Falanx Group Ltd (LON:FLX) Chief Executive Officer John Blamire caught up with DirectorsTalk to discuss what’s happened since year end 31st March, growth opportunity in the cyber security market and what investors should be looking out for in the coming months
Q1: Now, preliminary results out for year ending 31st March today but can you tell us what’s happened since March?
A1: Yes, absolutely, it’s been a very exciting period for Falanx Group. In May we raised £1 million of straight equity and another £500,000 of a convertible loan and this was to enable us to acquire a very very strong and growing starter consultancy business called Advanced Security Consulting (ASC) and that is led by one of the UK’s leading cyber security experts, Mr Jay Abbott. That’s been going very well over the last few months, integration has been very successful and we’ve restructured our cyber defence business model to encapsulate the best of what ASC does and the best of what we do. So we now provide an end-to-end cyber security service with the client side advisory, the consultancy piece flowing through to an assessment capability, a lot of people would know this a penetration testing but we’ve added a few other capability services into that, and that helps get the client and his organisation into a good place to then move them to a managed service platform that we’ve always had and we developed specifically for the UK government markets. So we’re now providing UK government grade cyber security, defence managed services, to the commercial market and even with all of that in place sometimes problems do happen so we have a response team, just think of that as the emergency services of the cyber security, they can rush into our clients and help fix the problems and get them back on their feet as quickly as possible. So with the capital raised, we made the acquisition of ASC, we got Jay Abbot, one of the UK’s leading cyber security experts on board who is now the Managing Director of our cyber defence business, and we also went through a bit of a rebranding to clean up where we’d been and move it forward as very much a tech-orientated business and we think we’re in a good place now.
Q2: What can you tell me about the growth opportunity in cyber security?
A2: Well it’s incredibly strong and one of the main reasons we went forward with the deal to buy ASC is that we had very much appreciated over the last 18 months the difficulty in selling a cyber security managed service into a market place which is still relatively young so in other words, corporate clients don’t know what they don’t know. There’s still a huge requirement for education, even though it’s a topic everybody’s reading in the papers all the time, the real index understanding is not quite there yet so we needed an organisation that could be that spearhead to go in there, to sit alongside the clients to help them understand so they could then move to do a managed service. Think of that as being the way through the door and that has opened up a huge series of opportunities and we’re now seeing our portfolio business treble in size in terms of the commercial organisations coming through the door than we had before. So we’re very pleased with the model that we’ve adopted and it’ll now allow us to address this huge and growing cyber security market in the UK and potentially overseas.
Q3: Finally then, what should investors be looking for in terms of news flow for Falanx Group over the coming months?
A3: First of all, new contracts, with ASC and our old monitoring business combined and formed Falanx Group’s cyber defence services, that is now starting to build a very strong pipeline of qualified business, I think in our statement we’ve still got £1.5 million worth of qualified pipeline so there’s good contract news coming through. We’ve also formulated a number of new channel deals and again I think in a research report it’s been stated that we’re working with CDW, which previously bought Kelway which is now the UK’s single largest IT provider and value-added reseller, and they are our partners out to some 2,200 clients all consume managed cyber security services so new channel deals coming through. We’ll also be launching a number of new services combined with some home-grown IP so we’re retaining that best of British standard on the tin and that will be coming through over the coming months. Then of course our interim period, the end of our financial year is 30th September, and in October we will be announcing those interim results which we believe from a Board perspective will be in line with what we’ve just put out which of course shows a very very significant upturn in growth and the turnaround of the cyber business from being very much a cash burning, cash consuming business whilst we were investing in it and now we’re starting to see a return on that investment. So those are the things people could look out for over the coming months.
