FLX.L Regulatory News (FLX)

11 May 2016

FALANX GROUP LIMITED

("Falanx", "the Group" or "the Company")

Trading Update

and

New Cyber Security Contract Win

Falanx Group Limited, a cyber defence and intelligence provider working with blue chip and government clients worldwide, is pleased to provide the following pre-close trading update.

The Company is trading in line with management's expectations. As a result of recent UK Government cyber contract wins, a growing client base, and its recent fundraising, net cash is now at £1.5m post costs of acquiring ASC. Falanx has also carefully managed its costs downward and has a reducing burn rate of circa £100k per month. 

Falanx believes it now has the foundations in place to advance its strategy having reorganised the Group to deliver a comprehensive suite of cyber security services, appointed Mike Read as non-executive Chairman, and having acquired Advanced Security Consulting Limited (ASC). Its highly regarded Business Intelligence division continues to demonstrate profitable growth and remains a valuable business development platform with over 70 blue chip clients.

New Cyber Security Contract Win

The Health Foundation has selected and contracted the managed Cyber Security Services of Falanx Cyber. The core networks of the Foundation will be protected in order to ensure privacy of data and network assurance. This is the first contract to be won using the consultancy process of ASC to deliver prepared client networks for continued long-term protection from our Security Operations Centre. Securing this contract also allows us to prove the application of our services outside of Government and into the Health and Charity markets.

Group Enlargement

In March 2015, Falanx informed shareholders of its intention to shift strategic focus to enlarge and develop its cyber security capacity. This decision was taken in response to the increasing importance Governments and blue chip organisations are placing on this issue. The financial cost that can result from data theft and the damage to reputations caused by losing customer information can have a catastrophic impact. A number of high profile cyber-attacks toward the end of 2015 brought the need for rigorous security and risk management into sharp focus. As a result, many organisations have placed cyber security at the top of their priority list for 2016. This has in turn helped cement the market opportunity for Falanx, with companies and Government bodies assessing the precise nature of the threats they face and identifying their vulnerabilities.

Falanx has now completed the reorganisation required to take advantage of this market opportunity. This reorganisation started with the launch of its Security Operations Centre (SOC) in Reading in March 2015, designed specifically to secure computer networks at the boundary and across the devices within. The SOC allows Falanx to manage and analyse data, whilst also providing helpdesk services to continuously protect both legacy and cloud computing systems from hostile attacks, unauthorised data access and theft. The Company achieved ISO 9001, /IEC 20000-1 and ISO/IEC 27001 accreditation, enabling Falanx to pursue major contracts with UK Government agencies, regulators and multi-nationals, and invested in its sales and marketing team. Falanx Intelligence and Resilience divisions are now enabled to market Falanx's cyber security solution to their existing network of blue chip and government clients.

Appointment of Mike Read as Non-Executive Chairman

Falanx Group announced the appointment of Mike Read on 2 February 2016. Mike has over 30 years' experience in the global Telecommunications, Media and Technology (TMT) sector and has been a director of eight public companies. He has held numerous 'C' level roles in the UK and USA, including CEO of Pipex Communications, Executive Director at Daisy Group Plc, Non-Executive Director at Nasstar Plc, and Non-Executive Chairman at IntY Ltd. 

Mike has significant experience helping to build international technology companies, having been involved on over 50 M&A transactions. He also has numerous relationships with the senior management teams of blue chip organisations, and has already helped to introduce Falanx to new business opportunities.

Acquisition of ASC

Falanx Group announced the acquisition of ASC on 5 May 2016. ASC is a market leading cyber security services organisation offering consulting, managed services, penetration testing and training. The organisation utilises senior trusted advisors and true industry experts with over 18 years of experience covering multiple sectors including financial services, pharmaceuticals and healthcare. ASC was founded in 2012 by Jay Abbott, its Managing Director and sole shareholder. Mr Abbott previously led the UK National Threat & Vulnerability Management Practice of PriceWaterhouseCoopers. Jay is also the chair of the Competitions Board for the UK Cyber Security Challenge and a member of the Defence and Security Board of TechUK. He will now become Managing Director of the Falanx Cyber Division, driving commercial market penetration, the technology roadmap and innovation.

ASC's capabilities are entirely complementary to Falanx and will allow the Group to offer a compelling and integrated cyber security solution to organisations of all types, delivered by highly qualified experts. The acquisition will help Falanx to offer new services to existing blue-chip Falanx Intelligence clients and to a wider range of businesses.

John Blamire, CEO of Falanx, said:

"Falanx continues to build a growing pipeline and is in contract negotiations with a number of further prospects, though the lead time for securing large corporate and Government sales can be significant. With any industry which is evolving rapidly it will take time for organisations and Government departments to properly assess the precise nature of the threat and identify their vulnerabilities. The key is to have in place the correct infrastructure, a skilled team, accreditations and an established reputation of working successfully with major Government bodies. Having these building blocks in place will position Falanx as a provider of choice to organisations as they start to properly understand and define the cyber defence services that they require."

Enquiries:

Falanx Group Limited, is a global intelligence, security and cyber defence provider working with blue chip and government clients.

The Group listed on AIM in June 2013 under ticker FLX

For more information: http://www.falanxgroup.com/