TIDMFLX
RNS Number : 5103W
Falanx Group Limited
15 November 2017
Falanx Group Limited
("Falanx" or "the Company")
INTERIM RESULTS AND UNAUDITED FINANCIAL STATEMENTS FOR THE SIX
MONTHS PERIODED 30 SEPTEMBER 2017
Falanx Group Limited (AIM: FLX), a cyber defence and
intelligence service provider working with blue chip and government
clients worldwide, is pleased to announce its interim results for
the six months ended 30 September 2017.
The Board is pleased to announce robust growth and believes
Falanx is on track to deliver against markets expectations of
achieving profitability in the year.
Period Highlights
Financial
-- Continued growth across all service lines with significant growth in revenue year on year
o Group Revenue +18% increase
o Cyber Revenues +40% increase
o Intelligence Revenues +9% increase
-- Cash balance of over GBP1m on 30(th) Sept 2017 (Sept 2016: GBP0.8m)
-- Balance sheet entirely equity financed and debt free
-- Oversubscribed placing of GBP2m of equity in May 2017 used to
undertake acquisitions, seed the development of MidGARD and augment
growth
Operational
-- Launch of MidGARD, our proprietary Advanced Threat Detection
platform at the UK's leading ethical hacking conference, resulting
in highly positive industry feedback
-- Acquisitions of Cloudified Ltd and AuditSec Ltd, increasing
market reach and proprietary IP embedded in MidGARD
-- Appointment of highly experienced Director of Intelligence
division and an industry leading Chief Technology Officer of Cyber
division, further strengthening the management team
Outlook and Strategy
Cyber
The MidGARD monitoring business model represents the latest
innovation in advanced threat detection and security incident and
event management. It brings together big data analytics and
external intelligence aggregation, backed up with our own live
Security Operations Centre based in the UK, manned by UK Security
Cleared Staff. This generates predictable recurring revenues over
multi-year customer contracts. These contracts have attractive
margin and cash generation attributes. Our investment in this Cloud
based platform allows a high level of operational leverage and
scalability to support expected customer growth and high customer
retention rates are expected.
The board believes therefore that such a platform can deliver
strong cash generation against a demand fuelled by powerful market
and regulatory drivers. As a result, our acquisition strategy so
far has been to obtain complimentary cyber service businesses, such
as Consulting and Assessment, which results in demand for
Monitoring services being cross-sold into the MidGARD platform.
Intelligence
Falanx Assynt covers geo-political intelligence in 35 countries
and regions, corporate business information and due diligence and
has intelligence staff embedded within our clients' own offices. It
has delivered organic growth of 9% over the six months to September
2017. With the arrival of a new Managing Director in late July,
together with an enhanced senior team, the capacity to drive the
level of organic growth over the next year is greatly enhanced.
Client retention in the Assynt Report business and embedded
analyst service remains very high with the addition of two
additional high profile clients in the past six months, provides
clear visibility of forward revenue. The Intelligence Consulting
business continues to enjoy strong growth, generating additional
revenues from individual assignments
Mike Read, Chairman and Acting CEO of Falanx, commented:
"The advent of the General Data Protection Requirement (GDPR)
and the need for corporates to be compliant is further fuelling a
growth Cyber market. Combined with rapidly increasing corporate
migration to Cloud based applications, increasing costs of in-house
IT and security solutions and a growing cyber 'skills gap' in the
UK, we continue to view market conditions for our Cyber services as
highly favourable for the foreseeable future.
"Our intelligence business under its product name Assynt has
been extremely busy. This is driven by the continued unrest in the
world and the need for our research team to brief our customers on
all the activities in a timely manner. More multinational customers
are now seeing the need for regular briefings to protect their
people and operations worldwide.
"We believe our strategies have positioned the Company well,
against highly attractive market opportunities and our business
model will generate long-term, growing, cash flows to drive
shareholder value."
.
Enquiries:
Falanx Group Limited www.falanx.com
Mike Read, Chairman
John Blamire, Founder
----------------------------- ----------------------
SPARK Advisory Partners
Limited
Nominated Adviser
Matt Davis / James Keeshan +44 (0) 203 368 3551
Turner Pope Investments
(TPI) Ltd
Joint-Broker
Ben Turner / James Pope +44 (0) 203 621 4120
Beaufort
Elliot Hance
IFC Advisory Ltd +44 (0) 207 382 8300
Graham Herring
Miles Nolan +44 (0) 207 652 9780
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
FALANX GROUP LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS PERIODED 30 SEPTEMBER 2017
6 Months 6 Months Year
to to to
30 Sep 30 Sep 31 Mar
2017 2016 2017
(Unaudited) (Unaudited) (Audited)
GBP GBP GBP
Continuing operations
Revenue 1,445,446 1,212,784 2,743,217
Cost of sales (1,061,735) (1,224,181) (2,194,564)
----------------------------- ------------ ------------ ------------
383,711 (11,397) 548,653
Administrative expenses (1,395,525) (636,026) (2,062,570)
Administrative expenses
- Research - - (64,517)
Operating Loss (1,011,814) (647,423) (1,578,434)
Finance income 256 163 196
Finance expense - (82,500) (110,000)
----------------------------- ------------ ------------ ------------
Net finance expense 256 (82,337) (109,804)
Loss before income tax (1,011,558) (729,760) (1,688,238)
Income tax expense - - (12,416)
----------------------------- ------------ ------------ ------------
Loss for the period from
continuing operations (1,011,558) (729,760) (1,700,654)
----------------------------- ------------ ------------ ------------
Total comprehensive loss
for the period (1,011,558) (729,760) (1,700,654)
----------------------------- ------------ ------------ ------------
Earnings per share
---------------------------- ------------ ------------ ------------
Basic earnings per share
- continuing and total
operations (0.67)p (0.74)p (1.52)p
Diluted earnings per share
- continuing and total
operations (0.67)p (0.74)p (1.52)p
----------------------------- ------------ ------------ ------------
FALANX GROUP LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2017
6 Months 6 Months Year to
to to
30 Sep 30 Sep 31 Mar
2017 2016 2017
(Unaudited) (Unaudited) (Audited)
GBP GBP GBP
Assets
Non-current assets
Property, plant & equipment 148,715 110,717 131,441
Intangible assets 1,138,913 773,508 769,983
Deferred tax - 2,887 -
1,287,628 887,112 901,439
---------------------------------- ----------- ----------- -----------
Current assets
Inventory 1,471 43,718 8,500
Trade and other receivables 584,242 791,387 633,101
Cash and cash equivalents 1,031,831 834,742 430,459
1,617,544 1,669,847 1,072,060
---------------------------------- ----------- ----------- -----------
Total assets 2,905,172 2,556,959 1,973,499
---------------------------------- ----------- ----------- -----------
Equity
Capital and reserves attributable
to equity holders of the
Company
Share premium account 9,498,445 6,647,257 7,410,507
Translation reserve (62,911) (85,538) (100,285)
Shares to be issued reserve 196,606 174,851 196,606
Retained earnings (7,715,005) (5,732,553) (6,703,447)
Total equity 1,917,135 1,004,017 803,381
---------------------------------- ----------- ----------- -----------
Liabilities
Current liabilities
Trade and other payables 978,508 1,532,793 1,160,589
Current tax liability - 20,149 -
Deferred tax liability 9,529 - 9,529
Total liabilities 988,037 1,552,942 1,170,118
---------------------------------- ----------- ----------- -----------
Total equity and liabilities 2,905,172 2,556,959 1,973,499
---------------------------------- ----------- ----------- -----------
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 GBP
Balance at 1 April
2016 5,309,031 (5,002,793) (42,162) 174,851 438,927
Loss for year - (1,700,654) - - (1,700,654)
Transactions with
owners:
Issue of share capital 2,175,021 - - - 2,175,021
Cost of share capital
issue (73,545) - - - (73,545)
Translation of foreign
subsidiary - - (58,123) - (58,123)
Share options issued - - - 21,755 21,755
Balance as at 31
March 2017 7,410,507 (6,703,447) (100,285) 196,606 803,381
------------------------ ---------- ------------ ------------ --------- ------------
Loss for the period - (1,011,558) - - (1,011,558)
Transactions with
owners:
Issue of share capital 2,170,938 - - - 2,170,938
Costs of issue of
share capital (83,000) - - - (83,000)
Translation of foreign
subsidiary - - 37,374 - 37,374
Balance as at 30
September 2017 9,498,445 (7,715,005) (62,911) 196,606 1,917,135
------------------------ ---------- ------------ ------------ --------- ------------
FALANX GROUP LIMITED
CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIODED 30 SEPTEMBER
2017
6 Months 6 Months Year
to to to
30 Sep 30 Sep 31 Mar
2017 2016 2017
(Unaudited) (Unaudited) (Audited)
GBP GBP GBP
Cash flows from operating
activities
Profit/(Loss) before tax (1,011,558) (729,760) (1,688,238)
Adjustments for:
Depreciation 32,474 15,908 43,874
Amortisation of intangibles 89,793 156,452 312,943
Share based payment - 35,000 56,755
Loss/(Profit) on disposal
of property, plant and
equipment 1,177 697 697
Net finance (income)/cost
recognised in profit or
loss (256) 82,337 109,804
(888,370) (439,366) (1,164,165)
Changes in working capital:
Decrease/(increase) in
inventories 7,029 (2,543) 32,675
Decrease/(increase) in
trade and other receivables 48,860 (169,674) (11,388)
(Decrease)/Increase in
trade and other payables (182,081) 324,675 (67,676)
---------------------------------- ------------ ------------ ------------
Cash used in operations (1,014,562) (286,908) (1,210,554)
Interest paid - (82,500) (55,000)
---------------------------------- ------------ ------------ ------------
Net cash used in operating
activities (1,014,562) (369,408) (1,266,554)
---------------------------------- ------------ ------------ ------------
Cash flows from investing
activities
Interest received 256 163 373
Acquisition of property,
plant and equipment (51,060) (60,659) (109,365)
Disposal of property, 150 - -
plant and equipment
Expenditure on capitalised
development cost (225,286) - (152,967)
Acquisition of subsidiary
net of cash acquired (100,000) (140,315) (140,315)
Net cash used in investing
activities (375,940) (200,811) (402,451)
---------------------------------- ------------ ------------ ------------
Cash flows from financing
activities
Net proceeds from loan
notes - - 495,000
Repayment of loan notes - - (550,000)
Net Proceeds from issue
of shares 1,954,500 1,018,205 1,781,455
Net cash generated from
financing activities 1,954,500 1,018,205 1,726,455
---------------------------------- ------------ ------------ ------------
Increase/(decrease) in
cash equivalents 563,998 447,986 58,450
Cash and cash equivalents
at beginning of the period 430,459 430,132 430,132
Foreign exchange profit/(losses)
on cash and cash equivalents 37,374 (43,376) (58,123)
---------------------------------- ------------ ------------ ------------
Cash and cash equivalents
at end of the period 1,031,831 834,742 430,459
---------------------------------- ------------ ------------ ------------
FALANX GROUP LIMITED
NOTES TO INTERIM FINANCIAL STATEMENTS FOR THE PERIODED 30
SEPTEMBER 2017
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 2017. 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 14 November 2017. 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 2017. 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
2017.
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 period ended 30 September
2017 are as follows:
Other
Intelligence Cyber segments Total
GBP GBP GBP GBP
----------------------- ------------- ------------ ---------- ------------
Revenues from
external customers 959,249 469,197 17,000 1,445,446
----------------------- ------------- ------------ ---------- ------------
Total revenue 959,249 469,197 17,000 1,445,446
----------------------- ------------- ------------ ---------- ------------
Operating expenses (814,330) (1,017,103) (503,560) (2,334,993)
Finance costs
- net - 9 247 256
Depreciation and
amortisation (5,808) (115,732) (727) (122,267)
Segment profit/(loss)
for the period 139,111 (663,629) (487,040) (1,011,558)
----------------------- ------------- ------------ ---------- ------------
The reportable segment results for the period 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)
----------------------- ------------- ---------- ---------- ------------
Segment assets and liabilities as at 30 September 2017 and
capital expenditure for the period then ended are as follows:
Other
Intelligence Cyber segments Total
GBP GBP GBP GBP
--------------------- ------------- -------- ---------- ----------
Total assets 404,087 887,510 1,613,575 2,905,172
Liabilities 429,029 306,260 252,748 988,037
Capital expenditure 5,428 35,857 9,775 51,060
--------------------- ------------- -------- ---------- ----------
Segment assets and liabilities as at 30 September 2016 and
capital expenditure for the period 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
--------------------- ------------- -------- ---------- ----------
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
2017 2016 2017
(Unaudited) (Unaudited) (Audited)
Loss attributable to equity
holders of the company (GBP) (1,011,558) (729,760) (1,700,654)
Weighted average number of
ordinary shares in issue 150,694,902 99,123,798 112,169,330
Basic (loss)/profit per share
(pence per share) (0.67) (0.74) (1.52)
------------------------------- ------------ ------------ ------------
As at 30 September 2017, 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 FZLLFDFFZFBL
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