TIDMFLX
RNS Number : 1219E
Falanx Group Limited
04 May 2017
Falanx Group Limited
("Falanx" or "the Company")
Trading Update
Falanx Group Limited (Stock Code: FLX) a cyber defence and
intelligence provider working with blue chip, SME and government
clients worldwide, is pleased to provide the following trading
update.
Full year trading for FYE16/17 is in line with management's
expectations. Falanx has enjoyed robust revenue increases across
all lines of business driven by geopolitical instability, rising
levels of crime and increasing regulatory requirements:
-- Total Falanx Group 2017 Revenue of GBP2.7M compared to
GBP1.8M in 2016, a growth of 50% year-on year;
-- Falanx Intelligence continued to grow profitably, with over
70 blue chip clients demanding Business Intelligence, Security
Consultancy and Intelligence products. The business unit generated
revenue of circa GBP1.80 million and EBITDA of circa GBP0.3m for
the 2017 financial year. Revenue for 2017 is up by 13% compared
with GBP1.59 million generated in 2016;
-- Falanx Cyber Defence customer base grew to 29 significant
clients, consuming a mixture of Consulting, Assessment and
Monitoring services. The business unit generated circa GBP1m of
revenue, doubling in the second half of the financial year;
-- Falanx Cyber Defence became 'UK Govt CHECK' accredited. This
highly sought after approval opens the door to a highly significant
proportion of Her Majesty's Government Cyber Assurance spend.
-- Falanx Cyber Technologies MidGARD 'Security-As-A-Service'
platform went live in late March 2017 gaining early adoption
amongst Falanx Cyber Defence clients, including a major IT Cloud
Services company, and will generate new revenues in FY17/18;
-- The development of MidGARD gives Falanx ownership of
proprietary monitoring IPR, thus cementing the company's position
as a highly competitive, managed Cyber Defence services provider,
where current barriers to entry are prohibitively expensive to all
but the largest providers;
-- The Falanx management team and Board have been significantly
strengthened. The business has now evolved into a fully integrated
Cyber Defence and Intelligence provider; and
-- A new Falanx website is now live, bringing together lines of
service in an easily accessible and engaging user experience.
Growth in Falanx Intelligence
During the past year Falanx Intelligence, trading as Stirling
Assynt, has continued to see high levels of client retention and
strong levels of demand for subscription and consulting products
due to the current geo-political volatility, including in the
Middle East, North Africa and Western Europe.
The Embedded Analyst business has been particularly strong. The
business has renewed 100 percent of existing contracts, for
embedded analysts, with prominent FTSE100 and 'Blue Chip' firms in
the financial, insurance and telecoms sectors. In addition, new
contracts to provide embedded analysts have been won with a major
US insurer, a major mobile telecoms company and a well-known US
food and beverage retailer. A strong pipeline exists to provide
further embedded analysts to several current and prospective
clients, including a Telecoms major and a top four global auditing
practice.
The Business Intelligence practice has also seen continued
strong demand, driven partly by rising international regulatory
requirements and shareholder expectations among client firms,
especially relating to corruption and international sanctions.
Growth in Falanx Cyber Defence
Falanx Cyber Defence has grown significantly both by revenue and
customers. On acquisition, in May 2016, ASC (Advanced Security
Consulting) held 6 key clients, all of which have been retained,
generating circa GBP40k run-rate per month in consulting revenue.
By the end of Q4 2017, Falanx Cyber Defence services had expanded
to 29 customer's with revenue in Assess and Consult doubling to
GBP80k per month, contributing to over GBP100k total revenue per
month. This resulted in Falanx Cyber Defence generating over
GBP0.9m in the 11 months from ASC acquisition up to the financial
year end of 31(st) March 2017.
Continuing Sales growth is being driven by the newly formed
Sales and Consultancy team. In addition, access to over 2000
potential new Cyber Security and Intelligence clients is provided
by highly regarded channel partners, including;
-- CDW Corporation: The $9bn NASDAQ technology solutions
provider, who recently bought Kelway, one of the UK's leading IT
suppliers;
-- NASSTAR Plc : The AIM listed, managed IT services provider;
-- Sentronex: One of the UK's leading Financial Services IT solutions providers;
-- Mersey Internal Audit Agency and Audit Yorkshire: providing
access to over 100 NHS Trusts in the UK.
In order to support this growth opportunity, Falanx Cyber
Defence continues to invest in finding and developing the best
technology and people available in the field of Cyber Security.
UK Government CHECK Accreditation
Falanx Cyber Defence has won the highly sought after CHECK
accreditation from the UK National Technical Authority for
Information Assurance (also known as CESG and a part of GCHQ).
Falanx is now approved to provide IT health check services to
identify vulnerabilities in IT systems and networks for Her
Majesty's Government and the wider public sector of systems
handling protectively marked information.
Central UK government departments spend approximately GBP7bn a
year on IT, of which 27% is spent on information assurance and
security. Demand by UK Government departments is extremely high for
accredited suppliers and Falanx sees this as a fabulous growth
opportunity for Falanx Cyber Defence services.
Falanx Cyber already holds a CREST accreditation, is available
through the government's G-Cloud Framework and is certified to ISO
27001 (Information Security Management, ISO 20000-1 Information
Technology Service Management) and ISO 9001 (Quality
Management)
Establishment of Falanx Cyber Technologies
The Falanx technology development hub is now fully established
in the new Cyber Defence Centre in Birmingham. The new MidGARD
platform was rapidly prototyped here and successfully rolled into
client infrastructure as a consequence of the intelligence being
generated by our Assessment, Monitor and Response teams. This form
of rapid technology development, based on real-time operations,
carries an extremely low cost, contributing significantly to cost
control and achieving profitability in a rapidly developing
market.
MidGARD and MicroSOC
The first phase of the MidGARD platform IPR was built internally
and wholly owned by Falanx to eliminate the cost of licensing off
the shelf products. This cost of licensing creates an extremely
high barrier to entry for small to medium sized cyber security
vendors aspiring to deliver fully featured managed services online.
This competitive technological advantage is also in short supply
for all cyber security vendors, including the very largest, in all
but a licensed form and therefore may be viewed as representing
significantly increased shareholder value.
The MidGARD platform delivered in the MicroSOC 'plug-n-play'
version built for the SME market, provides Falanx with an
exceptional competitive advantage over the Cyber Security managed
services peer group. With a low cost entry point and easy for
client self-setup with little technical knowledge, the management
team believes MicroSOC holds the key to a robust, reliable and
highly scalable Cyber Security-as-a-Service.
Strengthened Management Team
The Falanx management team has been transformed over the last 15
months with the appointment of new Chairman, CEO, Executive
Director Cyber Defence and now CFO, Craig Dawson resulting in a
circa GBP25k per month increase in group costs. This team has
exceptional experience of managing high growth businesses in the
Cyber, TMT and Security sectors, the new Falanx team looks forward
to a great deal of success;
Mike Read, Chairman: Appointed in February 2016, with over 30
years' experience in the telecommunications and internet space.
Mike held board and senior management level positions within a
number of organisations both within the US and UK. He served as
Board member and CEO of AIM listed Pipex Communications Plc (now
Daisy Group Plc) and President and Board member of Onemain.com, a
NASDAQ listed company. He has significant experience in Mergers and
Acquisitions, raising funds and growing shareholder value. He is
also a Chartered Engineer with an MBA.
Stuart Bladen, CEO: Appointed in October 2016. Stuart was
previously at Hewlett Packard where he led teams up to 18,000 staff
and a P&L of over $2Bn. He acquired and became Chairman of
Vistorm Ltd, another specialist cyber security company which grew
substantially on his watch to GBP120M turnover. He was a board
director for HP, Vistorm, and Lead NED at Injazat Data Systems in
Abu Dhabi where he sold a large portion of that business to
investors.
Jay Abbott, Executive Director Cyber Defence: Appointed in
January 2016, Jay previously led the UK National Threat &
Vulnerability Management Practice of PriceWaterhouseCoopers, before
founding the extremely well regarded Cyber Security consultancy,
ASC Ltd. Jay is a celebrated key-note speaker and is regularly
quoted in the media on the subject of Cyber Security. Over the past
20 years Jay has spoken at high profile public and private events
on the topics of cyber and information security, providing thought
leadership to the UK Cyber Security Challenge, alongside some of
the biggest names within commercial Cyber market and UK
Government.
Craig Dawson, CFO: Appointed in March 2017, Craig previously
performed advisory and assurance services at Deloitte LLP for a
broad range of FTSE listed institutions in the Technology, Media
and Telecommunications (TMT) sector. Craig then served as Finance
Director at Global Strategies Group (London), the worldwide
defence, technology, consultancy and services organisation. Craig's
invaluable corporate finance insights have been honed by playing a
key role in an equity raise of $73m on the NASDAQ and the
acquisition of STG Inc, a Cyber Security, Software Development,
Intelligence and Analytics company servicing the US Government, for
$165.5m.
Mike Read, Chairman of Falanx Group, commented:
"This has been a genuinely transformational year for Falanx
Group. The Falanx team has delivered on our promise to generate
outstanding growth and develop new technology. We have also
capitalized on our excellent relationships and highly regarded
services to significantly enlarge our client base. The foundations
are now in place for a profitable year of robust growth."
MAR
This announcement contains inside information for purposes of
Article 7 of Regulation (EU) No 596/2014
Enquiries:
Falanx Group Limited www.falanx.com
Stuart Bladen, Chief Executive
Officer
SPARK Advisory Partners
Limited
Nominated Adviser
Matt Davis / James Keeshan +44 (0) 203 368 3551
Whitman Howard Limited
Broker
Nick Lovering / Francis
North +44 (0) 207 659 1234
This information is provided by RNS
The company news service from the London Stock Exchange
END
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