Falanx Group Limited - Interim Results
07/12/2021 06:59
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20211207:nRSG7264Ua&default-theme=true
RNS Number : 7264U Falanx Group Limited 07 December 2021
Falanx Group Limited
("Falanx" or "the Company")
Interim results
Falanx Group Limited ("Falanx", AIM: FLX), the global cyber security and
intelligence services** provider, announces its interim results for the six
months ended 30 September 2021.
Highlights for six months to 30 September 2021
Cyber Security division (continuing business) in line with the trading update
given on 13 October 2021
• Revenues from continuing operations £1.80m (2020: £1.40m) an increase of
28%
• Gross margin from continuing operations 40% (2020: 27%) driven by high
utilisation levels and lower external licence fees following successful
customer migration to single cyber security monitoring platform ("Triarii")
• Ongoing cyber division adjusted EBITDA* profit of £0.1m (2020: loss £0.28m)
• Continuing Group adjusted EBITDA loss £0.40m (2020: £0.67m), a reduction of
40%
• £1.0m loan investment by BOOST&Co in August 2021
• Cash balances at 30 September 2021 £0.51m (2020: £0.22m), normal working
capital position and HMRC in terms
• Loss per share 0.13p (2020: 0.33p) from continuing operations
• Shareholders' funds £1.99m (2020: £3.58m)
Post Period Financial Highlights
• The Assynt Strategic Intelligence ("Assynt") division disposed 6 October 2021
for a cash enterprise value of £4.6m. In the six months to 30 September 2021
this division recorded revenues of £1.00m (2020: £1.05m) and an adjusted
EBITDA loss of £0.02m (2020: profit £0.05m)
• Second £1.5m tranche of loan investment from BOOST&Co received October
2021 on the same terms as the August drawdown. Total amount £2.5m.
• Cash balance at 30 November 2021 £4.3m, trade debtors were £0.55m, and trade
creditors were £0.24m
Operational highlights
• Disposal of the Assynt Strategic intelligence division allows expansion of and
investment in the Cyber Security division
• Strong inflow of customer orders in the Cyber Division, with high staff
utilisation levels has contributed to the adjusted EBITDA profitability
• Move to a single Triarii monitoring service complete, leading to significantly
lower support costs whilst increasing customer functionality
• Largest ever cyber order received in April 2021 for £1m of penetration
testing to be delivered over three years from a global financial services
company
• N-Able completed spinout from Solar Winds in July 2021, confirming the
opportunity to address this market of 25,000 MSP users and 500,000 end user
customers with our cyber security services. Conversations are ongoing and
Falanx expects this to start benefitting the next financial year
• The launch of the new f:CEL (falanx: Cyber Exposure Level) product designed to
help customers understand their Cyber risk at an affordable price point,
supporting SMEs through to larger organisations, with Enterprise class service
available for SMEs. Increasing partner interest supports confidence in its
growth potential
* Adjusted EBITDA is a non-IFRS headline measure used by management to measure
the Group's 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
** Former operations sold in October 2021
Alex Hambro, (Non-executive Chairman) of Falanx, commented:
"Following the disposal of Assynt in October 2021, Falanx is now a 'pure play'
Cyber Security services business which is well positioned and financed to
address the growing market opportunity created by constantly increasing risks
in the digital world. Customer demand has grown significantly compared with
the pre-pandemic environment. Our new initiatives are gaining interest from
both direct customers and from our larger partners,and we are beginning to
achieve sales of these innovative services. Our core service offerings of
penetration testing, and protective monitoring are doing well, have moved into
profitability and provide us with a solid foundation for growth with their
large customer bases.
We view the future for Falanx with increasing optimism. We are operating in an
exciting high growth market where there is increasing corporate and customer
activity, and we look forward to updating shareholders with our progress over
the next few months. "
Enquiries:
Falanx Group Limited Via IFC
Alex Hambro Chairman
Mike Read CEO
Ian Selby CFO
Stifel Nicolaus Europe Limited, Nomad and Joint Broker + 44 (0) 207 710 7600
Alex Price / Fred Walsh
IFC Advisory Ltd +44 (0) 203 934 663
Financial PR & IR
Graham Herring / Zach Cohen
About Falanx
Falanx Group Limited, is a cyber defence provider providing enterprise class
defensive and offensive security solutions to SME. For further
information: http://www.falanx.com/ (http://www.falanx.com/)
Business Review
The business review focusses solely on the ongoing cyber operations of the
Group.
Falanx Cyber Defence has achieved a much-improved financial performance in the
six months to 30 September 2021. The division recorded revenues of £1.8m
(2020: £1.4m) and adjusted EBITDA profits of £0.1m (2002: loss £0.28m).
Gross margins were 40% (2020: 27%) with the improvement arising from much
improved utilisation of professional services staff which were adversely
impacted by project delays during the COVID-19 crisis in 2020. Gross margins
also increased due to the cyber security monitoring service moving to a single
Triarii platform and the consequent elimination of certain 3(rd) party licence
fees from July 2021 onwards.
The division won £2.5m (2020: £1.5m) of orders for penetration testing in
the period. Included in this was the division's largest ever contract which
was won in April 2021. This was from an existing global financial services
customer and is for the provision of Penetration Testing services over a
three-year period.
Triarii MDR / "Detection in Depth"
Triarii as the service brand gives our customers and partners a choice of
technology stack, depending on their personal and technical preference. Our
standard (default) Triarii offering is built on the enterprise-class elastic
stack, including the big data database, SIEM tool and Elastic Endpoint
Security (formerly Endgame). Our alternate offering replaces these technology
components with Microsoft Azure sentinel and Endpoint technologies and are
especially relevant for clients already heavily invested in Microsoft Azure.
Both stacks are then supported by a range of other tools looking at activity
in a range of places both within and outside a client's network, resulting in
our Detection in Depth approach wherein we look in multiple locations for
signs of potential hostile activity.
The licensing cost of running Triarii has been significantly reduced from our
previous technologies - which have both now been retired from service.
Falanx : Cyber Exposure Level ("f:CEL")
This new solution plays an important role in protecting a company from
cyber-attacks. The more an organisation understands its security posture, the
more it understands the risk it carries of being attacked. f:CEL emulates the
reconnaissance phase often adopted by criminals in deciding whether to attack
a business. A rapidly deployed, automated service, this can be offered at mass
levels to get a view of the overall risk of an entire community of companies
(e.g., customers, suppliers, policy holders and many more) providing insight
into the risk carried by a community and the steps to take to mitigate that
risk at individual entity level.
Pricing for f:CEL is disruptive, being affordable by even the smallest of
businesses. The user can select the timing and frequency as to when they run
the service so an ongoing picture of their security situation can be
obtained. f:CEL is sold mainly by annual subscriptions (with an effective
average monthly price of circa £40) which generates a predictable stream of
high-quality recurring revenue. Users can select when to run their reports
during the subscription period, so that they can have an ongoing view as to
how their security profile is changing and with comparison to a wider cohort.
The reports create a valuable database which can be used to help provide
users, depending on the outcome of their report and in relation to a wider
cohort, with their cyber security needs such as penetration testing or
protective monitoring, and as the userbase expands this data is expected to
become an increasingly valuable asset.
The platform has been developed internally using a combination of proprietary
and standard components. This has allowed us to leverage our deep experience
and sector expertise, to create a platform which can be highly configured to
deal with a particular client or market requirement, which increases the
relevance of our reports to their users. We are in discussions with several
larger partners (in addition to N-able) who each have thousands of potential
f:CEL users, and we look forward to announcing further progress on this in the
coming months.
Outlook Statement
The investment in our Triarii and f:CEL services has created two new service
lines each with strong potential and increasing demand. They are typically
sold on a recurring revenue basis which generates predictable cash flows and
revenues over a period, and therefore increases the quality of our revenues
and profits. The Cyber Security business has had high levels of interest shown
by both longer term and newer partners. Our partners have large market access
(typically with several thousand end user clients) and are engaging with us on
its deployment, and we are adding further similar partners. With these
services we are well positioned to address the growing needs of SMEs for
increased defensive cyber security protection, and this fits alongside our
highly skilled penetration testing teams who carry out offensive testing of
our clients' IT infrastructures.
The board believes that the results of f:CEL reporting will improve the
awareness in organisations as to their cyber vulnerabilities and risks and
will provide a channel for further potential sales of XDR and penetration
testing into large userbases.
To properly exploit the potential of these services, the division will be
using its increased financial resources to expand its sales and marketing
efforts with the recruitment of certain strategic hires, initiation of
marketing programs and ongoing investment in service delivery and innovation.
We will also be expanding the highly skilled penetration testing team to
satisfy growing demand.
The Group's much stronger financial position, supported by good trading so far
in the second half of the year, will also help enable acquisitions of
complementary cyber security business to be made. Acquisitions are filtered to
have highly relevant products and services, addressable customer bases and to
be both earnings enhancing and cash generative.
Financial Performance
Continuing Operations (Cyber Security Division)
Revenues from continuing operations grew by 28% to £1.8m from £1.4m in the
previous year, and much improved utilisation, and a streamlined technology
platform, helped the gross margin to increase to 40% (2020: 27%). This
combined with firm control of the division's operating cost base (which fell
by a further 4%), helped the division to produce an adjusted EBTIDA profit of
c£0.1m (2020: £0.28m loss). Central costs were £0.49m (2020: £0.39m), with
the prior period benefitting from the salary sacrifice scheme which was
initiated as part of the Group's initial response to the COVID-19 crisis.
Overall, the adjusted EBITDA loss from continuing operations was reduced by
40% to £0.4m (2020: £0.6m).
Adjusting items were much lower at £0.02m (2020: £0.21m) and reflected lower
investment costs and professional fees.
Discontinued Operations (Assynt Strategic Intelligence Division)
The Assynt strategic intelligence recorded revenues of £1.0m (2020: £1.1m)
and its gross margin declined to 23% from 28%, and it produced an adjusted
EBITDA loss of £0.02m (2020: £0.05m profit). This division was disposed of
on 6 October 2021, and on disposal approximately £0.43m of divisional
liabilities were taken on by the purchaser.
Overall Group
Overall, the Group's revenues were £2.8m (2020: £2.5m) with a gross margin
of 34% (2020: 27%) and had an adjusted EBTIDA loss of £0.4m (2020: £0.6m).
Depreciation and amortisation charges were £0.25m (2020: £0.26m), with the
vast majority being the routine amortisation of the customer bases acquired in
2018, as well as property lease costs related to IFRS16. Share option
charges were £0.02m (2020: £0.24m), with the comparative period representing
higher costs associated with the grant of share options under the salary
sacrifice scheme in April 2020.
Interest payable £0.04m (2020: £0.02m) included financing costs associated
with the lease of the Reading office as well as the interest payable on the
loan from BOOST&Co which commenced in August 2021.
Overall, the loss from continuing operations for the period fell to £0.71m
(2020: £1.33m) against an overall loss of £0.75m (2020: £1.35m). The loss
per share (both on a basic and fully diluted basis) from continuing operations
was 0.13p (2020: 0.33p) and on an overall basis was 0.15p (2020: 0.34p)
Consolidated Statements of Financial Position at & Cash Flow
Non-current assets were £4.0m (2020: £5.8m) and principally comprised of the
acquired customers bases and associated goodwill. The £1.44m investment in
Furnace Technology (which was spun out of Falanx in December 2019) was fully
impaired in the year ended 31 March 2021.
Cash receipts were strong, with no incidence of bad debt being recorded, and
debtor days were 42 (2020: 48 days). Net cash outflow from operations was
£0.88m (2020: inflow £0.19m). This reflected the positive impact of HMRC
deferrals in the prior year as a response to COVID-19, and the consequent
repayments of circa £0.25m in the current year, as well as timings of certain
large customer receipts at the start of the period.
At 30 September net liabilities (mainly related to deferred incomes) of
approximately £0.43m were held on the balance sheet related to the
discontinued business and these were transferred to the purchaser on 6 October
2021.
In August 2021 the Company drew down the first £1.0m (of a £2.5m facility
& before costs) of secured loan form BOOST&Co, the key terms of which
are:
· Annual interest of 11%, and straight-line amortisation of the
loan commencing after 12 months
· The loan carries a 3% early prepayment fee on the then amount
outstanding
The proceeds of this loan (and its subsequent extension) are to provide
investment capital in the expansion of the Cyber division both through the
investment in sales and marketing, service innovation and the expansion of
delivery capability, as well as supporting value enhancing acquisitions of
cyber security businesses.
Cash balances as at 30 September 2021 were £0.51m (2020: £0.22m)
and overall shareholders' funds were £2.0m (2020: £3.9m).
Events after the reporting period
· On 6 October 2021 the Group disposed of the Assynt strategic
intelligence division. This included Falanx Assynt Ltd and including its four
overseas wholly owned subsidiaries in the UAE, USA, Hong Kong, and Ireland.
Assynt was acquired by Cross Atlantic Solutions Partners LLC, ("CAS") which is
backed by funds advised by a US based investment firm focused on investing in
information, marketing, and tech-enabled services businesses.
The consideration (before usual deal costs) was comprised of a total
consideration of £4.6 million before the deduction of a working capital
adjustment of approximately £0.5 million. £0.35 million of the consideration
is held in a 3(rd) party escrow account against any potential warranty claims
against standard issues for twelve months from completion.
Falanx made certain warranties to CAS in respective of Assynt's historic
business and the Company has put in a normalised level of working capital at
completion as referenced above. All of Assynt's employees transferred as part
of the transaction, and Falanx is providing certain administration services to
Assynt until the end of January 2022 as part of an orderly hand over under an
agreement negotiated on an arm's length basis.
· On 13(th) October 2021 the Group drew down the final £1.5m of
the Boost loan facility, under identical terms as the initial £1.5m drawdown
in August 2021 outlined above.
· Cash balances on 30 November 2021 were £4.3m following the
payment of the vast majority of deal costs related to the disposal of Assynt,
working capital adjustments and certain cyclical payments. At this date trade
debtors were £0.55m, and trade creditors were £0.24m and the group had a
normal working capital profile, with all amounts due to HMRC being within
agreed terms.
FALANX GROUP LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS PERIOD ENDED 30 SEPTEMBER 2021
6 Months to 6 Months to Year to
30 Sep 2021 30 Sep 2020 31 Mar 2021
(Unaudited) (Unaudited) (Audited)
£ £ £
Revenue - continuing operations 1,794,862 1,400,414 3,119,724
Revenue - discontinued operations 993,735 1,062,481 2,124,437
Revenue 2,788,597 2,462,895 5,244,161
Cost of sales (1,844,979) (1,786,474) (3,668,176)
Gross profit - continuing operations 718,920 379,819 1,016,937
Gross profit - discontinued operations 224,698 296,602 559,048
Gross profit 943,618 676,421 1,575,985
Administrative expenses (1,654,212) (2,010,370) (5,095,355)
Operating loss (710,594) (1,333,949) (3,519,370)
Operating loss from continuing operations (671,435) (1,297,963) (3,455,158)
Operating loss from discontinued operations (39,159) (35,986) (64,212)
Analysis of operating loss
Operating loss (710,594) (1,333,949) (3,519,370)
Share option expense 20,000 242,478 175,949
Depreciation and amortisation 254,865 258,294 533,482
Impairment of Furnace equity investment - - 340,000
Impairment of Furnace loan receivable - - 1,100,000
Highlighted costs 26,264 212,287 110,354
Adjusted EBITDA loss from continuing operations (385,734) (673,714) (1,350,520)
Adjusted EBITDA loss from discontinued operations (23,731) 52,824 90,935
Finance income - 4 4
Finance expense (36,312) (16,810) (32,574)
Net finance expense (36,312) (16,806) (32,570)
Loss before income tax (746,906) (1,350,755) (3,551,940)
Income tax credit 1,050 - -
Loss for the period from continuing operations (707,506) (1,334,769) (3,487,728)
Loss from discontinued operations, net of tax (38,350) (35,986) (64,212)
Loss for the period (745,856) (1,350,755) (3,551,940)
Other comprehensive income:
Re-translation of foreign subsidiaries (1,432) (2,684) 5,403
(1,432) (2,684) 5,430
Total comprehensive loss for the period (747,288) (1,353,439) (3,546,537)
Loss per share from continuing operations
Basic loss per share (0.13) p (0.33) p (0.75) p
Diluted loss per share (0.13) p (0.33) p (0.75) p
Loss per share from continuing and discontinued operations
Basic loss per share (0.14) p (0.34) p (0.77) p
Diluted loss per share (0.14) p (0.34) p (0.77) p
FALANX GROUP LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2021
6 Months to 6 Months to Year to
30 Sep 2021 30 Sep 2020 31 Mar 2021
(Unaudited) (Unaudited) (Audited)
£ £ £
Assets
Non-current assets
Property, plant & equipment 125,679 187,165 155,831
Intangible assets 3,531,661 3,729,594 3,702,840
Right of use asset 308,781 417,762 363,271
Investments with fair value through Profit and Loss - 340,000 -
Loan Receivable - 1,100,000 -
3,966,121 5,774,521 4,221,942
Current assets
Trade and other receivables 930,628 1,103,389 1,076,216
Cash and cash equivalents 512,972 223,054 545,321
1,443,600 1,326,443 1,621,537
Assets in a disposal group classified as held for sale 190,214 - -
Total assets 5,599,935 7,100,964 5,843,479
Equity
Capital and reserves attributable to equity holders of the Company
Share premium account 4,039,125 17,903,427 4,033,161
Translation reserve (109,209) (115,864) (107,777)
Share based payment reserve 767,243 829,803 747,243
2022 liabilities reserve 1,000,000 - 1,000,000
Retained earnings (3,689,845) (14,758,835) (2,943,989)
Total equity 2,007,314 3,858,531 2,728,638
Liabilities
Non-current liabilities
Deferred tax liability 8,479 9,529 9,529
Lease liability 203,081 301,339 252,874
Borrowings 968,830 - 42,129
Other payables 5,532 242,734 5,409
1,185,922 553,602 309,401
Current liabilities
Trade and other payables 1,286,839 1,688,178 1,592,715
Contract liabilities 386,677 907,658 1,108,317
Lease liability 99,926 92,995 95,997
Borrowings 9,594 - 7,871
1,783,036 2,688,831 2,804,900
Liabilities directly associated with assets in the disposal group classified 623,663 - -
as held for sale
Total liabilities 3,592,620 3,242,433 3,114,841
Total equity and liabilities 5,599,935 7,100,964 5,843,479
FALANX GROUP LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Accumulated Translation Share based 2022
capital losses Reserve payment reserve Liabilities reserve Total
£ £ £ £ £
Balance at 1 April 2020 17,903,427 (13,408,080) (113,180) 587,325 - 4,969,492
Loss for the year - (3,551,940) - - - (3,551,940)
Re-translation of foreign subsidiaries - - 5,403 - - 5,403
Transactions with owners:
Capital reconstruction (15,000,000) 14,000,000 - - 1,000,000 -
Issue of share capital 1,247,600 - - - - 1,247,600
Costs of issue of share capital (117,866) - - - - (117,866)
Share based payment charge - - - 175,949 - 175,949
Forfeited share options reversed through reserves - 16,031 - (16,031) - -
Balance at 31 March 2021 4,033,161 (2,943,989) (107,777) 747,243 1,000,000 2,728,638
Loss for the year - (745,856) - - - (745,856)
Re-translation of foreign subsidiaries - - (1,432) - - (1,432)
Transactions with owners:
Issue of share capital 5,964 - - - - 5,964
- - - 20,000 - 20,000
Balance as at 30 September 2021 4,039,125 (3,689,845) (109,209) 767,243 1,000,000 2,007,314
FALANX GROUP LIMITED
CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDED 30 SEPTEMBER 2021
6 Months to 6 Months to Year to
30 Sep 2021 30 Sep 2020 31 Mar 2021
(Unaudited) (Unaudited) (Audited)
£ £ £
Cash flows from operating activities
Profit/(Loss) before tax (746,906) (1,350,755) (3,551,940)
Adjustments for:
Depreciation 33,608 39,588 75,753
Amortisation of intangibles 166,766 164,215 348,748
Amortisation of right of use assets 54,491 54,491 108,981
Impairment of investment in Furnace - - 340,000
Impairment of loan receivable - - 1,100,000
Share based payment 20,000 242,478 175,949
Loss on disposal of equipment / fixtures and fittings 77 - -
Amortisation of borrowing cost 2,361 - -
Net finance cost recognised in profit or loss 36,312 16,806 32,569
(433,291) (833,177) (1,369,940)
Changes in working capital:
Increase/(decrease) in trade and other receivables (39,760) 1,066,247 1,093,419
Decrease in trade and other payables (403,510) (44,627) (126,756)
Cash generated from / used in operations (876,561) 188,443 (403,277)
Interest paid (11,003) (1,605) (3,774)
Tax paid 1,050 - -
Net cash used in / generated from operating activities (886,514) 186,838 (407,277)
Cash flows from investing activities
Interest received - 4 4
Acquisition of property, plant and equipment (3,987) (31,330) (36,161)
Expenditure on development cost - - (157,779)
Net cash used in investing activities (3,987) (31,326) (193,936)
Cash flows from financing activities
Repayment under finance lease (47,133) (43,851) (89,413)
Interest paid on lease liabilities (11,923) (15,205) (28,799)
Proceeds from bank borrowing - 50,000 50,000
Repayment of bank borrowing (3,104) - -
Proceeds from borrowing 1,000,000 - -
Loan transaction costs (70,834) - -
Interest paid on borrowing (13,386) - -
Proceeds from issue of shares 5,964 - 1,247,600
Costs of share issuance - - (117,866)
Net cash used in financing activities 859,584 (9,056) 1,061,623
Decrease/(increase) in cash equivalents (30,917) 146,456 (460,636)
Cash and cash equivalents at beginning of the period 545,321 79,282 79,282
Foreign exchange gains on cash and cash equivalents (1,432) (2,684) 5,403
Cash and cash equivalents at end of the period 512,972 223,054 545,321
FALANX GROUP LIMITED
NOTES TO INTERIM FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 SEPTEMBER 2021
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
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 2021. These interim financial statements do not
constitute statutory accounts within the meaning of the Companies Act.
The interim financial information has not been reviewed nor audited by the
auditors. The interim financial information was approved by the Board of
Directors on 6 December 2021. The information for the year ended 31 March 2021
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 2020. 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.
Going Concern
These interim financial statements have been prepared on a going concern
basis, which notwithstanding the loss incurred for the six-month period to 30
September 2021.
· On 6(th) October 2021 the group disposed of its Assynt strategic
intelligence division for an enterprise value of £4.6m cash. This division
had been loss making in this six-month period following a reduction in both
revenue and gross margins.
· On 13th October 2021 the Group drew down the final £1.5m of loan
from BOOST&Co. Both post balance sheet events have very significantly
improved the Group's cash position.
· Trading has remained solid in the cyber security division with
strong order intake and a healthy pipeline of new business, including
significant opportunities for its Triarii and f:CEL services which have
recurring revenues with high gross margin. The ongoing business is now purely
focussed on the Cyber security division, which benefits from very favourable
macro-economic conditions with the move to an online environment for many
businesses and the consequent rise in cyber security risks which need to be
mitigated.
· The Group adjusted EBITDA loss for October 2021 was approximately
£90,000 and cash balances at 30 November 2021 were £4.3m All amounts due
to HMRC are either current or are the subject to agreed payment plans which
are being adhered to. The Group's debtor book is performing well, and cash
receipts are strong, and on 30 November 2021 trade debtors and creditors stood
at £0.55m and £0.24m respectively
· The Group has produced stress test as well as base case financial
forecasts which cover the period to 31 December 2022. These reflect investment
in organic expansion, and the stress test scenario has been prepared on losses
running at over three times the current run rate for 12 months with no
mitigation and no growth in business. This shows that the Group should still
have a positive cash balance in December 2022.
Should this stringent stress test scenario not be achieved, then further
mitigating actions would be carried out to ensure that the Group remains
within its resources, and these would include a reduction of planned capital
expenditure, headcount reduction, reducing discretionary spend and sales
investment, freezing or reducing pay and cancelling recruitment, and all of
these are within the director's control. Further actions could include seeking
further support from existing and new shareholders and debt providers.
Based on the above, the Group expects to have will have sufficient resources
to meets its liabilities as they fall due for at least 12 months from the date
of these interim results.
Discontinued operations
In accordance with IFRS 5 'Non-current assets held for sale and discontinued
operations', the net results of Assynt Group Limited and subsidiaries
("Assynt") are presented withing discontinued operations in the consolidated
statement of comprehensive income (for which comparatives are restated) and
the assets and liabilities of these operations are presented separately on the
consolidated statement of financial position. Please see note 6 for further
details.
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 2021.
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 2021 are as
follows:
Corporate Total
Cyber segment Continuing operations Discontinued operations Total
£ £ £ £ £
Assynt report - - 972,633 972,633
Professional services 1,407,699 - 1,407,699 21,102 1,428,801
Monitoring managed services 387,163 - 387,163 387,163
Revenues from external customers 1,794,832 - 1,794,832 993,735 2,788,597
Gross margin 718,920 - 718,920 224,698 943,618
Segment Reported EBITDA 105,369 (515,186) (409,817) (25,912) (435,729)
Exceptional costs (21,242) 45,325 24,083 2,181 26,264
Segment Adjusted EBITDA 84,127 (469,861) (385,734) (23,731) (409,465)
Finance costs - net (18,435) (17,636) (60,071) (241) (104,785)
Depreciation and amortisation (155,954) (85,664) (241,618) (13,247) (254,865)
Share option expense - (20,000) (20,000) - (20,000)
Segment profit/(loss) for the period (69,020) (638,486) (707,506) (39,400) (749,906)
The reportable segment results for the period ended 30 September 2020 are as
follows:
Corporate Total
Cyber segment Continuing operations Discontinued operations Total
£ £ £ £ £
Assynt report - - - 1,018,606 1,018,606
Professional services 941,496 - 941,496 43,875 985,371
Monitoring managed services 458,918 - 458,918 - 458,918
Revenues from external customers 1,400,414 - 1,400,414 1,062,481 2,462,895
Gross margin 379,819 - 379,819 296,602 676,421
Segment Reported EBITDA (320,562) (492,160) (812,722) (20,455) (833,177)
Exceptional costs 40,478 98,530 139,008 73,279 212,287
Segment Adjusted EBITDA (280,084) (393,630) (673,714) 52,824 (620,890)
Finance costs - net (491) (16,315) (16,806) - (16,806)
Depreciation and amortisation (144,538) (98,225) (242,763) (15,531) (258,294)
Share option expense - (242,478) (242,478) - (242,478)
Segment profit/(loss) for the period (485,591) (849,178) (1,334,769) (35,986) (1,350,755)
The reportable segment results for the year ended 31 March 2021 are as
follows:
Corporate Total
Cyber segment Continuing operations Discontinued operations Total
£ £ £ £ £
Assynt report - - - 2,016,062 2,016,062
Professional services 2,272,951 - 2,272,951 108,375 2,381,326
Monitoring managed services 846,773 - 846,773 - 876,773
Revenues from external customers 3,119,724 - 3,119,724 2,124,437 5,244,161
Gross Margin 1,016,937 - 1,016,937 559,048 1,575,985
Segment Reported EBITDA (419,020) (918,607) (1,337,627) (32,312) (1,369,939)
Highlighted costs (Note 5) (27,369) 14,476 (13,093) 123,247 110,354
Segment Adjusted EBITDA (446,389) (904,131) (1,350,520) 90,935 (1,259,585)
Finance costs-net (1,346) (31,224) (32,570) - (32,570)
Depreciation and amortisation (308,590) (195,305) (503,895) (29,587) (533,482)
Impairment of Furnace equity investment - (340,000) (340,000) - (340,000)
Impairment of Furnace loan investment - (1,100,000) (1,100,000) - (1,100,000)
Share option expense (8,112) (165,524) (173,636) (2,313) (175,949)
Segment loss before tax for the year (737,068) (2,750,660) (3,487,728) (64,212) (3,551,940)
Segment assets and liabilities as at 30 September 2021 and capital expenditure
for the period then ended are as follows:
Corporate Total
Cyber segment Continuing operations Discontinued operations Total
£ £ £ £ £
Contract assets 2,688 - 2,688 - 2,688
Other assets 3,811,082 1,535,630 5,346,712 250,535 5,597,247
Contract liabilities (deferred income) 386,677 - 386,677 442,927 829,604
Other liabilities 1,407,674 1,174,606 2,582,280 180,736 2,763,016
Capital expenditure - tangible 3,017 970 (3,987) - 3,987
Capital expenditure - intangible - - - - -
Segment assets and liabilities as at 30 September 2020 and capital expenditure
for the period then ended are as follows:
Corporate Total
Cyber segment Continuing operations Discontinued operations Total
£ £ £ £ £
Contract assets 56,925 - 56,925 21,811 78,736
Other assets 3,667,703 2,914,037 (6,584,740) 440,488 7,022,228
Contract liabilities (deferred income) 266,008 - 266,008 641,650 907,658
Other liabilities 603,845 1,388,925 (1,992,770) 342,004 2,334,774
Capital expenditure - tangible 27,046 4,284 (31,330) - 31,330
Capital expenditure - intangible - - - - -
Segment assets and liabilities as at 31 March 2021 and capital expenditure for
the year then ended are as follows:
Corporate Total
Cyber segment Continuing operations Discontinued operations Total
£ £ £ £ £
Contract assets 62,141 - 62,141 1,551 63,692
Other assets 3,741,016 1,526,695 5,267,711 374,615 5,642,326
Contract liabilities (deferred income) 465,000 - 465,000 643,317 1,108,317
Other liabilities 588,087 1,029,262 (1,617,349) 389,175 2,006,524
Capital expenditure - Tangible 31,007 5,154 36,161 - 36,161
Capital expenditure - Intangible 157,780 - 157,780 - 157,780
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 to 6 Months to Year to
30 Sep 2021 30 Sep 2020 31 Mar 2021
(Unaudited) (Unaudited) (Audited)
Loss attributable to equity holders of the company (£) (794,329) (1,350,755) (3,551,940)
Weighted average number of ordinary shares in issue 526,001,185 400,401,185 462,675,158
Basic loss per share (pence per share) (0.15) (0.34) (0.77)
As at 30 September 2021, the potentially dilutive ordinary shares were
anti-dilutive because the Group was loss-making.
6. Events after the reporting period
Disposal of Assynt
On 6 October 2021, Falanx announced that it had disposed of the Assynt
Strategic Intelligence Division ("Assynt") for an enterprise value of £4.6
million in cash to Cross Atlantic LLC. As substantial progress towards a sale
had been made before 30 September 2021, the results of Assynt have been
disclosed as discontinued operations in the consolidated statement of
comprehensive income and the assets and liabilities of Assynt have been
classified as a disposal group held for sale in the consolidated statement of
financial position.
The estimated fair value less costs to sell exceeds the carrying value of
Assynt's net assets, and accordingly no impairment losses have been recognised
on reclassification as a disposal group.
The tables below show the results of the discontinued operations which are
included in the consolidated statement of comprehensive income and
consolidated cash flow statement, together with the classes of assets and
liabilities comprising the operations as held for sale on the consolidated
statement of financial position.
Income Statement for discontinued operations 6 Months to 6 Months to Year to
30 Sep 2021 30 Sep 2020 31 Mar 2021
(Unaudited) (Unaudited) (Audited)
£ £ £
Revenue 993,735 1,062,481 2,124,437
Cost of sales (769,037) (765,879) (1,562,389)
Gross profit 224,698 296,602 559,048
Administrative expenses (263,857) (332,188) (623,260)
Operating Loss (39,159) (35,986) (64,212)
Finance income
Finance expense (241) - -
Net finance expense (241) - -
Loss before income tax (39,400) (35,986) (64,212)
Income tax credit 1050 - -
Loss for the period (38,350) (35,986) (64,212)
As at
30 Sep 2021
(Unaudited)
£
Assets of the disposal group
Property, plant & equipment 453
Intangible assets 4,413
Trade and other receivables 185,348
Cash and cash equivalents
Total assets 190,214
Liabilities of the disposal group
Deferred tax liability
Trade and other payables 180,736
Contract liabilities 442,927
Total liabilities 623,663
Net liabilities of the disposal group (433,449)
On 13(th) October 2021 the Group drew down the final £1.5m of the Boost loan
facility, under identical terms as the initial £1.0m drawdown in August 2021
outlined above.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR EQLFBFLLEFBL
Recent news on Cloudified Holdings
See all newsBrief: Cloudified Announces Delay To Publication Of Annual Results For Year Ended 31 March 2026
Cloudified Holdings - Update on Publication of Results
Cloudified Holdings - Commercial update for PowerPlay Media
Brief: Cloudified Holdings Proposed Acquisition Of PowerPlay For £6 Mln To Be Satisfied By New Shares
Cloudified Holdings - Update on Reverse Takeover Target