falanx
I N T E L L I G E N C E | T E C H N O L O G Y | R E S I L I E N C E
www.falanxgroup.com:
www.falanxgroup.com
Report of the Directors and
Consolidated Financial Statements
for the Period 23 August 2012 to 31 March 2013
for Falanx Group Limited
falanx
I N T E L L I G E N C E | T E C H N O L O G Y | R E S I L I E N C E
Falanx Group Limited (Registered number: 1730012)
falanx
I N T E L L I G E N C E | T E C H N O L O G Y | R E S I L I E N C E
Contents
of the Consolidated Financial Statements
for the period 23 August 2012 to 31 March 2013
Company Information
Chairman’s Report
Corporate Governance
Report of the Directors
Report of the Independent Auditors
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Notes to the Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Page
2
3
6
8
13
14
15
16
17
18
19
20
21
22
Company Information
for the period 23 August 2012 to 31 March 2013
DIRECTORS:
J R Blamire
K P A Barclay
I Manley
Ms E Shaw
D P Carr
REGISTERED OFFICE: Kingston Chambers
PO Box 173
Road Town
Tortola
British Virgin Islands
REGISTERED NUMBER: 1730012 (British Virgin Islands)
AUDITORS: Bennett Brooks & Co Ltd
Chartered Accountants
& Statutory Auditors
1 Charterhouse Mews
London
EC1M 6BB
2
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Chairman’s Report
for the period 23 August 2012 to 31 March 2013
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 capi-
talise 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 Alternative Investment Market (“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.
3
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012) Chairman’s Report continued
for the period 23 August 2012 to 31 March 2013
Divisional approach - continued
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 manage-
ment 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 world-
wide 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. The 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 mar-
ket. 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
4
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012) Chairman’s Report continued
for the period 23 August 2012 to 31 March 2013
Financial review
Falanx Group is a newly established company and so has no trading history in the Financial Year 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 AIM of the London Stock Exchange and raised £595,000 (be-
fore 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 at 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.
Approved by the Board on 25 September 2013. and signed on its behalf by
K P A Barclay – Executive Chairman
5
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012) Corporate Governance Report
for the period 23 August 2012 to 31 March 2013
Statement of Compliance
Save for the Companies Act, there is no mandatory corporate governance regime in the British Virgin Islands with
which the Company must comply. However, the Directors recognise the importance of sound corporate governance
and intend to comply with appropriate recognised corporate governance standards, as far as practicable and to
the extent appropriate given the Company’s size, assets, liabilities and other relevant information. In practice this
means that the Company will be complying with the QCA Guidelines for AIM Companies.
Board of Directors
The board’s principal responsibilities include assisting in the formulation of corporate strategy, reviewing and
approving all significant corporate transactions, monitoring operational and financial performance, reviewing and
approving annual budgets and generally assisting management to enhance the overall performance of the
company in order to deliver maximum value to its shareholders.
The Company holds Board meetings at least eight times each financial year and at other times as and when
required.
Committees
On admission to AIM the company established an Audit Committee, a Remuneration Committee and a Nomination
Committee.
Audit Committee
The Audit Committee, comprising Desmond Carr, Iain Manley and Emma Shaw is chaired by Desmond Carr and
meets at least two times a year. The Audit Committee is responsible for ensuring that the Group’s financial perfor-
mance is properly monitored, controlled and reported. The Audit Committee is responsible for the scope and
effectiveness of the external audit, the work of the internal audit function and compliance by the Group with statu-
tory and regulatory requirements.
The Audit Committee also advises the Board on the appointment of the external auditors, reviews their fees and the
audit plan. It approves the external auditors’ terms of engagement, their remuneration and any non-audit work.
The Audit Committee also meets the Company’s auditors and reviews reports from the auditors relating to accounts
and internal control systems. The Audit Committee meets with the auditors as and when the Audit Committee
requires.
Remuneration Committee
The Remuneration Committee, comprising Desmond Carr, Iain Manley and Emma Shaw is chaired by Desmond
Carr and meets as and when necessary. It sets and reviews the scale and structure of the executive Directors’
remuneration packages, including share options and the terms of the service contracts. The remuneration and the
terms and conditions of the non-executive Directors are determined by the Directors with due regard to the interests
of the Shareholders and the performance of the Group. The Remuneration Committee also makes
recommendations to the Board concerning the allocation of share options to employees.
6
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012) Corporate Governance Report continued
for the period 23 August 2012 to 31 March 2013
Nomination Committee
The Nomination Committee, comprising Desmond Carr, Iain Manley and Emma Shaw is chaired by Desmond Carr
and meets as and when necessary. It keeps under review the skill requirements of the Board and the skill,
knowledge, experience, length of service and performance of the Directors. It also reviews their external interests
with a view to identifying any actual, perceived or potential conflicts of interests, including the time available to
commit to their duties to the Company.
The Committee also monitors the independence of each non-executive Director and makes recommendations
concerning such to the Board. The results of these reviews are important when the Board considers succession
planning and the re-election and reappointment of directors. Members of the Committee take no part in any discus-
sions concerning their own circumstances.
The Nomination Committee is also responsible for keeping under review the senior management team of the
organisation to ensuring the continued ability of the organisation to compete effectively in the marketplace.
Internal Control
The Board is responsible for identifying and evaluating the major business risks faced by the Group and for
determining and monitoring the appropriate systems of internal controls to manage these risks. These internal
controls are designed to safeguard the assets of the Company and to ensure the reliability of financial information
for both internal use and external publication. While they are aware that no system can provide absolute assur-
ance against material misstatement or loss, in light of the increased activity and further development of the group,
continuing reviews of internal controls will be undertaken to ensure that they are adequate and effective.
Shareholder Communication
The Directors consider the clear and timely communication of information to shareholders as an important part of
their duties. The board views the annual general meeting as an opportunity to communicate with both institutional
and private investors alike and aims to make constructive use of the annual general meetings. The Directors intend
to be present and available to answer questions at each year’s annual general meeting.
Corporate Responsibility
Falanx Group Limited operates responsibly with regards to its shareholders, employees, other stakeholders, the
environment and the wider community. The Group is committed to the well-being of all employees and ensures that
their health, safety and general welfare is paramount at all times. We also maintain open and fair relationships
with all clients and suppliers while ensuring that all transactions are operated on an arm’s length, commercial
basis.
The Directors are responsible for preparing the financial statements in accordance with applicable law and regula-
tions. Company law requires the Directors to prepare financial statements for each financial period. The Directors
have elected to prepare these financial statements in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union and applicable by law.
Approved by the Board on 25 September 2013 and signed on its behalf by
J R Blamire - Director
7
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012) Report of the Directors
for the period 23 August 2012 to 31 March 2013
The Directors present their report with the financial statements of the Company and the Group for the period 23
August 2012 to 31 March 2013.
Falanx Group Limited was incorporated in the British Virgin Islands on 23 August 2012 and is domiciled in the
British Virgin Islands. On 20 June 2013, the Company’s shares were admitted to trading on the London Stock
Exchange’s AIM market (“AIM”).
PRINCIPAL ACTIVITY
Falanx Group Limited is the ultimate holding company of Falanx Protection Limited and Stirling Assynt (Acquisition)
Limited. Both companies were incorporated and are domiciled in the British Virgin Islands.
Falanx Protection Limited was incorporated on 24 August 2012 as a wholly owned subsidiary of Falanx Group
Limited and commenced trading on 9 November 2012.
Stirling Assynt (Acquisition) Limited was incorporated on 7 February 2013 as a wholly owned subsidiary of Falanx
Group Limited for the purpose of making the acquisition of the entire business, assets and undertakings of Stirling
Assynt International Group Limited, a BVI company that was incorporated on 7 April 2008.
On 29 March 2013 Stirling Assynt (Acquisition) Limited acquired two trading subsidiaries, Stirling Assynt (Europe)
Limited and Stirling Risk (Asia) Limited. Further information about the business combinations can be found in note
21 of these financial statements.
Both Stirling Assynt (Europe) Limited and Stirling Risk (Asia) Limited, have traded for a number of years prior to
acquisition.
Falanx Protection Limited’s principal activities are the international supply and installation of blast protection de-
vices as well as the provision of security consultancy.
The principal activities of both Stirling Assynt (Europe) Limited and Stirling Risk (Asia) Limited are that of interna-
tional business intelligence consultancy.
REVIEW OF BUSINESS
The Group’s results for the period are set out in the consolidated statement of comprehensive income on page 13
of these financial statements.
No turnover and profit have been generated in the period under review as the Group has only acquired two
trading subsidiaries, Stirling Assynt (Europe) Limited and Stirling Risk (Asia) Limited, on 29 March 2013. Further
information can be found in the note 21 Business Combinations.
A review of the business, significant contracts, progress and the group’s future prospects can be found in the Chair-
man’s statement.
DIVIDENDS
No dividends will be distributed for the period ended 31 March 2013.
EVENTS SINCE THE END OF THE PERIOD
Information relating to events since the end of the period is given in the notes to the financial statements.
8
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Report of the Directors continued
for the period 23 August 2012 to 31 March 2013
DIRECTORS
The Directors who served the Company during the year and up to the date of this report were as follows:
Executive Directors
J R Blamire
K P A Barclay
Non-Executive Directors
I Manley
D P Carr
E Shaw
- Appointed 23 August 2012
- Appointed 22 February 2013
- Appointed 18 March 2013
- Appointed 11 January 2013
- Appointed 11 January 2013
Directors’ interests in the stated issued share capital of the Company, including family and pension scheme
interests, were as follows:
NUMBER OF SHARES AT
31 MARCH 2013
% HELD AT 31 MARCH 2013
J R Blamire
K P A Barclay*
I Manley
D P Carr
7,000,000
5,745,500
200,000
200,000
21.54%
17.68%
0.62%
0.62%
* Of which 2,182,500 (5.83%) are held by Dounreay Management and a further 666,666 (1.78%) by Andrea
Barclay.
Directors’ interests in transactions
No director had, during or at the end of the period, a material interest in any contract which was significant in
relation to the group’s business, except in respect of service agreements.
Significant shareholdings
As at 20 June 2013, the Company has been notified of the following interests in the Company’s Ordinary Shares
by its major shareholders:
NUMBER OF SHARES AT
20 JUNE 2013
% HELD AT 20 JUNE 2013
J R Blamire
K P A Barclay*
K Renyard
K Catchpole and family
J Campbell-James
G Long
H & J McLeod
Walker Cripps
7,900,000
5,765,500
3,500,000
2,496,333
2,083,333
1,750,000
1,420,000
1,125,000
21.09%
15.39%
9.34%
6.66%
5.56%
4.67%
3.79%
3.00%
All the directors, being eligible, will offer themselves for election at the first Annual General Meeting of the Company.
9
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Report of the Directors continued
for the period 23 August 2012 to 31 March 2013
GROUP’S POLICY ON PAYMENT OF CREDITORS
It is the Group’s policy to pay suppliers in accordance with the terms and conditions agreed between the Group
and its suppliers, provided that the goods and services have been supplied in accordance with the agreed terms
and conditions.
FINANCIAL INSTRUMENTS
The Group’s financial risk management objectives are to minimise debt and to ensure sufficient working capital for
the Group’s overheads and capital expenditure commitments.
Financial instruments are disclosed and discussed in note 22 to the financial statements.
POLITICAL AND CHARITABLE CONTRIBUTIONS
There were no political or charitable donations made by the Group during the year.
EMPLOYEES
The Group recognises the benefit of keeping its employees informed of all relevant matters on a regular basis.
The Group is an equal opportunities employer and all applications for employment are considered fully on the
basis of suitability for the job.
KEY RISKS AND UNCERTAINTIES
The following are the risk factors associated with the Company’s business and industry:
The Company is a new company with no operating history
The Company was incorporated on 23 August 2012 and has no track record or operating history beyond that of
its subsidiary Stirling Assynt (Acquisition) Limited. The Company is subject to all of the business risks and uncertain-
ties associated with any new business enterprise including the risk that the Company will not achieve its objectives
and that the value of an investment in the Company could decline and may result in the total loss of all capital
invested. The expected performance of the Company is not necessarily a guide to the future performance of the
Company.
Reliance on Key Contracts and Business Relationships
Several of the Company’s major customer contracts are in the form of single purchase order arrangements and the
majority of the engagements that are more formally documented are terminable on one month’s notice. In addition,
the Company has or anticipates having several large contracts that represent a significant proportion of its total
revenue. There can be no guarantee that the Company’s major customers will continue to engage its services.
Pipeline opportunities
The Company has a major contract in contemplation in the form of a pipeline of opportunity. However there is no
certainty that this opportunity will be entered into or converted into a concluded contract or that the expected level
of work will in fact if converted to a contract be awarded to the Company. In addition there can be no certainty
that any contracts resulting from conversion of the opportunity will be profitable or even not loss-making.
10
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Report of the Directors continued
for the period 23 August 2012 to 31 March 2013
KEY RISKS AND UNCERTAINTIES - CONTINUED
The Company may need additional access to capital in the future
The Company’s capital requirements depend on numerous factors, including its ability to expand its business and
its strategy of making complementary acquisitions. If its capital requirements vary materially from its current plans,
the Company may require further financing. Any additional equity financing may be dilutive to Shareholders, and
debt financing, if available, may involve restrictions on financing and operating activities and adversely affect the
Company’s dividend policy. In addition, there can be no assurance that the Company will be able to raise addi-
tional funds when needed or that such funds will be available on terms favourable or acceptable to the Company.
If the Company is unable to obtain additional financing as needed, the Company may be required to reduce the
scope of the Company’s operations or anticipated expansion or to cease trading.
Management of future growth
The Company’s plans for growth will challenge the Company’s new management team, customer support,
marketing, administrative and technological resources. If the Company is unable to manage its growth effectively
its business, operations or financial condition may deteriorate. The Company will consider future acquisition op-
portunities. If the Company is unable successfully to integrate an acquired company or business, the acquisition
could lead to disruptions to the business. If the operations or assimilation of an acquired business does not accord
with the Company’s expectations, the Company may have to decrease the value afforded to the acquired business
or realign the Company’s structure.
GOING CONCERN
The Directors regularly review cash flow forecasts of the Group to determine whether the Group has sufficient cash
reserves to meet the future working capital requirements. The forecasting of the business and cash flow numbers do
require a set of assumptions and carries certain risks in that projects are included in the forecasting in anticipation
of their being awarded. Clearly, should these not occur then the forecast numbers for a given year will be different.
The Board of Directors are of the opinion that the Group, using actual secured projects, will have the necessary
cash resources to meet the current working capital requirements. The consolidated financial statements are pre-
pared on the assumption that the Group is a going concern on the basis that the directors are satisfied that
sufficient financial resources will be available to meet the Group’s current and foreseeable working capital.
INFORMATION TO SHAREHOLDERS - WEB SITE
The Company has its own web site (www.falanxgroup.com) for the purposes of improving information flow to its
shareholders and potential investors.
11
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Report of the Directors continued
for the period 23 August 2012 to 31 March 2013
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with
applicable law and International Financial Reporting Standards, as adopted by the European Union (“IFRS”).
Company law requires the Directors to prepare financial statements for each financial year. Under that law the
Directors have elected to prepare the financial statements in accordance with International Financial Reporting
Standards as adopted by the European Union. Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and
the Group and of the profit or loss of the group for that period. In preparing these financial statements, the
Directors are required to:
n select suitable accounting policies and then apply them consistently;
n make judgements and accounting estimates that are reasonable and prudent;
n state that the financial statements comply with IFRS;
n prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s and the Group’s transactions and disclose with reasonable accuracy at any time the financial position
of the Company and the Group and enable them to ensure that the financial statements comply with the company
law. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included
on the Company’s website.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS
So far as the Directors are aware, there is no relevant audit information of which the Group’s auditors are
unaware, and each Director has taken all the steps that he or she ought to have taken as a director in order to
make himself or herself aware of any relevant audit information and to establish that the Group’s auditors are
aware of that information.
AUDITORS
Bennett Brooks & Co Ltd, were appointed auditors to the Company and a resolution proposing that they be
reappointed as auditors of the Company will be put to the Annual General Meeting.
ON BEHALF OF THE BOARD:
J R Blamire - Director
Date: 25 September 2013
12
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Report of the Independent Auditors to the Members of Falanx Group Limited
for the period 23 August 2012 to 31 March 2013
We have audited the financial statements of Falanx Group Limited for the period ended 31 March 2013 which
comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position,
the Company Statement of Financial Position, the Consolidated Statement of Cash Flows, the Company Statement
of Cash flows and the related notes. The financial reporting framework that has been applied in their preparation
is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
This report is made solely to the Company’s members, as a body. Our audit work has been undertaken so that
we might state to the Company’s members those matters we are required to state to them in a Report of the Audi-
tors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the prepa-
ration of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is
to audit and express an opinion on the financial statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s
Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to
give reasonable assurance that the financial statements are free from material misstatement, whether caused by
fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group’s and
the parent company’s circumstances and have been consistently applied and adequately disclosed; the reasona-
bleness of significant accounting estimates made by the directors; and the overall presentation of the financial
statements. In addition, we read all the financial and non-financial information in the Chairman’s Report and the
Report of the Directors to identify material inconsistencies with the audited financial statements. If we become
aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion the financial statements:
n give a true and fair view of the state of the Group’s and the Parent company’s affairs as at 31 March 2013 and
of the group’s profit for the period then ended;
n The Group and Parent company financial statements have been properly prepared in accordance with IFRSs as
adopted by the European Union.
Emphasis of matter – Going concern
In forming our opinion on the financial statements, we have considered the adequacy of the disclosures made in
the note 1 of the financial statements concerning the Group and Company’s ability to continue as a going concern.
In view of significance of this uncertainty we consider that it should be drawn to your attention but our opinion is
not qualified in this respect.
Neil White (Senior Statutory Auditor)
for and on behalf of Bennett Brooks & Co Ltd
Chartered Accountants & Statutory Auditors
1 Charterhouse Mews London EC1M 6BB
Date: 25 September 2013
13
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012) Consolidated Statement of Comprehensive Income
for the period 23 August 2012 to 31 March 2013
CONTINUING OPERATIONS
Revenue
Administrative expenses
OPERATING PROFIT
LOSS BEFORE INCOME TAX
Income tax
LOSS AFTER INCOME TAX
Notes
2
4
6
£
-
(73,774)
(73,774)
(73,774)
-
(73,774)
Excess of acquirer’s interest in the net fair
value of acquiree’s identifiable assets
21
210,699
PROFIT FOR THE PERIOD
OTHER COMPREHENSIVE INCOME
136,925
-
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
136,925
Profit attributable to:
Owners of the parent
Total comprehensive income attributable to:
Owners of the parent
136,925
136,925
Earnings per share expressed
in pence per share:
Basic
Diluted
8
4.46
4.46
14
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Consolidated Statement of Financial Position
31 March 2013
ASSETS
NON-CURRENT ASSETS
Goodwill
Property, plant and equipment
Investments
Deferred tax
CURRENT ASSETS
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
EQUITY
SHAREHOLDERS’ EQUITY
Share premium
Retained earnings
TOTAL EQUITY
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
TOTAL LIABILITIES
Notes
£
9
10
11
17
12
13
75,000
9,266
-
258,261
342,527
688,623
116,653
805,276
1,147,803
15
15
3,150
136,925
140,075
16
1,007,728
1,007,728
TOTAL EQUITY AND LIABILITIES
1,147,803
The financial statements were approved by the Board of Directors on 25 September 2013 and were signed
on its behalf by:
J R Blamire - Director
15
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Company Statement of Financial Position
31 March 2013
ASSETS
NON-CURRENT ASSETS
Goodwill
Property, plant and equipment
Investments
CURRENT ASSETS
Trade and other receivables
TOTAL ASSETS
EQUITY
SHAREHOLDERS’ EQUITY
Share premium
Retained earnings
TOTAL EQUITY
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
Notes
9
10
11
£
-
-
1
1
12
307,096
307,097
3,150
(33,424)
(30,274)
15
15
16
337,371
337,371
307,097
The financial statements were approved by the Board of Directors on 25 September 2013 and were signed
on its behalf by:
J R Blamire - Director
16
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Consolidated Statement of Changes in Equity
for the period 23 August 2012 to 31 March 2013
Changes in equity
Issue of share capital
Total comprehensive income
Retained
earnings
£
-
136,925
Balance at 31 March 2013
136,925
Share
premium
£
Total
equity
£
3,150
-
3,150
3,150
136,925
140,075
17
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Company Statement of Changes in Equity
for the period 23 August 2012 to 31 March 2013
Changes in equity
Issue of share capital
Total comprehensive income
Retained
earnings
£
-
(33,424)
Balance at 31 March 2013
(33,424)
Share
premium
£
Total
equity
£
3,150
-
3,150
3,150
(33,424)
(30,274)
18
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx 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
Net cash from investing activities
Cash flows from financing activities
Share issue
Net cash from financing activities
2
(8,348)
(8,348)
3,150
3,150
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
116,653
3
-
Cash and cash equivalents at end of period
3
116,653
19
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Notes
£
1
(3,148)
(3,148)
(2)
(2)
3,150
3,150
-
-
-
Consolidated Statement of Cash Flows
for the period 23 August 2012 to 31 March 2013
Cash flows from operating activities
Cash generated from operations
Net cash from operating activities
Cash flows from investing activities
Purchase of fixed asset investments
Net cash from investing activities
Cash flows from financing activities
Share issue
Net cash from financing activities
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
3
Cash and cash equivalents at end of period
3
20
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx 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
Group
Loss before income tax
Net foreign exchange
Increase in trade and other receivables
Increase in trade and other payables
Cash generated from operations
Company
Loss before income tax
Increase in amount owed by group
Increase in trade and other receivables
Increase in trade and other payables
Cash generated from operations
2.
NET CASH OUTFLOW ON ACUISITION OF BUSINESS AND SUBSIDIARIES
Consideration transferred in cash by Stirling Assynt (Acquisition) Limited
Less:
Cash and cash equivalent balances acquired
Net cash paid to acquired subsidiaries
£
(73,774)
(12,787)
(86,561)
(284,647)
493,059
121,851
£
(33,424)
(22,449)
(55,873)
(284,647)
337,372
(3,148)
(125,000)
116,652
(8,348)
3.
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
Cash and cash equivalents
31.3.13
£
116,653
23.8.12
£
-
31.3.13
£
-
23.8.12
£
-
Group
Company
The notes form part of these financial statements
21
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Notes to the Consolidated Financial Statements
for the period 23 August 2012 to 31 March 2013
1. 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.
The principal accounting policies are summarised below. They have all been applied consistently throughout the
period under review.
Application of new and revised International Financial Reporting Standards (IFRS)
a) Standards, amendments and interpretations effective in 2013 but not relevant:
The following new standards, amendments and interpretations to published standards are mandatory for account-
ing periods beginning on or after 1 April 2012 but they are not relevant to the Group’s operations:
n Amendments to IFRS 7 Disclosures - Transfer of Financial Assets
n Amendments to IAS 1 Presentation of Items of Other Comprehensive Income
n Amendment to IAS 1 (as part of the Annual Improvements to IFRSs 2009-2011 Cycle issued in May 2012)
n Amendments to IAS 12 Deferred Tax: Recovery of Underlying Assets
b) Standards, amendments and interpretations to existing standards that are not yet effective and have not been
adopted by the Group and are not relevant to the Group’s operations:
The following new standards, amendments and interpretation to existing standards were in issue at the date of
authorisation of these consolidated financial statements, but are not yet effective for the financial year ended 31
March 2013, and in some cases have not been adopted by the EU:
n IAS 19 ‘Employee Benefits’ ( as revised in 2011)
n IAS 27 ‘Separate Financial Statements’ ( as revised in 2011)
n IAS 28 ‘Investment in Associates and Joint Ventures’ (as revised in 2011)
n Amendments to IAS 32 ‘Offsetting Financial Assets and Financial Liabilities’
n Amendments to IFRSs ‘Annual Improvements to IFRSs 2009-2011 Cycle except for the amendment to IAS 1’
n IFRS 9 ‘Financial Instruments’ (Issued in 2009 and subsequent amendments in 2010)
n IFRS 10 ‘Consolidated financial statements’ (2011)
n IFRS 11 ‘Joint Arrangement’ (2011)
n IFRS 12 ‘Disclosure of Interests in Other Entities’ (2011)
n IFRS 13 ‘Fair Value Measurement’ (2011)
n IFRIC 20 ‘Stripping Costs in the Production Phase of a Surface Mine’
22
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Notes to the Consolidated Financial Statements
for the period 23 August 2012 to 31 March 2013
1. ACCOUNTING POLICIES CONTINUED
Use of estimates and judgements
The preparation of consolidated financial statements, in conformity with IFRS, requires management to make
judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts
of assets, liabilities and expenses. Actual results may differ from these estimates.
The following is the key assumption concerning the future, and other key sources of estimation uncertainty at the
end of the reporting period, that have a significant risk of causing material adjustment to the carrying amounts of
assets and liabilities within the next financial year.
(i) Goodwill
The Group follows the requirements of IAS36- Impairment of Assets, and test goodwill to determine when goodwill
is impaired. The determination requires significant judgement. In making this judgement, the Group estimates the
recoverable amount of the cash generating units to which goodwill has been allocated based on value-in use
calculations. The value-in-use calculations require the entity to estimate the future cash flows expected to arise
from the cash generating units and a suitable discount rate in order to calculate present value. For the purpose of
impairment testing, goodwill has been allocated to the Company’s cash generating unit- Stirling Assynt (Europe)
Limited.
The carrying amount of goodwill at 31 March 2013 was £75,000 and the Directors are of the opinion that no
impairment is currently considered necessary.
BASIS OF CONSOLIDATION
The consolidated financial statements comprise the financial statements of Falanx Group Limited and its subsidiar-
ies made up to 31 March 2013. Subsidiaries are fully consolidated from the date of acquisition, being the date on
which the Group obtains control, and continue to be consolidated until the date when such control ceases.
The financial statements of the subsidiaries are prepared for the same reporting period as the Parent Company,
using consistent accounting policies.
All intra-group balances, transactions, unrealised gains and losses resulting from intra-group transactions and
dividends are eliminated in full. Where the ownership of a subsidiary is less than 100%, and therefore a non-con-
trolling interest exists, any losses of that subsidiary are attributed to the non-controlling interest even if that results in
a deficit balance. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as
an equity transaction.
If the Group loses control over a subsidiary, it:
n Derecognises the assets (including goodwill) and liabilities of the subsidiary
n Derecognises the carrying amount of any non-controlling interest
n Derecognises the cumulative translation differences, recognised in equity
n Recognises the fair value of the consideration received
n Recognises the fair value of any investment retained
n Recognises any surplus or deficit in profit or loss
n Reclassifies the parent’s share of components previously recognised in other comprehensive income
to profit or loss or retained earnings, as appropriate
23
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Notes to the Consolidated Financial Statements
for the period 23 August 2012 to 31 March 2013
1. ACCOUNTING POLICIES CONTINUED
GOING CONCERN
As at 31 March 2013, the Group’s current assets exceed current liabilities by £202,452.
On 20 June 2013 Falanx Group Limited successfully listed on the London Stock Exchange’s Alternative Investment
Market (“AIM”). Subsequent to the listing, the Company has raised in total £820,000 capital through the issue of
Ordinary Shares. Further information about the event after the reporting period can be found in note 19 - Events
After the Reporting Period. The Directors are confident that even without the additional funds the Group will have
sufficient funds to continue its operations for the foreseeable future.
The Directors regularly review cash flow forecasts of the Group to determine whether the Group has sufficient cash
reserves to meet the future working capital requirements. The Board of Directors are of the opinion that the Group,
using actual secured projects, will have the necessary cash resources to meet the current working capital
requirements.
The Directors have therefore concluded that it is appropriated to prepare the consolidated financial statements on
a going concern basis.
REVENUE RECOGNITION
Revenue is recognised, when it is probable that the economic benefits will flow to the Falanx Group Limited and
when the revenue can be measured reliably, on the following bases:
(i) Consulting fees income on rendering of services to customers.
(ii) Subscription fee income is recognised on a straight line basis over the life of the contract.
The unrecognised portion is treated as deferred income and is included within trade and other payables as
deferred income.
(iii) Supply of products
Revenue in respect of the supply of products is recognised when title effectively passes to the customer.
(iv) Supply and installation contracts and supply of services
Where the outcome can be estimated reliably in respect of long-term contracts and contracts for on-going services,
revenue represents the value of work done in the period, including estimates of amounts not invoiced. Revenue in
respect of long term contracts and contracts for on-going services is recognised by reference to the stage of
completion, where the stage of completion can be assessed with reasonable accuracy. This is assessed by
reference to the estimated project costs incurred to date compared to the total estimated project costs. Revenue is
calculated to reflect the substance of the contract, and is reviewed on a contract-by-contract basis, with revenues
and costs at each divisible stage reflecting known inequalities of profitability.
24
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Notes to the Consolidated Financial Statements
for the period 23 August 2012 to 31 March 2013
1. ACCOUNTING POLICIES CONTINUED
GOING CONCERN
(v) Maintenance income
Revenues in respect of the supply of maintenance contracts are recognised on a straight line basis over the life of
the contract.
The unrecognised portion of maintenance income is included within trade and other payables as deferred income.
(vi) Training courses
Revenues in respect of training courses are recognised when the trainees attend the courses.
(vii) Interest income, in proportion to time, taking into account the principal outstanding and the effective interest
rates applicable.
BUSINESS COMBINATIONS AND GOODWILL
Business combinations are accounted for using the acquisition method. The cost of an acquisition is
measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the
amount of any non-controlling interest in the acquiree.
For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair
value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are ex-
pensed and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and pertinent
conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the
acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held
equity interest in the acquiree is remeasured to fair value as at the acquisition date through profit or loss. Any
contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent consideration, which is deemed to be an asset or liability,
will be recognised in accordance with IAS 39 either in profit or loss or as change to other comprehensive income.
If the contingent consideration is classified as equity, it shall not be remeasured until it is finally settled within
equity.
Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the
amount recognised for non-controlling interest over the fair value of the net identifiable assets acquired and
liabilities assumed.
If this consideration is lower than the fair value of the net identifiable assets of the subsidiary acquired, the
difference is recognised in profit or loss. After initial recognition, goodwill is measured at cost less any
accumulated impairment losses.
25
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012) Notes to the Consolidated Financial Statements
for the period 23 August 2012 to 31 March 2013
1. ACCOUNTING POLICIES CONTINUED
BUSINESS COMBINATIONS AND GOODWILL - CONTINUED
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date,
allocated to each of Falanx Group’s cash-generating units that are expected to benefit from the combination,
irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the
goodwill associated with the operation disposed of is included in the carrying amount of the operation when
determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured
based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.
PROPERTY, PLANT AND EQUIPMENT
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life;
n Fixtures and fittings - 33.33%
n Computer equipment - 33.33%
Property, plant and equipment are stated at acquisition cost less accumulated depreciation and any identified
impairment losses.
The gain or loss arising on the disposal is determined as the difference between the sale proceeds and the
carrying amount of the asset and is recognised in the income statement.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the
Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to
the income statement during the financial year in which they are incurred.
Depreciation on other assets is calculated using the straight-line method to allocate their cost to their residual
values over their estimated useful lives at annual rates of 33.33 per cent.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of
financial position date.
26
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Notes to the Consolidated Financial Statements
for the period 23 August 2012 to 31 March 2013
1. ACCOUNTING POLICIES CONTINUED
FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provi-
sions of the instrument.
The Group classifies its financial instruments into loans and receivables and other financial liabilities.
Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of
financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and
there is an intention to settle basis, or to realise the assets and settle the liabilities simultaneously.
Financial assets - Initial recognition and subsequent measurement
Financial assets within the scope of IAS 39 ‘Financial Instruments: Recognition and Measurement’ are classified as
financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-
for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
The Falanx Group determines the classification of its financial assets at initial recognition.
All financial assets are recognised initially at fair value plus, in the case of investments not at fair value through
profit or loss, directly attributable transaction costs.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation
or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that Falanx
Group commits to purchase or sell the asset.
(i) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. Loans and receivables include “trade and other receivables” and “cash and cash
equivalents”.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective
interest rate method (EIR), less impairment. Amortised cost is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an integral part of the EIR.
The EIR amortisation is included in finance income in profit or loss. The losses arising from impairment are
recognised in profit or loss in finance costs.
Trade and other receivables
Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Subsequent to the initial recognition, trade and receivables are measured at amortised
cost less impairment losses for bad and doubtful debts, except where the receivables are interest-free loans made
to related parties without any fixed repayment terms or the effect of discounting would be immaterial. In such
cases, the receivables are stated at cost less impairment losses for bad and doubtful debts.
Impairment losses for bad and doubtful debts are measured as the difference between the carrying amount of
financial asset and the estimated future cash flows, discounted where the effect of discounting is material.
27
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012) Notes to the Consolidated Financial Statements
for the period 23 August 2012 to 31 March 2013
1. ACCOUNTING POLICIES CONTINUED
FINANCIAL INSTRUMENTS - CONTINUED
Cash and cash equivalents
Cash and cash equivalents comprises cash at bank and in hand, demanded deposits with banks and other finan-
cial institutions that are readily convertible into known amounts of cash and are subject to an insignificant risk of
changes in value, having been within three months of maturity at acquisition.
Financial assets - Derecognition
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is
derecognised when the contractual rights to the cash flows from the asset expire, or when it transfers the financial
asset and substantially all the risks and rewards of ownership of the asset to another entity.
If the Group neither transfer nor retains substantially all the risks and rewards of ownership and continues to control the
transferred asset, it recognises its retained interest in the asset and an associated liability for amounts it may have to
pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, it continues
to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
Financial liabilities - Initial recognition and measurement
Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss,
other financial liabilities, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
The Group determines the classification of its financial liabilities at initial recognition.
All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, plus directly
attributable transaction costs.
The Group classifies its financial liabilities as other financial liabilities:
(i) Other financial liabilities
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at
amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocat-
ing interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated
future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to
the net carrying amount on initial recognition.
The Group’s other financial liabilities comprises “borrowings and trade and other payables”.
Borrowings
Borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost using the effective interest method, less any impairment losses.
Trade and other payables
Trade and other payables are initially recognised at fair value and thereafter stated in amortised cost, except
where the payables are interest-free loans made by related parties without any fixed repayment terms or the effect
of discounting would be immaterial, in which case they are stated at cost.
28
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012) Notes to the Consolidated Financial Statements
for the period 23 August 2012 to 31 March 2013
1. ACCOUNTING POLICIES CONTINUED
FINANCIAL INSTRUMENTS - CONTINUED
Financial liabilities - Derecognition
The Group derecognises financial liabilities when, and only when, its obligations are discharged, cancelled or
they expire. The difference between the carrying amount of the financial liability derecognised and the
consideration paid and payable is recognised in profit or loss.
TAXATION
Income tax expense represents the sum of the tax currently payable and deferred tax.
(i) Current tax
Current taxes are based on the results shown in the consolidated financial statements and are calculated according
to local tax rules, using tax rates enacted or substantially enacted by the statement of financial position date.
Income tax is recognised in the income statement or in equity if it relates to items that are recognised in the same
or a different period, directly in equity.
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities.
(ii) Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the
consolidated financial statements and corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for all taxable temporary differences.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax assets
and unused tax losses, to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences, and the carrying forward of unused tax assets and unused tax losses can be
utilised.
The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred tax assets to be utilised. Conversely, previously unrecognised deferred tax assets are recognised to the
extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset
to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the
asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively
enacted at the statement of financial position date.
29
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Notes to the Consolidated Financial Statements
for the period 23 August 2012 to 31 March 2013
1. ACCOUNTING POLICIES CONTINUED
FOREIGN CURRENCIES
(i) Functional and presentation currency
Items included in the financial statements of the Falanx Group are measured using the currency of the primary
economic environment in which the entity operates (the functional currency). The financial statements are presented
in £ sterling, which is the Falanx Group’s functional and presentation currency.
(ii) Translation of foreign currencies
In preparing the financial statements of each individual group entity, transactions in currencies other than the en-
tity’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the
transactions.
Transactions in foreign currencies during the year are converted at exchange rates ruling at the transaction dates.
Monetary assets and liabilities items in foreign currencies at the year end are translated at rates of exchange
ruling on the statement of financial position date. All exchange differences are dealt with in the income statement
in the period in which they arise except for:
n exchange differences on foreign currency borrowings relating to assets under construction for future productive
use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on
those foreign currency borrowings;
n exchange differences on monetary items receivable from or payable to a foreign operation for which settlement
is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which
are recognised initially in other comprehensive income and reclassified from equity to profit or loss on repayment
of monetary items.
For the purposes of presenting consolidated financial statements, the assets and liabilities of the Falanx Group’s
foreign operations are translated into Currency Units using exchange rates prevailing at the end of each reporting
period. Income and expense items are translated at the average exchange rates for the period, unless exchange
rates fluctuate significantly during the period, in which case the exchange rates at the dates of the transactions are
used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in
equity.
Goodwill and fair value adjustments on identifiable assets and liabilities acquired arising on the acquisition of a
foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of
exchange prevailing at the end of each reporting period. Exchange differences are recognised in equity.
30
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Notes to the Consolidated Financial Statements
for the period 23 August 2012 to 31 March 2013
1. ACCOUNTING POLICIES CONTINUED
SEGMENTAL REPORTING
The activities of the group are divided into operating segments in accordance with the requirements of IFRS 8
‘Operating Segments’. Operating segments are identified on the same basis that is used internally to manage and
report on performance and takes account of the organisational structure of the group based on the various services
of the reportable segments.
Internal management and reporting segment information is prepared in conformity with the accounting policies
adopted for preparing and presenting the group financial statements.
Operating segments are reported in a manner consistent with the internal reporting provided to the ‘chief decision-
maker’, who is responsible for allocating resources and assessing performance of the operating segments and
which has been identified as the Board of Directors that make strategic decisions.
EMPLOYEE BENEFITS COSTS
(i) Employee leave entitlements
Employee entitlements to annual leave, sick leave and maternity or paternity leave are not recognised until the
time of leave.
(ii) Retirement benefit scheme
The Company contributes to a personal pension plan for one of its employees and the pension charge represents
the amounts payable by the Company to the fund in respect of the period.
PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events,
it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the
amount can be made. Where the Company expects a provision to be reimbursed, the reimbursement is recognised
as a separate asset but only when the reimbursement is virtually certain.
A contingent liability is a possible obligation that arises from past events and whose existence will only be con-
firmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control
of the Group. It can also be a present obligation arising from past events that is not recognised because it is not
probable that outflow of economic resources will be required or the amount of obligation cannot be measured
reliably.
A contingent liability is not recognised but is disclosed in the notes to the financial statements. When a change in
the probability of an outflow occurs so that outflow is probable, it will then be recognised as a provision.
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by
the occurrence or non-occurrence of one or more uncertain events not wholly within the control of the Company.
Contingent assets are not recognised but are disclosed in the notes to the financial statements when an inflow of
economic benefits is probable. When inflow is virtually certain, an asset is recognised.
31
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012) Notes to the Consolidated Financial Statements
for the period 23 August 2012 to 31 March 2013
2. SEGMENTAL REPORTING
Segment information
As at 31 March 2013, the Group operates two business segments that includes Falanx Protection and Stirling
Assynt.
Falanx Protection has identified a pipeline of potential opportunities in the Middle East for physical security,
including blast protection.
Stirling Assynt provides the Assynt political and security risk briefing service and the business intelligence service.
Segment revenues and results
During the period, Falanx Protection incurred a segment loss of £30,687, which represents the licence fees and
legal fees incurred to 31 March 2013, without allocation of central administration costs, directors’ salaries and
finance cost. This is the measure reported to the chief operating decision maker for the purposes of resource
allocation and assessment of segment performance.
The business segment- Stirling Assynt was acquired on 29 March 2013 (see note 21 Business Combinations);
therefore, no segment revenue has been generated for the period 29 March 2013 to 31 March 2013.
The segment assets and liabilities at 31 March 2013 are as follows:
Segment assets
Falanx
Protection
£
-
Stirling
Assynt
£
860,545
Unallocated -
Holding companies
£
287,258
Consolidated
total
£
1,147,803
Segment liabilities
(30,687)
(514,669)
(462,372) (1,007,728)
3. EMPLOYEES AND DIRECTORS
The average monthly number of employees and directors during the period was as follows:
Directors
Subsequent to the acquisition of business from Stirling Assynt International Group Limited on
29 March 2013, the Group has 17 full time staff members as at 31 March 2013.
Directors’ remuneration
32
5
£
5,000
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Notes to the Consolidated Financial Statements
for the period 23 August 2012 to 31 March 2013
4. LOSS BEFORE INCOME TAX
The profit before income tax is stated after charging:
Depreciation - owned assets
Foreign exchange differences
5. AUDITORS’ REMUNERATION
Fees payable to the Group’s auditors for the audit of the company and its
subsidiaries’ financial statements
6. INCOME TAX
£
3,321
663
£
25,000
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.
7. LOSS OF PARENT COMPANY
The income statement of the parent company is not presented as part of these financial statements.
The parent company’s loss for the financial year was £ (33,424).
8. 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.
Basic and diluted EPS
Earnings attributable to ordinary shareholders 136,925
-
Effect of dilutive securities
Earnings
£
Weighted
average
number
of
shares
3,067,797
-
Per-share
amount
pence
4.46
-
33
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Notes to the Consolidated Financial Statements
for the period 23 August 2012 to 31 March 2013
9. GOODWILL
Group
COST
Acquisitions through business combinations (Note 21)
At 31 March 2013
NET BOOK VALUE
At 31 March 2013
£
75,000
75,000
75,000
Goodwill was recognised by Stirling Assynt (Europe) Limited on 11 April 2008, subsequent to the purchase of the
business from the director, Mr H McLeod.
As detailed in the accounting policies the Directors are required to undertake a review for impairment at least
annually and for other assets where events or changes in circumstances indicate that the carrying value of an asset
may not be recoverable. The Directors are of the opinion that no impairment is currently considered necessary.
Fixtures
and
fittings
£
Computer
equipment
£
2,500
10,087
2,500
10,087
292
3,029
292
3,029
Totals
£
12,587
12,587
3,321
3,321
2,208
7,058
9,266
10. PROPERTY, PLANT AND EQUIPMENT
Group
COST
Acquisitions through business combinations
At 31 March 2013
DEPRECIATION
Charge for period
At 31 March 2013
NET BOOK VALUE
At 31 March 2013
34
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Notes to the Consolidated Financial Statements continued
for the period 23 August 2012 to 31 March 2013
11. INVESTMENTS
Company
COST
Additions
At 31 March 2013
NET BOOK VALUE
At 31 March 2013
Details of the Company’s subsidiaries at the end of the reporting period as follows.
Name of subsidiary
Principal Activity
Place of incorporation
Shares in
group
undertakings
£
1
1
1
Proportion of
ownership interest
and voting power
held by Group
Stirling Assynt
(Acquisition) Limited
Holding of investments
British Virgin Islands
100%
Falanx Protection Limited
Blast protection,
security consultancy.
British Virgin Islands
100%
The following are the subsidiaries of Stirling Assynt (Acquisition) Limited:
Stirling Assynt
(Europe) Limited
International business
intelligence consultancy
United Kingdom
Stirling Risk (Asia) Limited
Provision of risk assessments Hong Kong
and investigation services
100%
100%
See note 21 Business Combinations for further information on the acquisition.
35
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Notes to the Consolidated Financial Statements continued
for the period 23 August 2012 to 31 March 2013
12. TRADE AND OTHER RECEIVABLES
Current:
Trade receivables
Amounts owed by group undertakings
Other receivables
Prepayments & accrued income
13. CASH AND CASH EQUIVALENTS
Bank accounts
14. CALLED UP SHARE CAPITAL
Allotted and issued:
Number:
Class:
32,500,000
Ordinary
Authorised share capital
Nominal
value:
Zero par value
Group
£
Company
£
303,867
-
300,093
84,663
-
22,449
284,647
-
688,623
307,096
Group
£
116,653
£
-
On incorporation, the Company was authorised to issue 1,000,000 Ordinary Shares with no par value.
Pursuant to a resolution of the Company passed on 11 January 2013, the maximum number of Shares the
Company is authorised to issue was increased from 1,000,000 to 200,000,000 shares.
Ordinary Shares, which has no par value, carry one vote per share and carry a right to dividends.
36
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Notes to the Consolidated Financial Statements continued
for the period 23 August 2012 to 31 March 2013
14. CALLED UP SHARE CAPITAL - CONTINUED
Issued share capital:
Number of shares issued
Share premium
Date
Share capital
Unpaid Ordinary
Shares on
incorporation
Unpaid Ordinary
Shares at
£0.00001
per share
15. RESERVES
Group
Profit for the period
Cash share issue
At 31 March 2013
Company
Deficit for the period
Cash share issue
At 31 March 2013
23 August 2012
1,000,000
15 March 2013
31,500,000
32,500,000
Retained
earnings
£
136,925
-
136,925
Retained
earnings
£
(33,424)
-
(33,424)
£
-
-
-
Share
premium
£
3,150
3,150
Share
premium
£
3,150
£
-
3,150
3,150
Totals
£
136,925
3,150
140,075
Totals
£
(33,424)
3,150
3,150
(30,274)
37
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Notes to the Consolidated Financial Statements continued
for the period 23 August 2012 to 31 March 2013
16. TRADE AND OTHER PAYABLES
Current:
Trade payables
Social security & other taxes
Other payables
Accruals & deferred income
VAT
17. DEFERRED TAX
UK Subsidiary
At 23 August 2012
Deferred tax asset (net) recognised through acquisition
-
Balance at 31 March
The deferred tax asset (net) represents:
Deferred tax asset
Deferred tax liabilities
Balance at 31 March
Group
£
Company
£
376,939
46,001
187,709
373,240
23,839
259,871
-
52,500
25,000
-
1,007,728
337,371
2013
£
258,261
258,261
260,114
(1,853)
258,261
Under IFRS, deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled, based on the tax rates (and tax law) that have been
enacted or substantively enacted by the balance sheet date.
The changes to the main rate of corporate tax for UK companies announced by Chancellor in the March 2013
Budget were substantively enacted for financial reporting purposes on 2 July 2013. The main changes in
corporation tax rates, that will have accounting implication for deferred tax, are as follows:
n The main rate of corporation tax will reduce from 23% to 21% from 1 April 2014
n The main rate of corporation tax will further reduce to 20% from 1 April 2015
The above deferred tax asset was calculated based on the expected UK main corporation tax rate of 23%, being
the rate which we expect to apply in the future when the asset is realised or when the liability is settled.
38
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Notes to the Consolidated Financial Statements continued
for the period 23 August 2012 to 31 March 2013
18. RELATED PARTY DISCLOSURES
Balances and transactions between the Company and its subsidiaries, which are the related party of the Company,
have been eliminated on consolidation and are not disclosed in this note.
Details of transactions between the Group and other related parties are disclosed below:
Transaction with Stirling Assynt International Group Limited
The Group’s Director, Karl Barclay, was the founder and Director of Stirling Assynt International Group Limited
prior to the business being acquired by Stirling Assynt (Acquisition) Limited.
Following the acquisition of the entire business, assets and undertaking of Stirling Assynt International Group
Limited, Karl Barclay has been appointed as Executive Chairman of Falanx Group Limited.
Further information about the business combinations can be found in the note 21 of these financial statements.
No amount has been outstanding between the Group and Stirling Assynt International Group Limited as at 31
March 2013.
19. EVENTS AFTER THE REPORTING PERIOD
Subsequent to 31 March 2013 the following events took place:
On 1 May 2013, Stirling Assynt (Europe) Limited signed a twelve month contract with QinetiQ appointing the
company to act as its principal sub-contractor for a second phase of a project to support the restructuring and
training of a government agency in a Middle Eastern country. The project involves implementation of the
company’s recommendations from a scoping phase.
On 20 June 2013 the Group was admitted to the Alternative Investment Market (AIM) of the London Stock Ex-
change 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.
On 19 September 2013 the Company announced that it had raised an additional £225,000 through a
subscription of 1,875,000 Ordinary Shares with warrants.
20. ULTIMATE CONTROLLING PARTY
The Directors are not aware of any ultimate controlling party as at 31 March 2013.
39
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Notes to the Consolidated Financial Statements continued
for the period 23 August 2012 to 31 March 2013
21. BUSINESS COMBINATIONS
Business and subsidiaries acquired
The Company’s subsidiary undertaking, Stirling Assynt (Acquisition) Limited, was incorporated in the BVI on 7
February 2013 for the purpose of making the acquisition of the entire business, assets and undertaking of Stirling
Assynt International Group Limited.
On 29 March 2013, the following are the subsidiaries acquired subsequent to the signing of Asset Purchase
Agreement between Stirling Assynt (Acquisition) Limited (“SAAL”) and Stirling Assynt International Group Limited
(“SAIG”):
Stirling Assynt (Europe) Limited
(“SAE”)
Proportion of voting
equity interest acquired
100%
Stirling Risk (Asia) Limited
(“SRA”)
100%
The principal activities of the above subsidiaries can be found in note 11 of these financial statements.
SAIG provides business intelligence including enhanced due diligence, crisis resolution and advice on market en-
try from offices in London and Hong Kong, and also provides political and security risk consultancy to a blue chip
client base of companies worldwide.
Through the acquisition of the entire business, assets and undertakings of SAIG by SAAL, the Group has an exist-
ing network of blue-chip clients worldwide, which take its Political & Security Risk and Business Intelligence
services.
Consideration transferred
The original loan of £125,000 made to SAIG was converted to the purchase consideration.
Assets acquired and liabilities recognised at the date of acquisition
SAIG
£
SAE
SRA
Total
£ £ £
Non-current assets
Goodwill
Property, plant and equipment
Deferred tax asset
Current assets
Cash and cash equivalents
Trade and other receivables
Current liabilities
Trade and other payables
40
-
-
-
75,000
9,266
258,261
-
-
-
75,000
9,266
258,261
2,610
104,475
1,435,540 330,595
9,567
116,652
73,381 1,839,516
- (1,544,044) (418,952) (1,962,996)
1,438,150 (766,447) (336,004) 335,699
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Notes to the Consolidated Financial Statements continued
for the period 23 August 2012 to 31 March 2013
21. BUSINESS COMBINATIONS - CONTINUED
Goodwill arising on acquisition
Consideration transferred
Less:
Fair value of identifiable net assets acquired
Excess of acquirer’s interest in the net fair
value of acquiree’s identifiable assets
Total
£
125,000
(335,699)
(210,699)
Excess of acquirer’s interest in the net fair value of acquiree’s identifiable assets
(i) A bargain purchase gain of £210,699 was made on the purchase of the assets and liabilities of SAIG
(ii) The gain arose as a result of the aquisition of the inter company debt of SAIG, which was
acquired at nil value by Stirling Assynt (Acquisition) Limited but in the opinion of the directors will be repaid
by the subsidiaries, Stirling Assynt (Europe) Limited and Stirling Risk (Asia) Limited.
Net cash outflow on acquisition of business and subsidiaries
Consideration transferred in cash
Less:
Cash and cash equivalent balances acquired
£
(125,000)
116,652
(8,348)
Impact of acquisitions on the results of the Group
No profit has been generated in the period under review. The subsidiaries were aquired on 29 March 2013.
Had these business combinations been effected at 1 April 2012, the revenue of the Group from continuing
operations would have been £1,806,747, and the profit from the continuing operations would have been
£148,611.
The directors consider these ‘pro - forma’ numbers to represent an approximate measure of the performance
of the combined group on an annualised basis and to provide a reference point for comparison in
future periods.
41
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Notes to the Consolidated Financial Statements continued
for the period 23 August 2012 to 31 March 2013
22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group is exposed through its operations to one or more of the following financial risks that arise from its use
of financial instruments. A risk management programme has been established to protect the Company against the
potential adverse effects of these financial risks.
Categories of financial instruments
The totals for each category of financial instruments and the carrying amounts, measured in accordance with IAS
39 as detailed in the policies, are as follows:
Financial Assets
As at 31 March 2013
Trade and other receivables
Cash and cash equivalents
Total
Financial liabilities
Loan and receivables
at amortised costs
Non- financial assets
Total
£
603,960
116,653
720,613
£
84,663
-
84,663
£
688,623
116,653
805,276
Trade and other payables
at amortised costs
£
Non- financial liabilities
£
Total
£
As at 31 March 2013
Trade and other payables
Total
564,648
564,648
Capital management
443,080
1,007,728
443,080
1,007,728
Total capital managed in the Group is the shareholders’ funds as shown in the statements of financial position.
The Group aims to manage its overall capital so as to ensure that it continues to operate as a going concern,
whilst providing an adequate return to its shareholders.
The Group set the amount of capital in proportion to its overall financing structure, i.e. equity and financial
liabilities. The Group manages the capital structure and makes adjustments to it in the light of changes in economic
conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure,
the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new
shares or sell assets to reduce debts.
The Group is not subject to any externally imposed capital requirements.
42
.
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Notes to the Consolidated Financial Statements continued
for the period 23 August 2012 to 31 March 2013
22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES - CONTINUED
Risk management objectives
The Group manages financial risks through a Treasury function which monitors the risks and acts accordingly. The
principal risks to which the Group is exposed are credit risk, liquidity risk and foreign exchange risk.
Credit risk
Credit risk is the risk that a counter-party will cause a financial loss to the Group by failing to discharge its
obligation to the Group.
The Group manages its exposure to this risk by applying Board approved limits to the amount of credit exposure
to any one counter-party and employs strict minimum credit worthiness criteria as to the choice of counter-party
thereby ensuring that there are no significant concentrations of credit risk.
The carrying amount of financial assets represents the maximum credit exposure; therefore, the maximum exposure
to credit risk at the balance sheet date was £720,613. The amount represents the total of the carrying amount of
current assets.
The maximum amount exposure to credit risk for trade receivables at the balance sheet date was £303,867.
As at the date of signing these financial statements, the Group does not expect to incur material credit losses of its
financial assets or other financial instruments; therefore credit exposure is considered minimal.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting these obligations associated with
financial liabilities.
The responsibility for liquidity risks management rests with the Board of Directors, which has established an
appropriate liquidity risk management framework for the management of the Group’s short term and long-term
funding and liquidity risks management requirements.
The Group manages liquidity risks by maintaining adequate reserves and reserve borrowing facilities, by
continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets
and liabilities.
The following are the areas of the Group’s exposure to liquidity risk:
Carrying amount
Due in less
Than one month
£
£
376,939
187,709
564,648
376,939
-
376,939
As at 31 March 2013
Trade payables
Other payables
Total
six months and one year
£
-
187,709
187,709
43
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
Notes to the Consolidated Financial Statements continued
for the period 23 August 2012 to 31 March 2013
22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES - CONTINUED
Foreign exchange risk
The Group’s exposure to foreign currency risk is follows. This is based on the carrying amount for monetary
financial instruments:
Financial assets
Sterling
As at 31 March 2013
Cash and cash
equivalents
Trade receivables
Other receivables
£
74,387
132,510
300,093
506,990
Financial assets
Sterling
£
US
Dollar
£
30,008
48,994
-
79,002
US
Dollar
£
Trade payables
Other payables
375,928
187,709
563,637
-
-
-
Euro
£
Australian
Dollar
£
Canadian
Dollar
£
Hong Kong Total
Dollar
£
£
81
-
51,435 3,150
-
51,516 3,150
-
-
827
-
827
12,177 116,653
66,951 303,867
- 300,093
79,128 720,613
Euro
£
-
-
-
Australian
Dollar
£
Canadian
Dollar
£
Hong Kong Total
Dollar
£
£
-
-
-
-
-
-
1,011 376,939
187,709
1,011 564,648
Foreign exchange sensitivity analysis
A 10 percent weakening of the foreign currencies against sterling would have increased/(decreased) equity and
profit/loss by £15,596 next year.
The Group currently does not utilise swaps or forward contracts to manage its currency exposures, although such
facilities are considered and may be used where appropriate in the future.
23. FINANCIAL COMMITMENTS
On 11 January 2013, Falanx Protection Limited and Environmental Recycling Technologies Plc (“ENRT”) entered
into a licence agreement, which Falanx Protection Limited agreed to pay ENRT a licence fee of $100,000 in four
instalments during 2013 and royalties equal to 5 percent of the net sales price of the product supplied by Falanx
Protection Limited in the licensed territory bi-annually, subject to an annual minimum royalty of $100,000, which is
payable from 2014 onwards.
Subject to earlier termination, the ENRT Agreement is for a period of 20 years or, if later, until the expiration of the
relevant patents on a country by country basis. Falanx Protection Limited may, however, terminate on three months’
notice at any time during the first twelve months. Upon termination Falanx Protection is free, subject to payment of
any applicable royalties, to sell or dispose of the licensed products how it chooses.
44
falanxINTELLIGENCE | TECHNOLOGY | RESILIENCEFalanx Group Limited (Registered number: 1730012)
falanx
I N T E L L I G E N C E | T E C H N O L O G Y | R E S I L I E N C E
www.falanxgroup.com:
www.falanxgroup.com
www.falanxgroup.com
4