LONDON (Alliance News) - Security and risk management consultancy Falanx Group Ltd Thursday predicted that it will grow significantly over the next five years, as it reported its first pretax profit driven by the continued turmoil in the Middle East.
The company, which was founded by a former British Army officer and employs former members of the security and intelligence communities as well as the British Army, reported a pretax profit of GBP9,488 for the year to March 31, compared with the GBP81,274 loss it reported a year earlier when it had no revenue. Its revenue in the last financial year was GBP4.4 million.
The company said its profit was low because it had spent a significant amount on recruiting new staff, establishing its cyber defence operations, and doing due diligence on potential acquisition targets.
It said its listing on AIM in June 2013 had given it credibility when dealing with potential clients in the Middle East and Asia, as well as the resources to pursue acquisitions of niche companies.
"Events in the Middle East have continued to raise awareness of the risks posed by political turmoil and the terrorist threat. This has led to an increase in interest amongst both commercial and government clients for support in understanding the threat and in constructing a response where their interests may be affected," it said.
The company is set to launch a cyber service in October, and said interest has been significant and it already has a number of projects in the pipeline. It is working in partnership with Reading-based cyber security tools company Assuria Ltd.
Its existing intelligence unit made a profit of GBP87,122 in the last year, a much improved performance as management cut costs and improved marketing.
Its resilience unit had its first year of operations and sub-contracted to a UK defence company to provide advisory, training and consulting services to a large Middle Eastern government client that required significant capacity building services. The contract ended in May, but it is talks with a number of clients in the Middle East and Asia about similar services and expects to secure contracts later in 2014. The unit made a profit of GBP699,000 in the last financial year, it said.
"All divisions have made great strides forward and our new cyber defence service will be a central plank of our growth strategy over the next few years. There is already significant engagement with government and commercial entities in the UK and internationally for the delivery of our unique cyber defence services," Falanx Chief Executive and founder John Blamire said.
"We are also in discussion with potential customers on new projects within the Intelligence and Resilience Divisions and we expect to see improved profitability from both alongside that of the Cyber Defence Division. I am confident the group is on track for significant growth over the next five years," he added.
Still, its shares were down 13.3% at 40.00 pence Thursday morning, the lowest level since the end of May.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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