FLX.L Regulatory News (FLX)

FALANX GROUP LIMITED

("Falanx" or the 'Company')

Preliminary Results

Falanx Group Limited (AIM: FLX), the security and risk management consultancy working with blue chip and government clients worldwide, is pleased to announce its maiden results for the period ended 31 March 2013 which refer to those of Stirling Assynt prior to its acquisition by Falanx Group.

Since listing on AIM in June, Falanx has been organised into four divisions: Falanx Intelligence, Falanx Resilience, Falanx Technology and Falanx Cyber.

Highlights

· Group listed on AIM June 2013

· Falanx now consists of 4 operating divisions

· Focus on Middle and Far East - projected spend in these regions $30 trillion

· Major contract with QinetiQ generates £2.5m turnover per annum

· Significant pipeline of business in place

John Blamire, CEO of Falanx, commented:

"Admission to AIM has given the Company additional gravitas in our target markets and we are already seeing the benefit of this, in particular in the Middle East. We have further expanded our pipeline of work throughout the region.

"In addition, flotation has allowed us to move ahead with our acquisition strategy and we are in discussion with a number of potential partners - each offering a specialist capability.

"The formation of Falanx and its organisation into 4 divisions has allowed us to maximise the potential opportunities available, and we are already seeing the benefit to the volume of business and, equally importantly, the bottom line."

For further information please contact:

Falanx Group Annual Financial Report

Chairman's Statement

I am pleased to present Falanx Group's first Annual Financial Report following our successful listing on the AIM Stock Exchange in June this year. The rationale for doing so is greater now than when we commenced the process.

The events of the Arab Spring and its continuing fall-out; the ever-present threat of international terrorism; and increased ethnic tensions in many areas of the world have resulted in significantly increased demand from both corporate and government clients for comprehensive services to respond to their security concerns. Our focus is on the Middle East and Asia, where spending on security over the next five years is expected to be in the region of $30 trillion and where competition in the security market is less well developed.

As a profitable, high-end security and intelligence provider led by a strong team of former military, government and corporate security specialists with broad geographic and sector experience, Falanx is well placed to capitalise on this projected growth in the market. Our high-level contacts in the Middle East and existing work there and in Asia already offer Falanx a platform on which to develop our business in those areas. This is reflected in the pipeline of new projects we have generated including bids for large capacity building contracts as well as a security implementation programme for a major infrastructure project in the Middle East.

The bid for the upgrade of ministerial buildings in the Middle East mentioned in our Admission document is expected to progress to a formal signed contract later this calendar year with initial revenue expected in the first quarter of 2014.

In addition, I am confident that listing on AIM will increase Falanx's standing with our existing and prospective clients and will enable us more effectively to respond to their requirements through the Group's three strategic goals:

1. To acquire top-quality, profitable, niche security providers so as to expand our capability, raise our profile and increase cash-flow. We are in advanced discussions with five companies as potential acquisitions and expect the first to be acquired in early 2014;

2. To exploit Stirling Assynt's extensive global client base for Falanx's broader proposition. To achieve this we are bringing in a new comprehensive CRM system to enable rapid cross-marketing; and

3. To build on our high-level contacts especially in the Middle East.

Divisional approach

To achieve these goals we have structured the business into four divisions: Falanx Intelligence (providing forward-looking political and security risk assessments and business intelligence services), Falanx Resilience (providing consultancy in physical security and capacity building), Falanx Technology (holding licences for certain physical security technologies and providing a channel for the acquisition of others) and Falanx Cyber (under development to provide a range of cyber capabilities). These neatly respond to the needs we have identified in our market research and experience of dealing with clients on security issues over many years. Our approach is to be a broadly-based 'solution engineer' for clients.

I am delighted that we have been able to assemble such a strong Main Board and senior management team with experience in each of these areas of business. Together the senior team brings extensive corporate management expertise, professional security and intelligence skill-sets, high-level contacts, new clients and an impressive pipeline. All of these underpin a strategy for rapid growth and provide us with the confidence and resources to respond to future challenges.

Falanx Intelligence

Earlier this year we made our first acquisition bringing in Stirling Assynt as the centre-piece of Falanx Intelligence. Stirling Assynt is a top quality provider of Political & Security Risk and Business Intelligence services to a worldwide network of blue-chip clients. Its renowned Assynt service offers fortnightly risk assessments on 33 countries, as well as bespoke analytical reporting on an extensive range of topics globally. Stirling Assynt has an extensive client base including both governments and major international companies and potentially provides other Falanx divisions with a rapid route to new markets.

Since acquisition Stirling Assynt has won a contract with FTSE 250 defence company QinetiQ to restructure and retrain a major Middle East government department. The contract is expected to last up to three years turning over a minimum of £2.5m annually. The project is now well underway with turnover on track, having received the expected £216k advance payment.

Falanx Resilience

Falanx Resilience has established itself as a security consultant of choice in the Middle East. Discussions are at an advanced stage with government and corporate clients for a large security project in a Middle Eastern country and two significant capacity building projects in a North African country. A bid for upgrade of ministerial buildings in the Middle East mentioned in our Admission document is expected to progress to a formal signed contract later this calendar year with initial revenue expected in the first quarter 2014.

Falanx Technology

Falanx Technology has obtained exclusive licences for some advanced blast mitigation products, including blast protective window blinds for which Falanx is the sole licensee in the Middle East and parts of Asia. It is also in discussion with two potential acquisitions: one a highly successful technical security firm and the other a mature supplier of anti-blast material.

Falanx Cyber

Since IPO, Falanx Cyber, headed by a highly experienced Cyber Security professional who was appointed in early 2013, has been in discussions with several high-quality, niche cyber security companies with a view to the early establishment of a unique set of capabilities that can be offered as a single proposition for the overseas market. Falanx Cyber has also reached agreement for a channel partnership with four companies, which we hope to be able to announce shortly. The partnership agreement will enable Falanx to purchase a controlling stake in three of these companies after a period of six months, enabling Falanx to monitor progress in each before acquisition.

Financial review

Falanx Group is a newly established company and so has no trading history in the FY 2012-2013. The figures in this report therefore reflect only those of Stirling Assynt before its acquisition by Falanx at the end of March 2013, and before the award of the Qinetiq contract mentioned above. They should not therefore be regarded as representing the extent of Falanx's current business.

Events since the balance sheet date

On 20 June 2013 the Group was admitted to the Alternative Investment Market (AIM) of the London Stock Exchange and raised £595,000 (before expenses) at a Placing Price of £0.12 per Ordinary Share through a placing of 4,958,333 Ordinary Shares, representing approximately 13.24 per cent. of the Group's enlarged share capital. The Company raised an additional £225,000 at £0.12p, with 1 warrant @18p attached per 2 shares in September 2013.

Admission to AIM will raise the corporate profile of the Company, enhance its ability to secure new business and will enable it to accelerate its acquisition strategy by the use of quoted shares.

Outlook

I am confident that the Group has a sound base on which to grow the business, and I look forward to working closely with our Board members, senior management and staff to support our clients and shareholders as we develop.

Falanx Group Limited (Registered number: 1730012)

Consolidated Statement of Comprehensive Income

for the period 23 August 2012 to 31 March 2013

Notes £

CONTINUING OPERATIONS

Revenue 2 -

Administrative expenses (73,774)

OPERATING PROFIT (73,774)

LOSS BEFORE INCOME TAX (73,774)

Income tax -

LOSS AFTER INCOME TAX (73,774)

Excess of acquirer's interest in the net fair

value of acquiree's identifiable assets 210,699

PROFIT FOR THE PERIOD 136,925

OTHER COMPREHENSIVE INCOME -

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 136,925

Profit attributable to:

Owners of the parent 136,925

Total comprehensive income attributable to:

Owners of the parent 136,925

Earnings per share expressed

in pence per share: 5

Basic 4.46

Diluted 4.46

Falanx Group Limited (Registered number: 1730012)

Consolidated Statement of Financial Position

31 March 2013

Notes £

ASSETS

NON-CURRENT ASSETS

Goodwill 75,000

Property, plant and equipment 9,266

Investments -

Deferred tax 258,261

342,527

CURRENT ASSETS

Trade and other receivables 688,623

Cash and cash equivalents 116,653

805,276

TOTAL ASSETS 1,147,803

EQUITY

SHAREHOLDERS' EQUITY

Share premium 3,150

Retained earnings 136,925

TOTAL EQUITY 140,075

LIABILITIES

CURRENT LIABILITIES

Trade and other payables 1,007,728

TOTAL LIABILITIES 1,007,728

TOTAL EQUITY AND LIABILITIES 1,147,803

Falanx Group Limited (Registered number: 1730012)

Consolidated Statement of Cash Flows

for the period 23 August 2012 to 31 March 2013

Notes £

Cash flows from operating activities

Cash generated from operations 1 121,851

Net cash from operating activities 121,851

Cash flows from investing activities

Net cash paid to acquired subsidiaries (8,348)

Net cash from investing activities (8,348)

Cash flows from financing activities

Share issue 3,150

Net cash from financing activities 3,150

Increase in cash and cash equivalents 116,653

Cash and cash equivalents at beginning of period 2 -

Cash and cash equivalents at end of period 2 116,653

Falanx Group Limited (Registered number: 1730012)

Notes to the Consolidated Statement of Cash Flows

for the period 23 August 2012 to 31 March 2013

1. RECONCILIATION OF PROFIT BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS

£

Loss before income tax (73,774)

Net foreign exchange (12,787)

(86,561)

Increase in trade and other receivables (284,647)

Increase in trade and other payables 493,059

Cash generated from operations 121,851

2. CASH AND CASH EQUIVALENTS

The amounts disclosed on the statement of cash flow in respect of cash and cash equivalents are in respect of these statement of financial position amounts:

Period ended 31 March 2013

31.3.13 23.8.12

£ £

Cash and cash equivalents 116,653 -

3. ACCOUNTING POLICIES

Basis of preparation

These consolidated financial statements have been prepared under the historical cost convention.

Statement of compliance

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS), IFRIC Interpretations and the Companies Act 2006 applicable to companies reporting under IFRS.

4. INCOME TAX

British Virgin Islands

The Company and its subsidiaries, Falanx Protection Limited and Stirling Assynt (Acquisition) Limited were incorporated and domiciled in British Virgin Islands. The Companies are therefore not subject to profit tax charge under BVI legislations.

UK and Hong Kong

No liability to UK and Hong Kong corporation tax arose on ordinary activities for the period, as the companies were acquired by Stirling Assynt (Acquisition) Limited on 29 March 2013. The companies did not have any trading activity between 29 March 2013 to 31 March 2013.

5. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of Ordinary Shares outstanding during the period.

Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential Ordinary Shares.

Reconciliations are set out below.

ENDS