Falanx Group services portfolio is very well positioned to opportunity

Cyber Security

Falanx Group plc (LON:FLX) have today provided results for the year to 31 March 2021 as per trading update announced on 18 August 2021.

Financial Highlights

Revenues £5.24m (2020: £5.85m) a decrease of 10.4% (as previously reported), during the COVID-19 period in H1, revenues showed a strong recovery in H2
Group wide monthly recurring revenues broadly consistent with 2020
Significant recovery in gross margin in the H2 driven by high utilisation of the professional services teams in the Cyber Security division
Operational and cash-based costs reduced by c25%
Reduction in Adjusted EBITDA* loss to £1.26m (2020: £1.56m)
Overall loss £3.55m (2020: £2.88m) with the increase caused by a £1.44m non-cash impairment of the Furnace investment and receivable following its spin out in December 2019
£1.25m equity fundraise completed in September 2020
Cash balances at 31 March 2021 £0.55m (2020: £0.07m), normal working capital position and HMRC in terms
Loss per share 0.77p (2020: 0.72p)
Shareholders’ funds £2.73m (2020: £4.97m)

Post Period Financial Highlights

Core Cyber Security division making major progress following revamping of service offerings in the last two years
Now profitable and expected to remain the case moving forwards compared to losing £0.41m in 2021
Refocused into a single cyber security monitoring service (Triarii) which has further improved its gross margin
Order intake now ahead of pre COVID-19 pandemic levels
Assynt trading strongly, with monthly recurring revenue contracts +20% by value since the start of the current financial year
Overall, a much-improved financial performance for the current year to date, and costs firmly under control
Stronger cash position following initial £1m BOOST&Co investment in August 2021, expected to grow to £2.5m to support investment and enhancing M&A activity
Cash at 31 August 2021 £0.89m

Operational highlights

Update to the Cyber Security Divisions Managed Detection and Response (“MDR”) service to support our Detection in Depth approach with the launch of a wider range of services with enhanced capabilities. Extended capability means we now offer Extended Detection and Response (XDR”) along with leading providers of security services
Triarii XDR on the Elastic platform
Triarii XDR on the Microsoft Azure Platform
Managed Endpoint Detection and Response (M-EDR) based on Elastic as well as N-able platform
Triarii lite on Elastic for an entry level product to the SME market
Moved to full home working during C19, with two leases exited, saving approximately £0.15m per annum.
Achieved a £1.2m extension and expansion from an existing global technology client in January 2021 expected to benefit the next 3 years
Assynt expanded its country coverage to 40 separate countries and extending the Global Themes to include COVID-19

Post Period Operational Highlights

Cyber Division

Strong inflow of customer orders in the Cyber Division, high utilisation levels supporting break through into adjusted EBITDA profitability
Move to a single Triarii monitoring platform now complete, leading to lower support costs whilst increasing customer functionality
Biggest ever single divisional order received in April 2021 for £1m of penetration testing to be delivered over the next three years from a global financial services company
N-Able completed spinout from Solar Winds in July 21, opening up further routes to address this market of 25,000 MSP users and 500,000 end user customers against a compelling cyber security requirement. Falanx expects this to start benefitting the second half of the current year
The launch of the new f:CEL ( falanx: Cyber Exposure Level) to help customers understand their Cyber risk at an affordable price point, supporting SMEs through to Enterprises

Assynt Division

Opening of Irish subsidiary to support rollout of expanded contract to supply embedded analysts to a global technology company, initial contract value expected to be £1m over three years with potential for further expansion.
Recognised by Chambers & Partners in their 2021 rankings, listed as one of five firms in their top tier of global Geopolitical Risk providers.

Mike Read, Falanx Group Chief Executive, said:

“Cyber Protection is no longer a ‘nice to have’, instead it is an essential part of any business risk discussion.  Hackers and criminals are attacking every sector and every size of organisation.  With the need for home working, arising from COVID 19, hacking has been made easier and risks have increased, Organisations can no longer avoid investing in protecting themselves. Clearly like other organisations we have experienced some delays in the progress of our business due to COVID-19 but recent growth has been encouraging and it seems as though these are now behind us.”

“Our services portfolio is very well positioned to address this exciting opportunity, and this is now feeding through into improving revenues and profits in the core Cyber Security division.  Our pipeline of future business is strong both in terms of quantum and quality of opportunities including those from our deepening relationship with N-Able Inc.”

“Our separate Assynt division has a solid and growing base of contracts as well as new prospects with some of the world’s largest companies, and this is a valuable asset in its own right.”

“Given the progress and increasingly favourable cyber-security market trends I am increasingly confident that Falanx’s core business is well positioned to deliver significant shareholder value.”

(*) Adjusted EBITDA is a non-IFRS headline measure used by management to measure the Group’s and individual divisions performance and is based on operating profit before the impact of financing costs, IFRS16, share based payment charges, depreciation, amortisation, impairment charges and highlighted items. IFRS16 is excluded so that the underlying rental costs of the premises are reflected in this metric.

Falanx will later today  add the report and accounts for the financial year ended 31 March 2021 to its website at www.falanx.com/falanx-group-investor-information in accordance with the electronic communication provisions under its Articles of Association and AIM Rule 20.

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Find more news, interviews, share price & company profile here for: Falanx Group Ltd

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