS Number : 9306N
Falanx Group Limited
01 November 2016
Falanx Group Limited
("Falanx" or "the Company")
INTERIM RESULTS AND
UNAUDITED FINANCIAL STATEMENTS
FOR THE SIX MONTHS PERIODED 30 SEPTEMBER 2015
Falanx Group (AIM:FLX), the global intelligence, security and
cyber defence provider, is pleased to announce its interim results
for the six months ended 30 September 2016.
Highlights
-- Significantly increased Cyber revenue to c.GBP0.3m, growth of
1130% and now contributing materially to the business after its
start-up investment period.
-- Increased Intelligence revenue to c.GBP0.9m, growth of 17%.
-- Successful acquisition of ASC Ltd, a fast growing and respected Cyber Security consultancy.
-- Integration of ASC and Falanx businesses has yielded
meaningful cost reductions, yielding annualized savings of
cGBP350k.
-- Raised GBP1.5m in May 2016 by way of a GBP1m equity placing
and GBP0.5m in convertible loan notes.
-- Cash balance of GBP830k at 30 September 2016.
-- Strong new Cyber orders and pipeline.
Post-period highlights
-- Appointment of Stuart Bladen as CEO. Stuart was previously
Executive Chairman of Vistorm Ltd, a specialist cyber company and
Head of UK Public Sector and Middle East for Hewlett-Packard.
-- Unsolicited subscription for GBP0.75m of equity at market
price and without attached warrants allowed for repayment in full
of convertible loan notes dated May 2016.
-- The company now goes forward on a debt free basis.
Outlook
The Cyber market is still growing strongly, driven by
significant cyber threats, growing regulation, and frequent
publicity on security breaches. In light of this growth, the ASC
acquisition has broadened our Cyber portfolio, and is delivering
new sales often with multiple services. This is promoting broader
client engagement and annuity revenue. To meet the scale of growth,
Falanx Cyber is moving to a new Security Operations Centre (SOC) in
Birmingham City Centre. This will refresh and expand our capacity,
whilst lowering unit cost for real estate and staff.
Cyber Defence orders and pipeline are extremely strong in the
Financial Services sector, bringing on board clients as prestigious
as Vanquis Bank, part of the Provident Group, and working with
partners such as Nasstar Plc to take our services to an ever
growing market. Our Intelligence division is also expected to
continue to expand, providing steady organic growth above 15% with
the greatest contribution of revenue being generated by
long-established and highly respected 'Blue Chip' clients. In order
to meet client demand in all areas we are planning a significant
recruitment push, this will in turn underpin our continued drive to
positive cash flow from operations next year. As such, we plan to
meet H2 needs for expanded working capital from the recent equity
subscription.
Stuart Bladen, CEO of Falanx Group, commented:
"I am delighted to join Falanx Ltd as CEO. I did so because I
believe Falanx is well positioned within a rapidly growing market.
My primary focus is to accelerate our strategy and deliver on the
extremely promising foundations I have found in Falanx and the
exciting opportunity that exists. I will focus in particular on
expanding our client relationships and on building high quality
efficient delivery teams to help Falanx to grow profitably".
Kyle Augustin, IT and Change Director, Vanquis Bank,
commented;
"We have been pleased to engage with Falanx this year, they have
provided us with valuable strategic cyber services helping us to
improve our security and systems"
Nigel Redwood, CEO of Nasstar Plc, commented:
"We are in early stage planning to establish a long term
partnership with Falanx Group in order to access and develop the
excellent growth opportunities in the UK Cyber Security market"
Enquiries:
Falanx Group Limited via Walbrook PR
Stuart Bladen, Chief Executive www.falanxgroup.com
www.falanxassuria.com
www.falanxcyberdefence.com
Panmure Gordon (UK) Limited
Nominated Adviser & Joint
Broker
Andrew Godber / Peter
Steel +44 (0) 20 7886 2500
Whitman Howard Limited
Joint Broker
Nick Lovering / Francis
North +44 (0) 207 659 1234
Walbrook PR (Media and +44 (0) 207 933 8780
Investor Relations) Paul falanx@walbrookpr.com
Cornelius / Nick Rome
About Falanx
Falanx Group Limited, is a global intelligence and cyber defence
provider working with blue chip and government clients. The Group
listed on AIM in June 2013 under ticker FLX For more information:
http://www.falanxgroup.com/
MAR
This announcement contains inside information for purposes of
Article 7 of Regulation (EU) No 596/2014
CHAIRMAN'S STATEMENT
I am pleased to report that we continue to strengthen the
company and the Board to grasp the growth opportunities within the
Cyber and Intelligence markets.
Trading for the six months to 30 September 2016 was in line with
management expectations with revenue for the period of c.GBP1.2m,
which is an increase of 54% compared to revenues achieved for the
same period last year. During the period, the Company continued to
focus on developing core cyber security skills to address the
significant market opportunities. Furthermore, the Company has now
successfully integrated the recent acquisition of ASC.
The Company benefited from increased revenue, with a significant
increase in Cyber Security services and a very solid half year in
Intelligence services.
Segmentally, revenue for the six months to 30 September 2016 was
as follows:
- Intelligence revenue for the period of c.GBP0.9m, an increase
of 17% compared to revenues achieved for the same period last
year
- Cyber revenue for the period of c.GBP0.3m, an increase of
1130% compared to revenues achieved for the same period last year
and reflects that this unit is now contributing to the overall
business after its start-up investment period.
On 3 October 2016, the Company announced it had successfully
strengthened its balance sheet through an equity subscription to
raise GBP0.75m (gross) and the early redemption of outstanding Loan
Notes held by Darwin Capital Ltd. A final repayment of GBP577,500
has been made to Darwin Capital Ltd.
Board Changes
As previously notified on 17(th) October: Stuart Bladen has been
appointed as CEO of Falanx Group. John Blamire continues to serve
on the Board as an executive director, working alongside Stuart in
developing new markets, strategic opportunities and development of
the Company's core offering. Stuart joins Falanx with a view to
further driving cyber security and intelligence opportunities, as
the Company builds on the momentum achieved following the
streamlining of operations earlier this year. A key focus for
Stuart will be to ensure that the Company continues to take
advantage of the growing opportunities across the cybersecurity and
intelligence markets and further develop its enlarged product
suite, which was enhanced by the acquisition of Advanced Security
Consulting Limited ("ASC") in May 2016. Stuart has a deep
understanding of the Cyber Security industry, in particular the
arena of consulting and managed security services. As Executive
Chairman of Vistorm Limited, Stuart doubled the company's size to
400 staff and annual turnover of GBP120m. Vistorm was a provider of
consulting, managed security services and network solutions to
companies needing a specialist security partner and is now HP
Information Security UK Ltd, part of the Hewlett Packard group.
Stuart's past track record also includes leadership roles at
Hewlett Packard as Vice President of UK Public Sector and for the
Middle East, Mediterranean and Africa, where he managed a US$2Bn+
turnover operation. In addition he has held senior roles at EDS,
Hitachi, Unisys and PwC where he led teams of up to 18,000 people
with business units delivering revenue of more than US$3Bn.
As notified on the 1(st) November: Iain Manley retired as
Non-Executive Director from the Board of Falanx Group with
immediate effect.
M Read
Chairman
RESULTS
Turnover for the six months ended 30 September 2016 was GBP1.2m
(2015: GBP0.79m) with Falanx Intelligence's revenue improved at
GBP0.9m (2015: GBP0.77m) and Falanx Cyber's revenue very
significantly improved at GBP0.3m (2015: GBP0.03m). The loss before
taxation decreased to c.GBP730k (2015: GBP1.3m).
The Group's cash balance at 30 September 2016 was GBP0.83m
(2015: GBP1.2m), prior to the post period repayment of loan notes
of GBP0.58m and equity subscription of GBP0.75m.
FALANX GROUP LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS PERIODED 30 SEPTEMBER 2016
6 Months 6 Months Year
to to to
30 Sep 30 Sep 31 Mar
2016 2015 2016
(Unaudited) (Unaudited) (Audited)
GBP GBP GBP
Continuing operations
Revenue 1,212,784 792,430 1,815,394
Cost of sales (1,224,181) (858,032) (1,875,689)
----------------------------- ------------ ------------ ------------
(11,397) (65,602) (60,295)
Administrative expenses (636,026) (1,236,118) (2,582,988)
Exceptional item - -
Operating Loss (647,423) (1,301,720) (2,643,283)
Finance income 163 283 373
Finance expense (82,500) (8,000) (8,149)
----------------------------- ------------ ------------ ------------
Net finance expense (82,337) (7,717) (7,776)
Loss before income tax (729,760) (1,309,437) (2,651,059)
Income tax expense - - 16,880
----------------------------- ------------ ------------ ------------
Loss for the period from
continuing operations (729,760) (1,309,437) (2,634,179)
----------------------------- ------------ ------------ ------------
Total comprehensive loss
for the period (729,760) (1,309,437) (2,634,179)
----------------------------- ------------ ------------ ------------
Earnings per share
---------------------------- ------------ ------------ ------------
Basic earnings per share
- continuing and total
operations (0.74)p (1.95)p (3.79)p
Diluted earnings per share
- continuing and total
operations (0.74)p (1.95)p (3.79)p
----------------------------- ------------ ------------ ------------
FALANX GROUP LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2016
6 Months 6 Months Year to
to to
30 Sep 30 Sep 31 Mar
2016 2015 2016
(Unaudited) (Unaudited) (Audited)
GBP GBP GBP
Assets
Non-current assets
Property, plant & equipment 110,717 69,821 59,441
Intangible assets 773,508 227,874 495,771
Deferred tax 2,887 - 2,887
887,112 297,695 558,099
---------------------------------- ----------- ----------- -----------
Current assets
Inventory 43,718 56,044 41,175
Trade and other receivables 791,387 907,215 529,686
Cash and cash equivalents 834,742 1,211,914 430,132
1,669,847 2,175,173 1,000,993
---------------------------------- ----------- ----------- -----------
Total assets 2,556,959 2,472,868 1,559,092
---------------------------------- ----------- ----------- -----------
Equity
Capital and reserves attributable
to equity holders of the
Company
Share premium account 6,647,257 5,289,771 5,309,031
Translation reserve (85,538) (18,139) (42,162)
Shares to be issued reserve 174,851 91,875 174,851
Retained earnings (5,732,553) (3,678,051) (5,002,793)
Total equity 1,004,017 1,685,456 438,927
---------------------------------- ----------- ----------- -----------
Liabilities
Current liabilities
Trade and other payables 1,532,793 773,419 1,120,165
Current tax liability 20,149 - -
Deferred tax liability - 13,993 -
1,552,942 787,412 1,120,165
---------------------------------- ----------- ----------- -----------
Total liabilities 1,552,942 787,412 1,120,165
---------------------------------- ----------- ----------- -----------
Total equity and liabilities 2,556,959 2,472,868 1,559,092
---------------------------------- ----------- ----------- -----------
FALANX GROUP LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Retained Translation Shares Total
premium earnings reserve to be
issued
reserve
GBP GBP GBP GBP
Balance at 1 April
2015 2,841,787 (2,368,614) (29,224) 91,875 535,834
Loss for year - (2,634,179) - - (2,634,179)
Transactions with
owners:
Issue of share capital 2,662,259 - - - 2,662,259
Cost of share capital
issue (195,025) - - - (195,025)
Translation of foreign
subsidiary - - (12,938) - (12,938)
Share options issued - - - 82,976 82,976
Balance as at 31
March 2016 5,309,031 (5,002,793) (42,162) 174,851 438,927
------------------------ ---------- ------------ ------------ --------- ------------
Loss for the period - (729,760) - - (729,760)
Transactions with
owners:
Issue of share capital 1,374,271 - - - 1,374,271
Costs of issue of
share capital (36,045) - - - (36,045)
Translation of foreign
subsidiary - - (43,376) - (43,376)
Balance as at 30
September 2016 6,647,257 (5,732,553) (85,538) 174,851 1,004,017
------------------------ ---------- ------------ ------------ --------- ------------
FALANX GROUP LIMITED
CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIODED 30 SEPTEMBER
2016
6 Months 6 Months Year
to to to
30 Sep 30 Sep 31 Mar
2016 2015 2016
(Unaudited) (Unaudited) (Audited)
GBP GBP GBP
Cash flows from operating
activities
Profit/(Loss) before tax (729,760) (1,309,437) (2,651,059)
Adjustments for:
Depreciation 15,908 10,984 22,746
Amortisation of intangibles 156,452 72,293 309,396
Share based payment 35,000 - 82,976
Loss/(Profit) on disposal
of property, plant and
equipment 697 - (109)
Net finance expense/(income)
recognised in profit or
loss 82,337 7,717 7,776
(439,366) (1,218,443) (2,228,274)
Changes in working capital:
(Increase)/Decrease in
inventories (2,543) 933 15,802
(Increase)/Decrease in
trade and other receivables (169,674) (247,056) 130,473
Decrease/(Increase) in
trade and other payables 324,675 (192,105) 154,641
---------------------------------- ------------ ------------ ------------
Cash used in operations (286,908) (1,656,671) (1,927,358)
Interest paid (82,500) (8,000) (8,149)
---------------------------------- ------------ ------------ ------------
Net cash used in operating
activities (369,408) (1,664,671) (1,935,507)
---------------------------------- ------------ ------------ ------------
Cash flows from investing
activities
Interest received 163 283 373
Acquisition of property,
plant and equipment (60,659) (10,841) (12,414)
Disposal of property,
plant and equipment - - 300
Acquisition of subsidiary (140,315) - -
Acquisition of intangibles - - (505,000)
Net cash used in investing
activities (200,811) (10,558) (516,741)
---------------------------------- ------------ ------------ ------------
Cash flows from financing
activities
Net Proceeds from issue
of shares 1,018,205 2,447,974 2,467,234
Net cash generated from
financing activities 1,018,205 2,447,974 2,300,833
---------------------------------- ------------ ------------ ------------
Increase/(decrease) in
cash equivalents 447,986 772,745 14,986
Cash and cash equivalents
at beginning of the period 430,132 428,084 428,084
Foreign exchange profit/(losses)
on cash and cash equivalents (43,376) 11,085 (12,938)
---------------------------------- ------------ ------------ ------------
Cash and cash equivalents
at end of the period 834,742 1,211,914 430,132
---------------------------------- ------------ ------------ ------------
FALANX GROUP LIMITED
NOTES TO INTERIM FINANCIAL STATEMENTS FOR THE PERIODED 30
SEPTEMBER 2016
1. General information
Falanx (the "Company") and its subsidiaries (together the
"Group") operate in the security and intelligence markets.
The Company is a public limited company which is listed on AIM
on the London Stock Exchange and is incorporated and domiciled in
the British Virgin Islands. The address of its registered office is
PO Box 173, Road Town, Tortola, British Virgin Islands.
2. Basis of preparation
These interim statements have been prepared on a basis
consistent with International Financial Reporting Standards (IFRS).
They do not contain all of the information required for full
financial statements and should be read in conjunction with the
consolidated financial statements of the Group as at and for the
year ended 31 March 2016. These interim financial statements do not
constitute statutory accounts within the meaning of the Companies
Act.
The interim financial information have not been reviewed nor
audited by the auditors. The interim financial information was
approved by the Board of Directors on 31 October 2016. The
information for the year ended 31 March 2016 is extracted from the
statutory financial statements for that year which have been
reported on by the Group's auditors and delivered to the Registrar
of Companies. The audit report was unqualified.
The accounting policies applied by the Group in these interim
financial statements are the same as those applied by the Group in
its consolidated financial statements for the year ended and as at
31 March 2016. The interim report is the responsibility of, and has
been, approved by the Directors. The Directors are responsible for
preparing the interim financial statements in accordance with the
AIM rules for Companies.
3. Critical accounting estimates and judgements
The preparation of financial information in accordance with
generally accepted accounting practice, in the case of the Group
being IFRS as adopted by the European Union, requires the Directors
to make estimates and judgements that affect the reported amount of
assets, liabilities, income and expenditure and the disclosures
made in the financial statements. Such estimates and judgements
must be continually evaluated based on historical experience and
other factors, including expectations of future events.
The significant judgements made by management in applying the
Group's accounting policies were the same as those applied in the
last annual financial statements for the year ended 31 March
2016.
4. Segmental reporting
The Directors consider that the Group's internal financial
reporting is organised along product and service lines and,
therefore, segmental information has been presented about business
segments. The segmental analysis of the Group's business was
derived from its principal activities as set out below. The
information below also comprises the disclosures required by IFRS 8
in respect of products and services as the Directors consider that
the products and services sold by the disclosed segments are
essentially similar and, therefore, no additional disclosure in
respect of products and services is required. The other segment
below and overleaf is made up of the parent company's
administrative operation.
Reportable segments
The reportable segment results for the year ended 30 September
2016 are as follows:
Other
Intelligence Cyber segments Total
GBP GBP GBP GBP
----------------------- ------------- ---------- ---------- ------------
Revenues from
external customers 882,465 325,291 5,028 1,212,784
----------------------- ------------- ---------- ---------- ------------
Total revenue 882,465 325,291 5,028 1,212,784
----------------------- ------------- ---------- ---------- ------------
Operating expenses (733,739) (627,414) (326,695) (1,687,848)
Finance costs
- net 45 - (82,382) (82,337)
Depreciation and
amortisation (5,734) (166,297) (328) (172,359)
Segment profit/(loss)
for the period 143,037 (468,420) (404,377) (729,760)
----------------------- ------------- ---------- ---------- ------------
The reportable segment results for the year ended 30 September
2015 are as follows:
Other
Intelligence Resilience Cyber segments Total
GBP GBP GBP GBP GBP
----------------------- ------------- ----------- ---------- ---------- ------------
Revenues from
external customers 766,037 - 26,393 - 792,430
----------------------- ------------- ----------- ---------- ---------- ------------
Total revenue 766,037 - 26,393 - 792,430
----------------------- ------------- ----------- ---------- ---------- ------------
Operating expenses (666,702) (25) (876,996) (467,150) (2,010,873)
Finance cost -
net 15 - - (7,732) (7,717)
Depreciation and
amortisation (5,918) - (77,359) - (83,277)
Segment profit/(loss)
for the period 93,432 (25) (927,962) (474,882) (1,309,437)
----------------------- ------------- ----------- ---------- ---------- ------------
Segment assets and liabilities as at 30 September 2016 and
capital expenditure for the year then ended are as follows:
Other
Intelligence Cyber segments Total
GBP GBP GBP GBP
--------------------- ------------- -------- ---------- ----------
Total assets 994,098 817,758 745,103 2,556,959
Liabilities 611,700 171,618 769,624 1,552,942
Capital expenditure 1,129 58,111 1,419 60,659
--------------------- ------------- -------- ---------- ----------
Segment assets and liabilities as at 30 September 2015 and
capital expenditure for the year then ended are as follows:
Other
Intelligence Resilience Cyber segments Total
GBP GBP GBP GBP GBP
--------------------- ------------- ----------- -------- ---------- ----------
Total assets 806,209 40 880,006 786,612 2,472,867
Liabilities 462,175 151,007 112,819 61,411 787,412
Capital expenditure 3,947 - 6,894 - 10,841
--------------------- ------------- ----------- -------- ---------- ----------
5. Earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the year.
6 Months 6 Months Year
to to to
30 Sep 30 Sep 31 Mar
2016 2015 2016
(Unaudited) (Unaudited) (Audited)
Loss attributable to equity
holders of the company (GBP) (729,760) (1,309,437) (2,634,179)
Weighted average number of
ordinary shares in issue 99,123,798 67,238,391 69,441,528
Basic (loss)/profit per share
(pence per share) (0.74) (1.95) (3.79)
------------------------------- ------------ ------------ ------------
As at 30 September 2016, the potentially dilutive ordinary
shares were anti-dilutive because the Group was loss-making.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LFLLXQBFLFBQ
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