Falanx Group Ltd (LON:FLX), the AIM listed provider of cyber security and strategic intelligence services, has announced new contract wins and renewals alongside discussions in relation to the UK government backed Coronavirus Business Interruption Loan.
Cyber Security Division
The division has since November 2020 signed a further five new customers as well as an expansion to some existing contracts for Triarii, its enhanced cyber security monitoring service. The new customers span a range of sectors, namely charity, financial services, pharma, defence and IT – clearly illustrating the universal appeal of the Triarii offering. This has been achieved through a combination of direct and indirect sales including the SolarWinds and Trustmarque partnerships. In terms of service coverage, they include Triarii MDR, Managed EDR and Triarii for Sentinel – the Microsoft Azure-based service which was launched on 13 January 2021 and which was developed in partnership with Trustmarque, part of Capita plc. Further details are on https://www.trustmarque.com/cyber-security/managed-detection-and-response-service/
The division has also maintained the strong performance of its penetration testing business, and this is materially above the pre-COVID-19 sales order run rate achieved this time last year. Clients are from several sectors including insurance and construction, with one client signing a three year framework agreement worth approximately £180,000 in total.
In total the order value across all of these contracts is in excess of £700,000, of which approximately £400,000 will benefit the 2021 calendar year. The order pipeline remains strong with similar prospective sales for both penetration testing and security monitoring.
Assynt Strategic Intelligence Division
The division has continued with its solid profitable performance which remains in line with management expectations. It has recently received a renewal for the provision of analysts from an existing client, one of the world’s largest technology companies, for £1.2m spread over the next three financial years. Further significant cyclical contract renewals from major corporations are expected to be received in the next few months, and it has a robust pipeline of opportunities from new and existing customers.
Potential Coronavirus Business Interruption Loan (“CBIL”) and Capital Reconstruction.
Falanx announces that it is in discussions with a specialist lender for the provision of a UK Government backed CBIL loan. This loan would enable the Group to make earnings enhancing acquisitions to enhance its core Cyber division, as well as supporting organic growth. To qualify for the CBIL the Company will be carrying out a capital reconstruction by reducing the share premium account, to decrease the deficit on retained earnings. The reduction of the deficit on retained earnings will, amongst other things, facilitate Falanx in making distributions to its shareholders at some point in the future. Under BVI law the reconstruction will require a change to the memorandum and articles of association and a general meeting will shortly be called in respect of this proposal.
Mike Read, Chief Executive, commented: “I am pleased with the continued contract momentum in both of our divisions. Triarii is gaining further traction and recent sales of, and interest in, our Microsoft Sentinel service offering, which was only launched last month, validates our chosen strategy of channel partners and using third party leading technologies to deliver our services. Customers in both divisions are increasing their commitments to us in terms of both quantum and duration and again, this underlies the value of our services to them. We will look to progress the CBIL opportunity and will update the market at the appropriate time as we see this as a strategy which can further support equity growth by enabling earnings enhancing acqusitions.”
