TIDMFLX
RNS Number : 4075V
Falanx Group Limited
03 December 2019
3 December 2019
Falanx Group Limited
("Falanx" or "the Company")
Interim results
Falanx Group Ltd ("Falanx", AIM: FLX), the global cybersecurity
and intelligence provider, announces its interim results for the
six months ended 30 September 2019.
Highlights
-- Group revenues increased 21% to GBP2.64m (H1 2018: GBP2.18m).
-- 31% increase in the intelligence business unit ("Assynt") H1
sales to GBP0.93 (2018: GBP0.71m), Cyber business unit increased
by 16% to GBP1.71m (H1 2018: GBP1.48m)
-- Group monthly recurring revenues in September 2019 of GBP0.29m
(September 2018: GBP0.22m). Overall recurring revenues comprised
56% (2018: 53%) of total revenue in the 6 month period
-- 6m to 30 September 2019 Adjusted EBITDA loss GBP0.93m (H1 2018:
GBP0.71m) after GBP0.3m spend in readiness for our major Cyber
opportunities
-- Cash at period end of GBP708k (H1 2018: GBP69k) with receivables
of GBP1.76m (H1 2018: GBP1.18m). The receivables balance has
reduced post-period by circa GBP0.2m and collections remain
strong
-- The new Security Operations Centre ("SOC") in Reading is now
fully operational and ready to support SolarWinds
Mike Read, Chief Executive Officer of Falanx, commented:
"We are reporting strong revenue growth of 21% for this
six-month period during which we have invested to position
ourselves for the considerable opportunities for our business. The
move to the new premises in Reading has delivered a stronger
operational infrastructure for the Group as we prepare to support
SolarWinds, and we expect this to deliver benefits in the second
half of the current financial year as they rollout their product.
The second half has been historically a stronger period in terms of
demand and delivery of our services, and we are delighted that it
has started well with increased activity for our Cyber business.
This combines well with the major increase in recurring revenue for
the Assynt division as it has moved into sustainable profitability
in recent months."
"The Board continues its focus on driving top line growth and
reducing costs as it targets cashflow breakeven. Demand for our
services is increasing as the Company sees strong growth in its
sales pipeline. As a result, the Board is confident that the
Company will deliver on its growth strategy and continues to view
the future with optimism."
Enquiries (Via IFC):
Falanx Group Limited www.falanx.com
Mike Read, Chief Executive Officer
Ian Selby, Chief Financial Officer
Stifel Nicolaus Europe Limited, + 44 (0) 207 710 7600
Nomad and Joint Broker Fred
Walsh / Alex Price / Neil Shah
+44 (0) 203 621 4120
Turner Pope Investments (TPI)
Ltd, Joint Broker
Ben Turner / James Pope
+44 (0) 203 934 6630
IFC Advisory Ltd, Financial falanx@investor-focus.co.uk
PR & IR
Graham Herring / Zach Cohen
About Falanx
Falanx Group Limited, is a global intelligence and cyber defence
provider working with blue chip and government clients. It operates
a cyber monitoring platform for corporate and governmental
customers which utilises a combination of proprietary and
third-party processes and technologies. For more information:
http://www.falanx.com/
Chairman's statement
This six-month period has seen a continued improvement in
trading with revenue growth of 21% over the same period last year
of which approximately 80% was organic. The Group has also
delivered improved margins in the Assynt business based on an
enlarged recurring revenue base. Stronger revenue performance in
the Cyber division was generated alongside a major investment
programme. Operational changes have been made in this division and
the gross margin has improved in the second quarter which is
expected to continue. At the same time, the Assynt division has
seen a significant increase in its recurring revenue base and
improvements in gross margin, both of which have now led the
division to operating profitability on a consistent run rate. The
investment programme in the business is largely complete and we are
pleased that the new SOC in Reading is now fully operational and
ready to support the SolarWinds rollout.
Business review
Cyber Security division
The division generated revenues of GBP1.71m in the six months to
30 September 2019, a rise of 16% over the same period in 2018. Our
current revenue mix is around 66% professional services and 34%
monthly recurring revenues ("MRR") from our managed services
product lines. Our professional services revenues grew by 18% while
our MRR revenues grew by 9%. Our overall churn levels were less
than 10% and were primarily driven by specific customer changes.
Gross margins were 30% (2018: 42%). This fall was largely the
result of product mix and certain utilisation issues which reduced
gross profit by approximately GBP0.15m. These have now been
remedied, more detail of which appears below, with improved
performance in the second quarter continuing into the second half
of the current financial year. During the period we, as planned,
invested significantly in expanding our overall sales and marketing
capabilities as well as building out the division's delivery
capability and physical infrastructure, including the planned Solar
Winds program. As a result of these investment plans, the
division's adjusted EBITDA loss increased to GBP0.43m (2018:
GBP0.13m).
SolarWinds is live and additional improvements are expected to
commence in the first calendar quarter of 2020. The mid-market
product continues to grow, and we are also expecting this to
progress in early 2020.
Over the summer we reviewed the effectiveness of certain our
utilisation processes and have adjusted our procedures and product
mix to improve gross margin performance. Our customer offerings now
better align with the needs of the readily addressable market and
we are delivering against these with much greater efficiency.
GBP0.1m of operational costs related to certain sales staff will
not be present in the second half of the year.
We have a strong pipeline of opportunities across the division,
including much larger potential deals for MRR services, which are
progressing very well, and our order book remains strong. We have
completed the bulk of the infrastructure upgrades to support Solar
Winds, and the margin improving cost efficiencies introduced in the
second quarter should provide the basis of a much-improved
financial performance in the second half of the year and beyond. We
believe we are now well-positioned to deliver shareholder value
against this growing market opportunity.
Strategic Intelligence
Falanx Assynt, the Falanx Group's geopolitical and strategic
intelligence business, generated revenues of GBP0.93m in the six
months to 30 September 2019, a rise of 31% over the same period in
2018. Our strategy since mid-2018 has been to move away from spot
revenues to predictable MRR and we are pleased that this now
represents approximately 95% of total revenue. We invested in sales
and marketing expansion at the start of the year and this delivered
an increase of circa 75% of MRR between April and September 2019.
Gross margins consequently increased to 36% (2018: 25%). This
investment, which commenced at the start of the calendar year,
produced a strong EBITDA profit performance at the end of the
period and this momentum has carried over into the second half of
the year. Overall it recorded an EBITDA loss of GBP0.01m (2018:
profit GBP0.01m).
Over the half year, the division has won and commenced several
new, large, long-term contracts, predominantly with new clients
based outside the UK. Our non-UK client base now represents some
78% of revenues. The bulk of this came from our embedded analyst
offering, which has been our fastest growing service line, and has
helped provide content for our high margin report subscription.
These new contracts are beginning to feed into our monthly
revenues, which we anticipate will provide further revenue growth
in H2. The pipeline remains strong and continues to improve as do
the quantum and quality of opportunities, many of which are
international. We are further expanding our offering in the Assynt
Report subscription service to add greater content, including
further expansion into emerging markets such as sub-Saharan
Africa.
We are planning to close contracts on several further MRR
opportunities in the second half of the current financial year. We
expect these, combined with the much-improved recent financial
performance, to provide the foundations of a much stronger result
in the current financial year and beyond.
Technology division
We have continued to invest in our innovative technology
platform (Project Furnace) which has the potential to support other
data-driven business models. While we currently use this technology
within our own SOC, we see the greatest opportunity for platform in
areas beyond our core security services and we are evaluating
appropriate strategies to best maximise returns from this
investment.
Outlook
The second half of the year has historically been a stronger
period in terms of demand for our services and we are delighted
that it has started well with increased activity for our cyber
business. This combines well with the increase in recurring revenue
for the Assynt division as it has moved into profitability in
recent months. Our gross margins have recently improved, and we
expect this trend to continue in the second half of the year.
The Board continues its focus on driving profitable top line
growth and further reducing costs as it targets cashflow breakeven.
Demand for our services is increasing as the Company sees strong
growth in its sales pipeline. As a result, the Board is confident
that the Company will deliver on its growth strategy and continues
to view the future with optimism.
Financial review
Consolidated Statement of Comprehensive Income
Revenue
Group revenues grew by 21% to GBP2.64m (2018: GBP2.19m) with
both divisions recording organic growth. The Cyber division grew by
16% to GBP1.71m from stronger utilisation and monitoring revenues
and the Intelligence division grew by 31% to GBP0.93m as a result
of a much larger base of recurring revenue contracts. This
recurring revenue contract base grew significantly in September
2019 and was some 80% higher that it was in April 2019.
Gross margin
Overall margin fell from 36% to 32% primarily caused by certain
aspects of utilisation and product mix in the Cyber division. This
division's margin fell from 42% to 30% attributable to investment
in new staff, Solar Winds capacity, certain 3(rd) party costs and
revenue mix. Action was taken to change processes and certain
services with the result that margins have improved in recent
months and further improvement is expected going forward. The
Assynt business increased its gross margin from 25% to 36% as a
result of a much stronger revenue performance and contribution from
embedded analyst and report revenues.
Underlying operating costs
Our overall underlying operating cost base increased by
approximately 18% to GBP1.77m. Assynt costs increased by
approximately GBP0.17m relating to business development in support
of the increase in recurring revenue contracts. Cyber costs
increased by GBP0.20m, although we do not expect all this increase
to be reflected in H2 2019. A significant element of this increase
was as a result of the expansion of sales and marketing costs,
increasing support for anticipated Solar Winds sales, and
approximately GBP70,000 relating to the reallocation of certain
costs from central group ("Other Segment"). This was reflected in
the annual results to 31 March 2019 but not in the interims for
that period. Central overheads fell by c.GBP0.1m to GBP0.48m
reflecting the redeployment of resources into operations and
investment programs. Our average headcount in the period was 78
(2018: 68).
Overall, we expect our current operating cost base to support
our revenue growth expectations in the near term.
Adjusted EBITDA
As a result of the planned expansion our loss at this level
increased from GBP0.71m to GBP0.93m.
Adjusting items
The Group recorded GBP0.35m (2018: GBP0.08m) of items outside of
usual trading. GBP0.13m related to non-capitalised development
costs related to Project Furnace. A further GBP0.13m related to
investment in infrastructure and the IT environment which has now
been largely completed. The remaining GBP0.09m related to staff
changes and a legal action to recover monies from former
parties.
Depreciation and amortisation
As a result of increased capital expenditure on infrastructure
the Group's depreciation charge increased to c.GBP0.07m (2018:
GBP0.04m) on depreciation relating to physical assets and a further
amortisation charge of cGBP0.16m (2018: GBP0.15m), of which the
vast bulk related to the amortisation of intangibles in the Cyber
division arising from acquired customer bases in prior financial
years.
Loss for the period
Overall the Group recorded a Loss of GBP1.55m (GBP0.97m). Loss
per share increased marginally from 0.37p to 0.39p.
Consolidated Statement of Financial Position
As part of the planned expansion of capacity against Solar Wind
and to support further Cyber division growth, specifically a larger
talent pool, the SOC was relocated from Birmingham to Reading
during the period. This has been accounted for as a lease under
IFRS16 and an asset of GBP0.67m recorded relating to its future
value, as well as an offsetting lease liability of GBP0.44m, have
been recorded. These are expected to be amortised over a period of
5 years. Intangibles increased by GBP0.63m compared to September
2018. Approximately GBP0.46m of this relates to an IFRS3
revaluation of the good will intangible asset recorded in the
accounts for the year ended 31 March 2018. The remainder represents
investment in Project Furnace. The bulk of the capital investment
program has been completed and a much lower level is planned going
forward.
Trade and other receivables increased by approximately GBP0.58m
compared with 30 September 2018. This was mainly due to higher
business volumes and higher level of prepayments including rental
deposits compared to that at 30 September 2018. Since then the
receivables balances has fallen by circa GBP0.2m. Overall debtors
fell from 31 March 2019, and certain overdue items were collected
in October 2019. Debtors were largely in terms and at the end of
the period and trade debtors represented approximately 47 days of
sales (2018: 38 days), with the increase arising from short-term
timing issues and collections have been strong since the balance
sheet date. Contract Liabilities (deferred income) reduced slightly
mainly caused by short term timing issues. Trade creditors were
largely in terms and represented a normal trading cycle. Accrued
revenues are converting to cash in a short timescale in line with
previous periods.
Overall shareholders' funds stood at GBP6.12m (2018:
GBP3.93m)
Consolidated Cash Flow Statement
Our cash resources were used to support investment reflected in
trading losses in operations at both an operational level and
capital expenditure level. As referenced above circa GBP0.35m of
non-underlying expenditure was incurred. Our working capital
profile was broadly neutral, and this reflected a relatively lower
level of creditors compared to the period to 30 September 2018.
Overall our net use of cash in operating activities was GBP1.27m
(2018: GBP0.53m) reflecting a greater level of investment than in
the prior period.
Overall capital investment was GBP0.46m (2018: GBP0.27m)
reflecting the investment in physical infrastructure around the SOC
move, IT infrastructure, and the investment in Project Furnace.
Overall cash balances stood at GBP0.71m (2018: GBP0.07m).
FALANX GROUP LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS PERIODED 30 SEPTEMBER 2019
6 Months 6 Months Year to
to to
30 Sep 2019 30 Sep 31 Mar
2018 2019
(Unaudited) (Unaudited) (Audited)
GBP GBP GBP
Revenue 2,640,117 2,185,998 5,212,136
Cost of sales (1,794,647) (1,388,436) (2,924,210)
----------------------------------------- ------------ ------------ ------------
Gross profit 845,470 797,562 2,287,926
Administrative expenses (2,391,737) (1,765,429) (4,144,508)
Operating Loss (1,546,267) (967,867) (1,856,582)
Analysis of operating loss
Operating loss (1,546,267) (967,867 (1,856,582)
Share option expense 45,000 - 60,715
Depreciation and amortisation 226,725 181,358 369,071
Exceptional costs 348,225 79,709 180,921
Adjusted EBITDA loss (926,317) (706,800) (1,245,875)
Finance income 1,428 292 1,526
Finance expense (5,593) (2,228) (4,257)
----------------------------------------- ------------ ------------ ------------
Net finance expense (4,165) (1,936) (2,731)
Loss before income tax (1,550,432) (969,803) (1,859,313)
Income tax credit - - 28,442
----------------------------------------- ------------ ------------ ------------
Loss for the period (1,550,432) (969,803) (1,830,871)
Other comprehensive income:
Re-translation of foreign subsidiaries 779 - 3,053
Total comprehensive loss for the
period (1,549,653) (969,803) (1,827,818)
----------------------------------------- ------------ ------------ ------------
Earnings per share
---------------------------------------- ------------ ------------ ------------
Basic earnings per share (0.39)p (0.37)p (0.58)p
Diluted earnings per share (0.39)p (0.37)p (0.58)p
----------------------------------------- ------------ ------------ ------------
FALANX GROUP LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2019
6 Months 6 Months Year to
to to
30 Sep 2019 30 Sep 2018 31 Mar 2019
(Unaudited) (Unaudited) (Audited)
GBP GBP GBP
Assets
Non-current assets
Property, plant & equipment including
leases 236,138 123,130 111,852
Right-of-use assets 523,020 - -
Intangible assets 5,447,692 4,816,729 5,386,573
6,206,850 4,939,859 5,498,425
-------------------------------------- ------------ ------------ ------------
Current assets
Inventory 3,828 3,828 3,828
Trade and other receivables 1,758,518 1,177,987 2,112,097
Cash and cash equivalents 708,055 69,223 2,443,686
2,470,401 1,251,038 4,559,611
-------------------------------------- ------------ ------------ ------------
Total assets 8,677,251 6,190,897 10,058,036
-------------------------------------- ------------ ------------ ------------
Equity
Capital and reserves attributable
to equity holders of the Company
Share premium account 17,903,427 13,968,734 17,903,427
Translation reserve (107,801) (80,894) (108,580)
Shares to be issued reserve 403,959 245,369 358,959
Retained earnings (12,077,184) (10,196,293) (10,526,752)
Total equity 6,122,401 3,936,916 7,627,054
-------------------------------------- ------------ ------------ ------------
Liabilities
Non-current liabilities
Deferred tax liability 7,172 9,133 7,593
Finance lease liability 441,696 - -
-------------------------------------- ------------ ------------ ------------
448,868 9,133 7,593
Current liabilities
Trade and other payables 1,095,265 1,151,115 1,313,558
Contract liabilities 1,010,717 1,093,733 1,109,831
Total liabilities 2,105,982 2,244,848 2,423,389
-------------------------------------- ------------ ------------ ------------
Total liabilities 2,554,850 2,253,981 2,430,982
-------------------------------------- ------------ ------------ ------------
Total equity and liabilities 8,677,521 6,190,897 10,058,036
-------------------------------------- ------------ ------------ ------------
FALANX GROUP LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Retained Translation Share option Total
capital earnings reserve and warrant
reserve
GBP GBP GBP GBP GBP
Balance at 1 April 2018 13,868,734 (8,695,881) (111,633) 255,483 5,316,703
Loss for the year - (1,830,871) - - (1,830,871)
Re-translation of foreign
subsidiaries - - 3,053 - 3,053
Transactions with owners:
Issue of share capital 4,255,000 - - - 4,255,000
Cost of share capital
issue (220,307) - - - (220,307)
Share based payment charge - - - 103,476 103,476
Balance as at 31 March
2019 17,903,427 (10,526,752) (108,580) 358,959 7,627,054
---------------------------- ----------- ------------- ------------ ------------- ------------
Loss for the period - (1,550,432) - - (1,550,432)
Re-translation of foreign
subsidiaries - 779 - 779
Transactions with owners:
Issue of share capital - - - -
-
Costs of issue of share - - - -
capital -
Share based payment charge - - - 45,000 45,000
Balance as at 30 September
2019 17,903,427 (12,077,184) (107,801) 403,959 6,122,401
---------------------------- ----------- ------------- ------------ ------------- ------------
FALANX GROUP LIMITED
CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIODED 30 SEPTEMBER
2019
6 Months 6 Months Year to
to to
30 Sep 30 Sep 2018 31 Mar
2019 2019
(Unaudited) (Unaudited) (Audited)
GBP GBP GBP
Cash flows from operating activities
Profit/(Loss) before tax (1,550,432) (969,803) (1,859,313)
Adjustments for:
Depreciation 69,704 35,801 75,526
Amortisation of intangibles 157,021 145,557 293,546
Share based payment 45,000 - 60,715
Net finance (income)/cost recognised
in profit or loss 4,165 1,936 2,731
(1,274,542) (786,509) (1,426,795)
Changes in working capital:
Decrease in inventories - 554 554
Decrease/(increase) in trade
and other receivables 353,254 344,960 (588,755)
(Decrease)/increase in trade
and other payables (352,510) (87,047) 98,006
----------------------------------------- ------------ ------------ ------------
Cash used in operations (1,273,798) (528,042) (1,916,990)
Interest paid (311) (2,228) (4,257)
----------------------------------------- ------------ ------------ ------------
Net cash used in operating activities (1,274,109) (530,270) (1,921,247)
----------------------------------------- ------------ ------------ ------------
Cash flows from investing activities
Interest received 1,428 292 1,526
Acquisition of property, plant
and equipment (245,590) (22,804) (51,251)
Expenditure on development cost (218,139) (229,283) (461,008)
Acquisition of subsidiary net
of cash acquired - (19,803) (19,803)
Net cash used in investing activities (462,301) (271,598) (530,536)
----------------------------------------- ------------ ------------ ------------
Cash flows from financing activities
Proceeds from issue of shares - - 4,155,000
Costs of share issuance - - (177,545)
Net cash generated from financing
activities - - 3,977,455
----------------------------------------- ------------ ------------ ------------
Decrease/(increase) in cash equivalents (1,736,410) (801,868) 421,241
Cash and cash equivalents at
beginning of the period 2,443,686 914,961 914,961
Foreign exchange gains on cash
and cash equivalents 779 (43,870) 3,053
----------------------------------------- ------------ ------------ ------------
Cash and cash equivalents at
end of the period 708,055 69,223 2,443,686
----------------------------------------- ------------ ------------ ------------
FALANX GROUP LIMITED
NOTES TO INTERIM FINANCIAL STATEMENTS FOR THE PERIODED 30
SEPTEMBER 2019
1. General information
Falanx (the "Company") and its subsidiaries (together the
"Group") operate in the security and intelligence markets. The
Company is a public limited company which is listed on AIM on the
London Stock Exchange and is incorporated and domiciled in the
British Virgin Islands. The address of its registered office is PO
Box 173, Road Town, Tortola, British Virgin Islands. The Company is
UK based and its Head Office is at Five Kings House, 1 Queen St Pl,
London EC4R 1QS.
2. Basis of preparation
These interim statements have been prepared on a basis
consistent with International Financial Reporting Standards (IFRS).
They do not contain all of the information required for full
financial statements and should be read in conjunction with the
consolidated financial statements of the Group as at and for the
year ended 31 March 2019. These interim financial statements do not
constitute statutory accounts within the meaning of the Companies
Act. These results reflect the impacts of IFRS's 9, 15 and 16 which
were not required in the comparative period. Adjustments required
for IFRS 9 and 15 were trivial and the Group only had short term
leases outstanding at 30 September 2018 and therefore no
restatement has been made.
In relation to IFRS 16, the Group recognised a right-to-use
asset and a lease liability at the lease commencement date. The
right-to-use asset is initially measured at cost, which comprises
the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial
direct costs incurred less any lease incentives received.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement dat.
Discounted using the interest rate implicit in the lease or, if
that rate cannot be determined, the Group's incremental borrowing
rate.
This interim financial information has not been reviewed nor
audited by the auditors. The interim financial information was
approved by the Board of Directors on 2 December 2019. The
information for the year ended 31 March 2019 is extracted from the
statutory financial statements for that year which have been
reported on by the Group's auditors and delivered to the Registrar
of Companies. The audit report was unqualified.
The accounting policies applied by the Group in these interim
financial statements are the same as those applied by the Group in
its consolidated financial statements for the year ended and as at
31 March 2019. The interim report is the responsibility of, and has
been, approved by the Directors. The Directors are responsible for
preparing the interim financial statements in accordance with the
AIM rules for Companies.
Going Concern
The Group made losses of GBP1.55m (2018: GBP0.97m) in the
6-month period to 30 September 2019 of which GBP0.92 (2018:
GBP0.71m) relates to the Adjusted EBITDA performance of the
business. Cash balances as at 30 September 2019 were GBP0.71m and
these are seen by the Board as sufficient to achieve break even and
cash generation on its current organic plans. The group expects
gross margins in the Cyber division to be stronger in the second
half of the year and beyond, and also expects lower operational
costs as well as a much lower capital expenditure program. The
Assynt division has recently started to benefit from a much larger
base of profitable monthly recurring revenues. Should the Group not
achieve its revenue, margin and growth targets, the Board routinely
prepares alternative stress test scenarios to deal with lower
performance and any ensuing shortfall in working capital. This
assumes that cost reductions and discretionary expansion spend
would be curtailed as well as cessation of certain investment
spends. Other measures could involve the disposal of assets or
business units. Furthermore, the Group could seek, as in previous
years, the support of investors and Directors (debt or equity) and
has received offers of invoice discounting facilities should it
want them. The Group has also received the support of its bankers
in previous years for the provision of overdraft facilities.. Based
upon the above the Directors have a reasonable expectation that the
Group has adequate working capital for the twelve months following
the date of approving these interim results. For this reason, they
continue to adopt the going concern basis in preparing these
interim results.
3. Critical accounting estimates and judgements
The preparation of financial information in accordance with
generally accepted accounting practice, in the case of the Group
being IFRS as adopted by the European Union, requires the Directors
to make estimates and judgements that affect the reported amount of
assets, liabilities, income and expenditure and the disclosures
made in the financial statements. Such estimates and judgements
must be continually evaluated based on historical experience and
other factors, including expectations of future events.
The significant judgements made by management in applying the
Group's accounting policies were the same as those applied in the
last annual financial statements for the year ended 31 March
2019.
4. Segmental reporting
The Directors consider that the Group's internal financial
reporting is organised along product and service lines as
referenced in the Business Review and Finance reports, and,
therefore, segmental information has been presented about business
segments. The segmental analysis of the Group's business was
derived from its principal activities as set out below. The
information below also comprises the disclosures required by IFRS 8
in respect of products and services as the Directors consider that
the products and services sold by the disclosed segments are
essentially similar and, therefore, no additional disclosure in
respect of products and services is required. The other segment
below and overleaf is made up of the parent company's
administrative operation. Other segments represent central group
functions as well as certain R&D development activities under
Project Furnace.
Reportable segments
The reportable segment results for the period ended 30 September
2019 are as follows:
Six months ended 30 Other
September 2019
Intelligence Cyber segments Total
GBP GBP GBP GBP
------------------------------- ------------- ---------- ---------- ------------
Assynt report 890,083 - 890,083
Professional services 40,640 1,220,751 - 1,261,391
Monitoring managed services 488,643 - 488,643
------------------------------- ------------- ---------- ---------- ------------
Revenues from external
customers 930,723 1,709,394 - 2,640,116
------------------------------- ------------- ---------- ---------- ------------
Gross margin 338,023 507,447 845,470
------------------------------- ------------- ---------- ---------- ------------
Segment Reported EBITDA (18,861) (482,785) (764,356) (1,319,542)
Share option expense 4,274 9,799 30,927 45,000
Exceptional costs - 41,758 305,467 348,225
Segment Adjusted EBITDA (14,587) (431,228) (480,501) 926,317
------------------------------- ------------- ---------- ---------- ------------
Finance costs - net 372 (299) (4,238) (4,165)
Depreciation and amortisation (14,836) (155,746) (56,143) (226,725)
Segment profit/(loss)
for the period (33,325) (692,370) (824,737) (1,550,432)
------------------------------- ------------- ---------- ---------- ------------
Six Months Ended 30 Other
September 2018
Intelligence Cyber segments Total
GBP GBP GBP GBP
------------------------------- ------------- ---------- ---------- ----------
Assynt report 642,024 - 642,024
Professional services 66,399 1,030,780 - 1,079,179
Monitoring managed services 446,795 - 446,795
------------------------------- ------------- ---------- ---------- ----------
Revenues from external
customers 708,423 1,477,575 - 2,185,998
------------------------------- ------------- ---------- ---------- ----------
Gross margin 179,174 618,388 - 797,562
------------------------------- ------------- ---------- ---------- ----------
Segment Reported EBITDA 7,340 (162,264) (631,585) (786,509)
Exceptional costs - 37,925 41,784 79,709
Segment Adjusted EBITDA 7,340 (124,339) (589,801) (706,800)
------------------------------- ------------- ---------- ---------- ----------
Finance costs - net (1,338) (828) 230 (1,936)
Depreciation and amortisation (3,359) (175,196) (2,803) (181,358)
Segment profit/(loss)
for the period 2,643 (338,288) (634,158) (969,803)
------------------------------- ------------- ---------- ---------- ----------
Year Ended 31 March 2019 Other
Intelligence Cyber segment Total
GBP GBP GBP GBP
Assynt report 1,402,196 - - 1,402,196
Professional services 238,765 2,567,845 - 2,806,610
Monitoring managed services - 1,003,330 - 1,003,330
------------------------------- ------------- ---------- ------------ ------------
Revenues from external
customers 1,640,961 3,571,175 - 5,212,136
------------------------------- ------------- ---------- ------------ ------------
Gross Margin 548,966 1,738,960 - 2,287,926
Segment Reported EBITDA (54,706) (88,250) (1,344,555) (1,487,511)
Share option expense 5,766 13,221 41,728 60,715
Exceptional costs (Note
5) - 128,997 51,924 180,921
Segment Adjusted EBITDA (48,940) 53,968 (1,250,903) (1,245,875)
------------------------------- ------------- ---------- ------------ ------------
Finance costs-net (827) (2,134) 230 (2,731)
Depreciation and amortisation (16,103) (309,995) (42,973) (369,071)
Segment profit/(loss)
for the year (71,636) (400,379) (1,387,297) (1,859,313)
------------------------------- ------------- ---------- ------------ ------------
Segment assets, liabilities and capital expenditure for the
period then ended are as follows:
Other
As at 30 September 2019 Intelligence Cyber segments Total
GBP GBP GBP GBP
------------------------- ------------- ---------- ---------- ----------
Contract assets 22,683 91,061 - 113,744
Other assets 599,639 6,220,844 1,743,025 8,040,488
Contract liabilities
(deferred income) 578,980 421,737 1,010,717
Other liabilities 183,700 893,916 466,517 1,544,134
Capital expenditure -
tangible 932 199,154 45,303, 245,560
Capital expenditure -
intangible 29,332 188,803 218,139
------------------------- ------------- ---------- ---------- ----------
Excludes impact of IFRS16
Other
As at 30 September 2018 Intelligence Cyber segments Total
GBP GBP GBP GBP
------------------------- ------------- ---------- ---------- ----------
Contract assets 42,680 - - 42,680
Other assets 524,291 4,244,967 1,379,355 6,184,613
Contract liabilities
(deferred income) 542,816 550,917 - 1,093,733
Other liabilities 186,024 532,757 441,467 1,160,248
Capital expenditure -
tangible 2,203 20,601 - 22,804
Capital expenditure -
intangible 53,965 436,790* - 490,755
------------------------- ------------- ---------- ---------- ----------
*now classified within Other related to Furnace development
Other
As at 31 March 2019 Intelligence Cyber segment Total
GBP GBP GBP GBP
----------------------- ------------- ---------- ---------- ----------
Contract assets 63,528 133,702 - 197,230
Other assets 2,085,245 5,252,009 2,039,553 9,376,807
Contract liabilities
(deferred income) 679,068 430,763 - 1,109,831
Other liabilities 267,139 665,231 388,781 1,321,151
Capital expenditure -
Tangible 2,203 54,480 - 56,683
Capital expenditure -
Intangible 76,265 673,483 - 749,748
----------------------- ------------- ---------- ---------- ----------
As at 31 March 2019 Intelligence Cyber segment Total
GBP GBP GBP GBP
----------------------- ------------- ---------- ---------- ----------
Contract assets 63,528 133,702 - 197,230
Other assets 2,085,245 5,252,009 2,039,553 9,376,807
Contract liabilities
(deferred income) 679,068 430,763 - 1,109,831
Other liabilities 267,139 665,231 388,781 1,321,151
Capital expenditure -
Tangible 2,203 54,480 - 56,683
Capital expenditure -
Intangible 76,265 673,483 - 749,748
----------------------- ------------- ---------- ---------- ----------
5. Earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the year.
6 Months 6 Months Year to
to to
30 Sep 2019 30 Sep 31 Mar
2018 2019
(Unaudited) (Unaudited) (Audited)
Loss attributable to equity holders
of the company (GBP) (1,550,432) (969,803) (1,830,371)
Weighted average number of ordinary
shares in issue 400,401,186 260,601,854 313,614,123
Basic (loss)/profit per share (pence
per share) (0.39) (0.37) (0.58)
-------------------------------------- ------------ ------------ ------------
As at 30 September 2019, the potentially dilutive ordinary
shares were anti-dilutive because the Group was loss-making.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR DLLFBKLFZFBV
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December 03, 2019 02:00 ET (07:00 GMT)
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