Falanx Group Ltd (LON:FLX), the AIM listed provider of cyber security and strategic intelligence services, has announced a trading update for the year ended 31 March 2020 together with a Q1 update.
The Company expects to report revenues for the year ended 31 March 2020 in the region of £5.8m (2019: £5.2m). The Cyber division won 42 new customers in the period and the Assynt strategic intelligence division benefitted significantly from the rollout of major contracts.
The Company also updates on its trading for the quarter ended 30 June 2020. Despite the disruption caused by COVID-19 and its impact on the delivery of certain aspects of consultancy work, as well as wider economic factors, revenues were approximately 5% ahead of those for the same period last year. Sales orders were lower in April and May but began to accelerate from June onwards as organisations respond to Cyber security issues of working from home and its increased risk profile. The Board is pleased that this increase in sales has continued into the second quarter of the financial year.
Falanx Assynt, the Group’s strategic intelligence division, has been trading consistently profitably on the back of its strong recurring revenue contracts with global companies. Overall monthly recurring revenues comprised circa 94% of its total revenues. The Group was recently recognised by Chambers & Partners as one of the leading global political risk advisory firms in the UK.
Overall costs have been reduced and a portion of Falanx staff furloughed as the Group’s move to a remote home environment has proved successful. This has enabled the Group to exit premises leases in July 2020 located in Sussex and London, resulting in the Group HQ being located at its Reading office. Overall, the Group’s total monthly expenditure (cost of sales, capex, exceptional & opex) each month has been reduced by approximately 30% in the same period in 2019. For additional context, the Group’s average monthly revenues in the final six months of the year ended 31 March 2020 exceeded the current monthly cost base on an operating level. Whilst there has clearly been some impact of COVID on the Group’s recent revenues, its overall EBITDA loss in Q1 FY21 was reduced significantly by 60%. Furthermore, the bulk of the Group’s investment programme was completed in 2019 and its Cloud technology platform ‘Furnace’ was spun out in December 2019, further reducing the monthly cash expenditure.
The Group’s Cyber division’s order book recovered strongly in July with sales order values for the month being greater than the total for the first quarter. Overall, the pipeline of potential business remains strong.
At 30 June 2020 cash balances stood at £0.75m following favourable working capital movements customer payments. Debtors and creditors (including HMRC) are within agreed terms, and banking facilities of up to an additional £0.5m remaining unused.
Enhanced offering for Managed Detection and Response (‘MDR’)
Falanx Cyber has been providing a MDR service for years now which is based upon underlying technologies with an additional service offering. As a result, businesses can benefit from a Managed Service as opposed to acquiring the technology and deploying it themselves, without the requisite skills to interpret the output from the technologies.
The Company is pleased to announce the launch of its significantly enhanced MDR service, Triarii. Triarii has been created using a combination of best of breed and enterprise-class external components. This service delivers superior capabilities greatly enhancing the Group’s MDR service and making it market-leading in all respects, yet still at a competitive price point. This supports the Group’s mantra of offering ‘enterprise-class security solutions to all businesses, whatever the size’.
Following extensive internal and customer trials, Triarii is now either deployed or being deployed with 4 customers including Managed Service Providers.
Following successful trials, the Group’s largest partners are showing significant interest in Triarii with a view of deploying it into their customer bases, providing a robust pipeline of opportunities for the service. This pipeline includes the previously announced SolarWinds channel, which has accepted the Triarii service for use within its community, having been invited to join their Technology Alliance Partner Program, which makes third party solutions available to all of its MSP partners.
In conjunction with the launch of the service, the Group will shortly be launching its new website to promote and inform customers as to the value of all Falanx Cyber services, including Triarii. In the short-term a brief teaser for the site is available at: https://falanxcyber.com/triarii-register-your-interest/
Notice of results
Prior to COVID-19m the Group had anticipated to release results in July 2020. However the logistical process of the audit with BDO LLP, which is currently underway, means that the Group now expects full year results for the year ended 31 March 2020 to be released towards the end of September 2020. The Board will continue to monitor this timeline and update as necessary.