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 Annual Report 2015 Report and financial statements year ended 31 March 2015 FALANX GROUP LIMITED Security and cyber defence provider working with blue chip and government clients Falanx Group Limited, listed on AIM is a global intelligence, security and cyber defence provider working with blue chip and government clients internationally to protect their assets from a range of threats. The Group has three business divisions: • • • Falanx Assuria: Comprehensive cloud-based Cyber Defence services Falanx Intelligence: Political & Security Risk and Business Intelligence services Falanx Resilience: Security consultancy and protection services Falanx Assuria Falanx Assuria provides world- leading Cyber Defence solutions that provide assurance comprehensive and protection for customer data and information infrastructure using advanced, British-developed, GPG13 compliant technology. Falanx Intelligence Stirling Assynt provides Political & Security Risk and Business Intelligence services globally, giving clients the information they need to make key business decisions. Falanx Resilience Falanx Resilience offers specialist security consultancy, especially in the area of advanced ballistic and blast mitigation products, and specialist advisory, training and procurement services for government departments and agencies internationally. CONTENTS At a Glance Chairman’s Statement Directors Directors’ Report Statement of Directors’ Responsibilities 01 02 04 05 09 Corporate Governance Report Independent Auditors’ Report Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position 10 12 13 13 14 Consolidated Statement of Changes in Equity 15 Consolidated Cash Flow Statement 16 Notes to the Consolidated Financial Statements Company Information 17 36 01 Falanx Group Limited | Report and financial statements year ended 31 March 2015 CHAIRMAN’S STATEMENT In this year we have achieved significant progress towards our aim of establishing a strong foundation for future growth. Whilst the Group strategy remains the acquisition of niche security providers, exploitation of the Falanx Intelligence client base, and building on contacts in the Middle East, our firm focus now is to exploit the long-term growth potential of our Cyber Defence business. To achieve this we have invested significant resources in the Falanx Cyber Division enabling us to create an impressive operational capability and deploy a strong, experienced sales force. Falanx Cyber Falanx Cyber, operating under the Falanx Assuria brand, formally launched its new Cyber Defence managed service in March 2015 with the establishment of a well-appointed Security Operations Centre using advanced software provided under licence by our partner Assuria Limited. A £2.49m net fund-raise was concluded in May 2015 to enable the extension of Assuria software licences to April 2018 as well as to support joint development with Assuria of some new specialist software for monitoring multiple clients on the Cloud. Having established an excellent operational capability and taken on its first prestigious client (the UK Government’s CERT UK) the Division’s focus is now firmly on building revenues. This is taking longer than expected, however with our newly established professional sales team, G Cloud listing and engagement with strategic partners including Principia Underwriting, to develop a range of insurance products, ZeroDayLab, a leading provider of cyber security solutions, and Digital Shadows, the Cyber Intelligence company, we expect to make progress this year. In addition to offering the only British developed, Government compliant Protective Monitoring capability on the market, Falanx Cyber has a number of differentiators which provide significant benefits to clients: • Clients only pay for the service they receive based on a simple monthly fee. • Our highly-automated service offers a comprehensive and cost-effective capability for all types of client, including to SMEs who currently lack an affordable solution. • ‘Insider’ malicious activity is recorded in a format acceptable as evidence in court. • The service is deployed through the Cloud: no intrusive hardware is installed in client networks. Falanx Cyber’s objective within the next year is to become a key provider of protective monitoring managed services to UK Government and financial services. To achieve this we have been actively engaged in discussions with a number of potential clients on their detailed requirements over the past three months. Our pipeline also includes a major European intergovernmental agency and two overseas financial services groups. Falanx Intelligence Falanx Intelligence, operating under the Stirling Assynt brand, has been trading successfully for over seven years and has established itself as a credible and reliable provider of political and security risk assessments and business intelligence reports. In this year the division achieved profits of £225k with a profit margin of 12.7% and growth in turnover of 13.5%. Its international client base includes governments, oil and gas companies, financial services, insurance, utilities, airlines, legal firms and technology companies. Many of these are long-term clients who have remained loyal to the business over five years or more. We have further invested in the division’s sales team and expect revenues to remain solid in all areas. Services include: Assynt Services The Assynt Report is a highly-regarded, fortnightly predictive political and security risk service covering 33 countries that goes out to an extensive client base of major companies, international organisations and governments around the world. Most clients pay an annual subscription and the business achieves a high percentage of renewals. The service also provides bespoke political and security risk assessments according to client requirements for an agreed fee and seconds analysts who work alongside client companies on annually renewed contracts. Business Intelligence Service Business intelligence reports provide due diligence for clients on suppliers, acquisition targets and partners internationally. This is a project based business in which tasks often arise at short notice requiring rapid response. The business offers a highly competitive and well-regarded service and has a number of long-term clients. Falanx Resilience Falanx Resilience is a project-based consultancy operating largely in the Middle East, primarily offering training and advisory services and blast and ballistic mitigation products. Resilience has no permanent staff and consultants are brought in for specific roles when a contract is signed. As a project-based business the revenue stream is unpredictable, but contracts can be highly profitable. The business conducted a successful one-year training and advisory project in the Middle East that ended in May 2014. Although the contract was due to be renewed, as is the custom in the region, the death of the leader led to a change of ministers and a moratorium on all commercial 02 Falanx Group Limited | Report and financial statements year ended 31 March 2015 activity for a period while the new top team is established. We remain hopeful that in due course Falanx will be invited back to finish the job and we continue actively to seek other opportunities in the region. Financial Summary Falanx Group’s turnover for the year ended 31 March 2015 was £1.92 million (2014: £4.4 million), with Falanx turnover being Intelligence and Falanx Resilience’s £1.76 million (2014: £1.56 million) and £156k (2014: £2.88 million) respectively. Falanx Group’s loss before taxation for the year was £2.20 million. The Group incurred £297,000 set up costs associated with conducting commercial, legal and technical due diligence on an acquisition target, and legal costs related to Falanx resilience. Of our three Divisions, Falanx Intelligence made a pre-tax profit of £225k in the reporting year. Falanx Cyber in its build-up phase made a loss of £1.14 million in the reporting year. Falanx Resilience made a loss of £231k. Following the placing in May 2015 the Company had cash balances of £1.7 million at 30 June 2015. Summary and Outlook This has been a year of significant investment in the Group’s capabilities. In addition to its Intelligence and Resilience propositions it now has an outstanding Cyber Defence capability supported by a strong, professional sales team as a solid platform for growth. Approved by the Board on 14 July 2015 and signed on its behalf by K P A Barclay Executive Chairman 03 Falanx Group Limited | Report and financial statements year ended 31 March 2015 DIRECTORS Karl Barclay Karl Barclay (Executive Chairman) spent 6 years as the Head of Global Security and Fraud Risk for HSBC Holdings plc, where he headed a team of 3,000 responsible for combating international organised crime and terrorism. He is a Fellow of the Security Institute and a visiting lecturer at Cranfield University in Security and Risk Management. Karl spent 16 years in the Foreign and Commonwealth Office and prior to that spent 20 years in the army serving in a variety of management roles in Berlin, West Germany, Northern Ireland, Gibraltar and Hong Kong. (Non-executive Director) Desmond Carr Desmond Carr is a retired Chairman and CEO of ExxonMobil Saudi Arabia Inc after 11 years of service in the Kingdom. Desmond has 40 years of international commercial experience overseeing large capital projects requiring alignment of interests of investors, governments, international finance agencies and NGOs. He holds a First Class Bachelor of Science degree in Civil Engineering and Master of Science degree in Hydrology and Water Resources Engineering. John Blamire John Blamire (Chief Executive Officer) is a former officer of the British Army, having served in Northern Ireland, Iraq, Cyprus, Canada, USA and the Falkland Islands, gaining a wealth of operational experience. In 2001 he created a strategic-level intelligence unit within a high-risk area of Iraq, leading over 60 highly qualified intelligence personnel. After leaving the Army he co- founded Praetorian Protection Ltd, a company providing specialist services to clients in Africa. He holds a degree in Law and Business. Emma Shaw Emma Shaw (Non-executive Director) is the Managing Director of Esoteric Ltd, an Electronic Sweeping, Counter- Espionage and Intelligence gathering company. An MBA graduate, and a Chartered Security Professional (CSyP) Emma’s early career was spent with the Royal Military Police, followed by a career in the Ministry of Defence. Emma is also the former Chairman and Fellow of the Security Institute; a Board member of the Defence Industry Security Association (DISA); a Fellow of the Chartered Institute and member of the Advisory Management Council for CSARN. Iain Manley Iain Manley (Non-executive Director) is an experienced corporate financier and chartered accountant, with a successful 15 year career in capital raising in public and private markets. Iain previously worked at Coopers & Lybrand, Arthur Andersen Corporate Finance (specialising in public company M&A), Cobalt Corporate Finance, a TMT advisory firm, as well as acting as CFO of a number of private and public companies. 04 Falanx Group Limited | Report and financial statements year ended 31 March 2015 DIRECTORS’ REPORT The Directors present their report and the audited Financial Statements for the year ended 31 March 2015. Business Review The Group’s results for the period are set out in the consolidated statement of comprehensive income on page 13 of these financial statements. A review of the business, significant contracts, progress and the Group’s future prospects can be found in the Chairman’s statement. Key Performance Indicators Performance Indicator Group revenue Gross margin Description Why Measured 2015 2014 Comment Changes in total revenue compared to prior year Revenue growth gives a quantified indication of the rate at which the Group’s business activity is expanding over time Percentage of total revenue retained by the group after direct costs deduction Provides indication of sales profitability and proportion of revenue available to cover other running costs £1,922,049 £4,436,639 A decrease of 56.68% resulting from reduced revenue in the resilience segment 5.76% 31.70% Increase in variable costs mainly attributable to Cyber security operations in developmental phase EBITDA A measure of profits Offers a clearer reflection of the value of operations £(2,055,802) £21,839 Increased overhead cost largely due to the costs incurred for Cyber security operations Dividends The consolidated statement of comprehensive income for the year is set out on page 13, and shows the loss for the year. The Directors do not recommend the proposal of a final dividend in respect of the current year. Events after reporting date Information relating to events since the end of the period is disclosed in note 29 to the financial statements. 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 A Manley D P Carr E Shaw 05 Falanx Group Limited | Report and financial statements year ended 31 March 2015 DIRECTORS’ REPORT continued Directors continued Directors’ interests The Directors’ interests in the share capital of the Company at the year end were as stated below: J R Blamire K P A Barclay* I A Manley D P Carr 2015 2014 Number of shares 7,900,000 5,765,500 200,000 200,000 % Held 15.14% 11.05% 0.38% 0.38% Number of shares 7,900,000 5,765,000 200,000 200,000 % Held 19.89% 14.52% 0.39% 0.39% * Of which 2,182,500 (4.18%) are held by Dounreay Management and a further 666,666 (1.28%) 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. Directors’ remuneration Executive Directors: J R Blamire K P A Barclay Non-executive Directors: I A Manley E Shaw D P Carr Salary Benefits in kind Pension contribution 2015 Total 2014 Total 60,000 100,000 43,500 12,000 12,000 227,500 – – – – – – – – – – – – 60,000 100,000 60,000 100,000 43,500 12,000 12,000 30,500 12,000 12,000 227,500 214,500 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. In respect of the financial period ended 31 March 2015, creditors’ days have been calculated at 92 days (2014: 40 days). Political and charitable donations There were no political and charitable donations made by the Group during the year. 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 23 to the financial statements. 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. 06 Falanx Group Limited | Report and financial statements year ended 31 March 2015 Health and Safety Group companies have a responsibility to ensure that all reasonable precautions are taken to provide and maintain working conditions for employees and visitors alike, which are safe, healthy and in compliance with statutory requirements and appropriate codes of practice. The avoidance of occupational accidents and illnesses is given a high priority. Key Risks and Uncertainties The following are the risk factors associated with the Group’s business and industry: Reliance on Key Contracts and Business Relationships Several of the Group’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 Group has or anticipates having several large contracts that represent a significant proportion of its total revenue. There can be no guarantee that the Group’s major customers will continue to engage its services. Pipeline opportunities The Group has a number of major contracts in contemplation in the form of a pipeline of opportunities. However there is no certainty that these opportunities will be entered into or converted into concluded contracts or that the expected level of work will in fact if converted to contracts be awarded to the Group. In addition there can be no certainty that any contracts resulting from conversion of the opportunity will be profitable or even not loss-making. The Company may need additional access to capital in the future The Group’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 Group 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 Group’s dividend policy. In addition, there can be no assurance that the Group will be able to raise additional funds when needed or that such funds will be available on terms favourable or acceptable to the Group. If the Group is unable to obtain additional financing as needed, the Group may be required to reduce the scope of the Group’s operations or anticipated expansion or to cease trading. Management of future growth The Group’s plans for growth will challenge the Group’s management team, customer support, marketing, administrative and technological resources. If the Group is unable to manage its growth effectively its business, operations or financial condition may deteriorate. The Group will consider future acquisition opportunities. If the Group 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 Group’s expectations, the Group may have to decrease the value afforded to the acquired business or realign the Group’s structure. Going Concern On 8 May 2015 the Group announced that it had raised net proceeds of approximately £2.49 million after deducting commission and transaction related expenses through the issue of the Placing and Subscription Shares at the placing price of 14 pence per ordinary share. The Directors have reviewed forecasts and budgets based on current expected levels of expenditure and have concluded that the Group has sufficient funds available to meet its commitments for at least the next twelve months from the date of the approval of financial statements. The Directors regularly review the funding position of the Group and its cash flow forecasts. The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements. 07 Falanx Group Limited | Report and financial statements year ended 31 March 2015 DIRECTORS’ REPORT continued Information to shareholders – Website The Group has its own web site (www.falanxgroup.com) for the purposes of improving information flow to its shareholders and potential investors. Substantial shareholdings On 14 July 2015, the following were holders of 3% or more of the Group’s issued share capital: Registered holder J R Blamire Ruffer LLP K P A Barclay* K C Investments Walker Crips K Renyard R Giles Myers Portfolio Limited J Campbell-Jones Ordinary shares issued share capital Percentage of 7,900,000 7,142,857 5,765,500 5,129,944 4,677,086 3,500,000 3,077,778 3,070,977 2,440,475 11.12% 10.05% 8.11% 7.22% 6.58% 4.93% 4.33% 4.32% 3.43% * Of which 2,182,500 (3.07%) are held by Dounreay Management and a further 666,666 (0.94%) by Andrea Barclay. Save as set out above, the Directors are not aware of any other persons with a holding of 3% or more of the Group’s issued share capital. Auditors The auditors Kingston Smith LLP were re-appointed by the Audit Committee on 12 May 2015 and have indicated their willingness to continue in office. Disclosure of information to the auditors So far as the Directors are aware, there is no relevant audit information of which the Group’s auditors are unaware and they have taken all steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Group’s auditors are aware of that information. Statement of Directors’ responsibilities The statement of Directors’ responsibilities can be found on page 9 of these financial statements. The statement of Directors’ responsibilities forms part of the Directors’ report. On behalf of the Board J R Blamire Director 14 July 2015 08 Falanx Group Limited | Report and financial statements year ended 31 March 2015 STATEMENT OF DIRECTORS’ RESPONSIBILITIES The Directors are responsible for preparing the Directors’ report and the financial statements in accordance with applicable law and regulations and, as regards the Group financial statements, International Financial Reporting Standards (IFRS) as adopted by the European Union. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group 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 Group and the financial performance and cash flows of the Group for that year. In preparing these financial statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and accounting estimates that are reasonable and prudent; • state whether, in preparation of the Group financial statements, the Group has complied with IFRS as adopted by the European Union, subject to any material departures disclosed and explained in the Group financial statements; and • prepare the accounts on the going concern basis unless it is inappropriate to presume that the Group will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with all applicable legislation and as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of 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 Group’s website. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions. 09 Falanx Group Limited | Report and financial statements year ended 31 March 2015 CORPORATE GOVERNANCE REPORT Statement of Compliance Save for the Companies Act, there is no mandatory corporate governance regime in the British Virgin Islands with which the Group 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 Group’s size, assets, liabilities and other relevant information. In practice this means that the Group 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 Group in order to deliver maximum value to its shareholders. The Group holds Board meetings at least eight times each financial year and at other times as and when required. Committees The Group has in the operation the following committees: an Audit Committee, a Remuneration Committee and a Nomination Committee. Audit Committee The Audit Committee comprises Desmond Carr (Chairman), Iain Manley and Emma Shaw and meets at least two times a year. Executive Directors are permitted to attend meetings at the discretion of the Chairman of the Committee. There is an opportunity for any meeting to be in private between the Non-Executive Directors and the Company’s auditor to consider any matter they wish to bring to the attention of the Committee. The terms of reference and areas of delegated responsibility of the Audit Committee are in the consideration and approval of the following matters: • monitoring the quality and effectiveness of the internal control environment, including the risk management procedures followed by the Group; • • reviewing the Group’s accounting policies and ensuring compliance with relevant accounting standards; reviewing the Group’s reporting and accounting procedures; • ensuring that the financial performance of the business is properly measured, controlled and reported on; • reviewing the scope and effectiveness of the external audit and compliance by the Group with statutory and regulatory requirements; • approving the external auditors’ terms of engagement, their audit plan, their remuneration and any non-audit work; • considering reports from the auditor on the outcome of the audit process and ensuring that any recommendations arising are communicated to the Board and implemented on a timely basis; • reviewing the Board’s statement on internal control in the Annual Report; and • ensuring compliance with the relevant requirements of the AIM Rules. Remuneration Committee The Remuneration Committee comprises Desmond Carr (Chairman), Iain Manley and Emma Shaw 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. 10 Falanx Group Limited | Report and financial statements year ended 31 March 2015 Nomination Committee The Nomination Committee comprises Desmond Carr (Chairman), Iain Manley and Emma Shaw 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 Group. 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 discussions 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 has overall responsibility for ensuring that the Group maintains a system of internal control to provide it with reasonable assurance regarding the reliability of financial information used within the business and for publication. The Board is also responsible for ensuring that assets are safeguarded and risk is identified as early as practicably possible. As noted, the Audit Committee has a significant role in this area. The internal control systems established are designed to manage rather than completely eliminate risk and can only provide reasonable but not absolute assurance against misstatement or loss. The Group does not currently have an internal audit function and this will be kept under review as the Group progresses. The Board reviews the effectiveness of the systems of internal control and its reporting procedures and augments and develops these procedures as required to ensure that an appropriate control framework is maintained at all times. The principal control mechanisms deployed by the Group are: • Board approval for all strategic and commercially significant transactions; • detailed scrutiny of the monthly management accounts with all material variances investigated; • executive review and monitoring of key decision-making processes at subsidiary board level; • Board reports on business performance and commercial developments; • periodic risk assessments at each business involving senior executive management; • • standard accounting controls and reporting procedures; and regularly liaising with the Group’s auditor and other professionals as required. Shareholder Communication The Group’s website (www.falanxgroup.com) is the primary source of information on the Group. This includes an overview of the activities of the Group, information on the Group’s subsidiaries and details of all recent Group announcements. 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 regulations. 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 14 July 2015 and signed on its behalf by J R Blamire Director 11 Falanx Group Limited | Report and financial statements year ended 31 March 2015 INDEPENDENT AUDITORS’ REPORT to the members of Falanx Group Limited We have audited the financial statements of Falanx Group Limited for the year ended 31 March 2015 which comprise the Group Statement of Comprehensive Income, the Group Statements of Financial Position, the Group Statements of Cash Flows, the Group Statements of Changes in Equity 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 Group’s members, as a body. Our audit work has been undertaken for no purpose other than to draw to the attention of the Group’s members those matters which we are required to include in an auditor’s report addressed to them. To the fullest extent permitted by law, we do not accept or assume responsibility to any party other than the Group and Group’s members as a body, for our work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditor As explained more fully in the Directors’ Responsibilities Statement set out on page 9 the directors are responsible for the preparation 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 (APB’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 Company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness 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 Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. 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 give a true and fair view of the state of the Group’s affairs as at 31 March 2015 and of the Group’s loss for the year then ended; and • the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union. Matthew Meadows for and on behalf of Kingston Smith LLP, Statutory Auditor Devonshire House 60 Goswell Road London EC1M 7AD 14 July 2015 12 Falanx Group Limited | Report and financial statements year ended 31 March 2015 CONSOLIDATED INCOME STATEMENT for the year ended 31 March 2015 Continuing operations Revenue Cost of sales Gross profit Administrative expenses Exceptional item Operating (loss)/profit Finance income Finance costs Finance income – net (Loss)/Profit before income tax Income tax expense Loss for the year from continuing operations Loss for the year Earnings per share Basic earnings per share – continuing and total operations Diluted earnings per share – continuing and total operations Note 2015 £ 2014 £ 4 1,922,049 4,436,639 (1,811,324) (3,030,192) 110,725 1,406,447 (2,223,897) (1,397,080) 30 (92,626) (2,205,798) 8 8 9 10 10 525 – 525 (2,205,273) (217,855) (2,423,128) (2,423,128) (4.75)p (4.75)p – 9,367 122 (1) 121 9,488 (54,399) (44,911) (44,911) (0.12)p (0.12)p CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 March 2015 Loss for the year Other comprehensive income: Other comprehensive income for the year, net of tax 2015 £ 2014 £ (2,423,128) (44,911) – – – – Total comprehensive income for the year (2,423,128) (44,911) Attributable to: Owners of the parent Total comprehensive income for the year (2,423,128) (2,423,128) (44,911) (44,911) Items in the statement above are disclosed net of tax. The income tax relating to each component of other comprehensive income is disclosed in note 9. The notes on pages 17 to 35 are an integral part of these consolidated financial statements. 13 Falanx Group Limited | Report and financial statements year ended 31 March 2015 CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 March 2015 Assets Non-current assets Property, plant and equipment Intangible assets Deferred tax Current assets Inventories Trade and other receivables Cash and cash equivalents Total assets Equity Capital and reserves attributable to equity holders of the Company Share premium account Translation reserve Shares to be issued reserve Retained earnings Total equity Liabilities Current liabilities Trade and other payables Deferred tax liability Total liabilities Total equity and liabilities Note 2015 £ 2014 £ 12 13 15 16 17 18 69,964 300,167 – 370,131 56,977 660,159 428,084 1,145,220 1,515,351 9,033 30,000 203,862 242,895 33,075 1,260,306 210,414 1,503,795 1,746,690 20 2,841,797 540,964 (29,224) 91,875 21 (2,368,614) 535,834 – – 54,514 595,478 22 15 965,524 13,993 1,151,212 – 979,517 1,151,212 1,515,351 1,746,690 The notes on pages 17 to 35 are an integral part of these consolidated financial statements. The financial statements on pages 13 to 16 were authorised for issue by the Board of Directors on 14 July 2015 and were signed on its behalf by: J R Blamire Director Company number: 1730012 (British Virgin Islands) 14 Falanx Group Limited | Report and financial statements year ended 31 March 2015 CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 March 2015 Balance at 1 April 2013 Loss for the period Transactions with owners: Issue of share capital Costs of issue of share capital Balance at 31 March 2014 Balance as at 1 April 2014 Loss for the year Transactions with owners: Issue of share capital Costs of issue of share capital Translation of foreign subsidiary Retained earnings £ Translation reserve £ Shares to be Issued reserve £ Note Share premium £ 128,150 – 99,425 (44,911) – – – – – – – – – (29,224) – Total £ 227,575 (44,911) 900,956 (488,142) 595,478 – (2,423,128) 2,368,333 (67,500) (29,224) 91,875 535,834 – – – – – – – – – – 91,875 91,875 900,956 (488,142) 540,964 – – – – 54,514 – (2,423,128) 2,368,333 (67,500) – – – – – – Share options issued 11 Balance as at 31 March 2015 2,841,797 (2,368,614) (29,224) Share premium account represents the excess of the amount subscribed for share capital over the nominal value of these shares, net of share issue expenses. Share issue expenses comprise the costs in respect of the issue by the Company of new shares. Retained earnings represent the cumulative earnings of the Group attributable to the owners of the parent. The notes on pages 17 to 35 are an integral part of these consolidated financial statements. 15 Falanx Group Limited | Report and financial statements year ended 31 March 2015 CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 March 2015 Cash flows from operating activities (Loss)/Profit before tax Adjustments for: Depreciation Amortisation of intangibles Share based payment Loss on disposal of equipment/fixtures & fittings Net finance income recognised in profit or loss Changes in working capital: Increase in inventories Decrease/(Increase) in trade and other receivables (Decrease)/Increase in trade and other payables Cash used in operations Interest paid Net cash used in operating activities Cash flows from investing activities Interest received Acquisition of equipment/fixtures and fittings Acquisition of intangibles Net cash used in investing activities Cash flows from financing activities Net proceeds from issue of shares Net cash generated from financing activities Net increase in cash equivalents Cash and cash equivalents at beginning of year Foreign exchange losses on cash and cash equivalents Cash and cash equivalents at end of year Note 2015 £ 2014 £ (2,205,273) 9,367 8,862 141,134 91,875 183 (525) (1,963,744) (23,902) 600,148 (185,692) (1,573,190) – 4,972 7,500 – – 122 21,961 (33,075) (571,683) 268,484 (314,313) (1) (1,573,190) (314,314) 525 (69,923) (411,301) (480,699) 2,300,833 2,300,833 246,944 210,414 (29,274) 428,084 – (4,739) – (4,739) 412,814 412,814 93,761 116,653 – 210,414 The notes on pages 17 to 35 are an integral part of these consolidated financial statements. 16 Falanx Group Limited | Report and financial statements year ended 31 March 2015 CONSOLIDATED CASH FLOW STATEMENT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 31 March 2015 1. General information Falanx (the “Company”) and its subsidiaries (together the “Group”) operate in the security (including cyber) 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. 2. Summary of significant accounting policies The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been applied consistently to all the years presented unless otherwise stated. 2.1 Basis of preparation These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union and International Financial Reporting Interpretations Committee (“IFRIC”) interpretations. The functional and presentational currency for the financial statements is GBP Sterling. The financial statements have been prepared under the historical cost convention, as modified by the revaluation of available for sale financial assets, financial assets and financial liabilities at fair value through profit or loss. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3. 2.1.1 Going concern The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman’s Statement and Directors’ Report on pages 2 to 8. In addition, note 23 to the Financial Statements includes the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk. The Directors regularly review the funding position of the Group and its cash flow forecasts. On 8 May 2015 the Group announced that it had raised net proceeds of approximately £2.49 million after deducting commission and transaction related expenses through the issue of the Placing and Subscription Shares at the placing price of 14 pence per ordinary share. The Directors have reviewed forecasts and budgets based on current expected levels of expenditure and have concluded that the Group has sufficient funds available to meet its commitments for at least the next twelve months from the date of the approval of financial statements. The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements. 2.1.2 New and Revised Standards Standards in effect in 2015 The following new and amended standards, and interpretations are mandatory for the first time for the financial year beginning 1 April 2014 but are not currently relevant to the group (although they may affect the accounting for future transactions and events): • • • • • IFRS 10, ‘Consolidated financial statements’, effective date 1 January 2014 IFRS 11, ‘Joint arrangements’, effective date 1 January 2014 IFRS 12, ‘Disclosures of interests in other entities’, effective date 1 January 2014 IAS 32, (amendment) ‘Financial instruments presentation’ effective date 1 January 2014 IAS 36, (amendment) ‘Recoverable amount disclosures for non-financial assets’ effective date 1 January 2014 IFRS in issue but not applied in the current financial statements The following IFRS and IFRIC Interpretations have been issued but have not been applied by the Group in preparing these financial statements as they are not as yet effective. The Group intends to adopt these Standards and Interpretations when they become effective, rather than adopt them early. • • IFRS 9, ‘Financial instruments’, effective date 1 January 2018 IFRS 15, ‘Revenue from contracts with customers’, effective date 1 January 2017 A number of IFRS and IFRIC interpretations are also currently in issue which are not relevant for the Group’s activities and which have not therefore been adopted in preparing these financial statements. 17 Falanx Group Limited | Report and financial statements year ended 31 March 2015 2. Summary of significant accounting policies continued 2.2 Consolidation Subsidiaries Subsidiary undertakings are all entities over which the Group has the power to govern the financial and operating policies of the subsidiary and, therefore, exercise control. The existence and effect of both current voting rights and potential voting rights that are currently exercisable or convertible are considered when assessing whether control of an entity is exercised. Subsidiaries are consolidated from the date at which the Group obtains the relevant level of control and are de-consolidated from the date at which control ceases. The acquisition method of accounting is used for all business combinations. On acquisition, the cost is measured at the aggregate of their fair values at the date of exchange, of assets given, liabilities incurred or assumed and equity instruments issued by the Group in exchange for control of the acquire. Any costs directly attributable to the business combination are expensed as incurred. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 (Revised), “Business Combinations” are recognised at fair values at the acquisition date. Goodwill represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the difference is recognised directly in profit or loss. Any subsequent adjustment to reflect changes in consideration arising from contingent consideration amendments are recognised in profit or loss. Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. 2.3 Segment reporting In accordance with IFRS 8, segmental information is presented based on the way in which financial information is reported internally to the chief operating decision maker. The Group’s internal financial reporting is organised along product and service lines and therefore segmental information has been presented about business segments. A business segment is a group of assets and operations engaged in providing products and services that are subject to risks and returns which are different from those of other business segments. 2.4 Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group. The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the Group’s activities. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. 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: Class of revenue Subscription fee Consultancy Supply of products Maintenance income Training courses Recognition criteria straight line basis over the life of the contract on rendering of service to customers when effective title passes to the customer straight line basis over the life of the contract on delivery of training course 2.5 Taxation The tax expense for the year represents the total of current taxation and deferred taxation. The charge in respect of current taxation is based on the estimated taxable profit for the year. Taxable profit for the year is based on the profit as shown in the income statement, as adjusted for items of income or expenditure which are not deductible or chargeable for tax purposes. The current tax liability for the year is calculated using tax rates which have either been enacted or substantively enacted at the balance sheet date. 18 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continuedfor the year ended 31 March 2015Falanx Group Limited | Report and financial statements year ended 31 March 2015 Deferred tax is provided in full, using the liability method on temporary differences arising between the tax base of assets and liabilities and their carrying values in the financial statements. The deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates which have been enacted or substantively enacted at the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred income tax liability is settled. 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 reporting 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. 2.6 Foreign Currency Assets and liabilities in foreign currency are translated into sterling at the rate of exchange ruling on the reporting date. Transactions in foreign currency are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating loss. (a) 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 GBP sterling, which is the Falanx Group’s functional and presentation currency. (b) Translation of foreign currencies In preparing the financial statements of each individual Group entity, transactions in currencies other than the entity’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 reporting date. All exchange differences are dealt with in the income statement in the period in which they arise except for 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. 2.7 Property, plant and equipment All property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. All assets are depreciated in order to write off the costs, less anticipated residual values of the assets over their useful economic lives on a straight line basis as follows: • Fixtures and fittings: 5 years • Computer equipment: 3 years 19 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continuedFalanx Group Limited | Report and financial statements year ended 31 March 2015 2. Summary of significant accounting policies continued 2.8 Intangible assets Acquired intangible assets are shown at historical cost. Acquired intangible assets have a finite useful life and are carried at cost, less accumulated amortisation over the finite useful life. All charges in the year are shown in the income statement in administrative expenses. Software licences Acquired software licences are shown at historical cost. Software licences have a finite life useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight line method to allocate the cost of software licences over their estimated useful lives of 3 years. Other intangibles Acquired intangible assets are shown at historical cost. Acquired intangible assets have a finite useful life and are carried at cost, less accumulated amortisation over the finite useful life. All charges in the year are shown in the income statement in administrative expenses. Intangible assets are amortised over 10 years. 2.9 Impairment of non-financial assets Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. A review for indicators of impairment is performed annually. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Any impairment charge is recognised in the income statement in the year in which it occurs. When an impairment loss, other than an impairment loss on goodwill, subsequently reverses due to a change in the original estimate, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, up to the carrying amount that would have resulted, net of depreciation, had no impairment loss been recognised for the asset in prior years. 2.10 Inventory Inventory mainly comprises of licences held for resale. They stated at the lower of cost and net realisable value. Cost is based on purchase price and net realisable value is based on estimated selling price less disposal costs. 2.11 Financial assets The Group classifies its financial assets as cash and cash equivalents and trade and other receivables. The classification is dependent on the purpose for which the financial assets are acquired. (a) Cash and cash equivalents Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short-term deposits, including liquidity funds, with an original maturity of three months or less. For the purpose of the statement of consolidated cash flow, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. (b) Trade and other receivables These assets are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market. They arise principally from the provision of goods and services to customers. Trade receivables are initially recognised at fair value less an allowance for any uncollectible amounts. A provision for impairment is made when there is objective evidence that the Group will not be able to collect debts. Bad debts are written off when identified. 2.12 Share capital Ordinary shares of the Company are classified as equity. Costs directly attributable to issue of new shares are shown in equity as a deduction. 20 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continuedfor the year ended 31 March 2015Falanx Group Limited | Report and financial statements year ended 31 March 2015 2.13 Reserves The Group financial statements include the following reserves: share premium account, warrants reserve and retained earnings. Premiums paid on the issue of share capital, less any costs relating to these, are posted to the share premium account. 2.14 Trade payables Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value and are subsequently measured at amortised cost using the effective interest method. As the payment period of trade payables is short future, cash payments are not discounted as the effect is not material. 2.15 Leases Leases where the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases, net of any incentives received from the lessor, are charged to the income statement on a straight line basis over the term of the lease. Rental income received under operating leases is credited to the income statement on a straight line basis over the lease term. 2.16 Pensions The Company operates a defined contribution pension scheme under which fixed contributions are payable. Pension costs charged to the income statement represent amounts payable to the scheme during the year. 2.17 Share-based payments The cost of share-based payment arrangements, which occur when employees receive shares or share options, is recognised in the income statement over the period over which the shares or share options vest. The expense is calculated based on the value of the awards made, as required by IFRS 2, ‘Share-based payment’. The fair value of the awards is calculated by using the Black-Scholes option pricing model taking into account the expected life of the awards, the expected volatility of the return on the underlying share price, the market value of the shares, the strike price of the awards and the risk-free rate of return. The charge to the income statement is adjusted for the effect of service conditions and non-market performance conditions such that it is based on the number of awards expected to vest. Where vesting is dependent on market-based performance conditions, the likelihood of the conditions being achieved is adjusted for in the initial valuation and the charge to the income statement is not, therefore, adjusted so long as all other conditions are met. Where an award is granted with no vesting conditions, the full value of the award is recognised immediately in the income statement. 2.18 Provisions Provisions are recognised in the balance sheet where there is a legal or constructive obligation to transfer economic benefits as a result of a past event. Provisions are discounted using a rate which reflects the effect of the time value of money and the risks specific to the obligation, where the effect of discounting is material. Provisions are measured at the present value of expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time, value of money and the risks specific to the obligation. The increase in provision due to the passage of time is recognised as interest expense. 21 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continuedFalanx Group Limited | Report and financial statements year ended 31 March 2015 3. Critical accounting estimates and judgements The preparation of the Group Financial Statements in conformity with IFRSs as adopted by the European Union requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the present circumstances. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Group Financial Statements are disclosed below. Deferred tax asset The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the group’s future taxable income against which the deferred tax assets can be utilised. This is based on projected forecasts and budgets which are reviewed by the directors and a judgement is made as to the whether the tax asset can be recognised. Impairment of intangible assets Management have assessed indicators of impairment and conducted an impairment review of intangible assets. They have made judgements as to the likelihood of them generating future cash flows, the period over which those cash flows will be received and the costs which are attributable against them. The recoverable amount is determined using the value in use calculation. The use of this method requires the estimation of future cash flows and the selection of a suitable discount rate in order to calculate the present value of these cash flows. In support of the assumptions, management use a variety of sources. In addition, management have undertaken scenario analyses, including a reduction in sales forecasts, which would not result in the value in use being less than the carrying value of the cash-generating unit. However, if the business model is not successful, the carrying value of the intangible assets may be impaired and may require writing down. Management have exercised judgement in selecting the appropriate discount rate for application to intangible assets when carrying out impairment calculations and have applied a pre-tax discount rate of 24%. The other intangible asset detailed in note 13 is being written down over a 10 year period with a remaining useful life of 5 years. The directors feel that this is a realistic period given that the Stirling Assynt (Europe) Limited subscriber base formed from the original purchase of Assynt Associates continues to expand. Impairment of trade receivables Impairments against trade receivables are recognised where a loss is probable. As the business has a short trading history there is little historical evidence available to assess the likely level of bad debts and management have therefore based their assessment of the level of impairment on prior industry experience as well as the collection rates being experienced. The estimates and assumptions used to determine the level of provision will be regularly reviewed and such a review could lead to changes in the assumptions, which may impact the income statement in future periods. 22 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continuedfor the year ended 31 March 2015Falanx Group Limited | Report and financial statements year ended 31 March 2015 4. Segmental reporting As described in note 2, the Directors consider that the Group’s internal financial reporting is organised along product and service lines and, therefore, segmental information has been presented about business segments. The categorisation of business activities into segments has changed from analysing per company to analysing per division to be in line with the views of the chief operating decision maker as highlighted in the Chairman’s statement. 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. Reportable segments The reportable segment results for the year ended 31 March 2015 are as follows: Revenues from external customers Total revenue Operating expenses Finance income Depreciation and amortisation Intelligence £ Resilience £ 1,765,933 1,765,933 156,116 156,116 Cyber £ – – Other segments £ Total £ – – 1,922,049 1,922,049 (1,528,834) (386,970) (1,002,585) (1,059,332) (3,977,721) 394 (12,654) – – – (137,472) 131 – 525 (150,126) Segment profit/(loss) for the year 224,839 (230,854) (1,140,057) (1,059,201) (2,205,273) The reportable segment results for the year ended 31 March 2014 are as follows: Intelligence £ Resilience £ Cyber £ Revenues from external customers 1,555,826 2,880,813 Total revenue Operating expenses Finance income Depreciation and amortisation Segment profit/(loss) for the year 1,555,826 2,880,813 (1,456,353) (2,181,753) 121 (12,472) 87,122 – – 699,060 – – – – – – Other segments £ Total £ – – 4,436,639 4,436,639 (776,694) (4,414,800) – – (776,694) 121 (12,472) 9,488 Segment assets consist primarily of plant and equipment, intangible assets, inventories, trade and other receivables and cash and cash equivalents. Unallocated assets comprise deferred taxation, available for sale financial assets, financial assets held at fair value through profit or loss and derivatives. Segment liabilities comprise operating liabilities; liabilities such as deferred taxation, borrowings and derivatives are not allocated to individual business segments. 23 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continuedFalanx Group Limited | Report and financial statements year ended 31 March 2015 4. Segmental reporting continued Segment assets and liabilities as at 31 March 2015 and capital expenditure for the year then ended are as follows: Total assets Liabilities Capital expenditure Intelligence £ Resilience £ 732,809 400,403 3,206 70 226,007 – Cyber £ 507,417 162,798 478,204 Other segments £ 275,055 190,309 – Total £ 1,515,351 979,517 481,410 Segment assets and liabilities as at 31 March 2014 and capital expenditure for the year then ended are as follows: Total assets Liabilities Capital expenditure Intelligence £ Resilience £ 824,383 600,071 4,739 761,405 124,284 – Cyber £ 33,075 – – Unallocated £ 127,827 426,859 – Total £ 1,746,690 1,151,214 4,739 Geographical information The Group’s business segments operate in six geographical areas, although managed on a worldwide basis from the Group’s head office in the United Kingdom. A geographical analysis of revenue and non-current assets is given below. Revenue is allocated based on location of customer; non-current assets are allocated based on the physical location of the asset. Revenue United Kingdom Europe Australasia United States Middle East Other Countries Non-current assets United Kingdom Australasia 2015 £ 883,969 518,203 154,865 169,229 138,525 57,258 2014 £ 3,571,236 326,575 280,875 131,325 89,759 36,869 1,922,049 4,436,639 2015 £ 2014 £ 370,131 242,577 – 318 370,131 242,895 Major customers Included within revenue arising from the intelligence segment are revenues approximately £nil (2014: £2,880,813) which arose from sales to the Group’s largest customer. No other single customer contributed 10% or more to the Group’s revenue in 2015 or 2014. 5. Operating profit Operating profit for the year is stated after charging the following: Depreciation of owned property, plant and equipment Amortisation of intangibles Operating lease rentals – other 24 2015 £ 8,862 141,134 29,908 2014 £ 4,972 7,500 27,061 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continuedfor the year ended 31 March 2015Falanx Group Limited | Report and financial statements year ended 31 March 2015 6. Auditors’ remuneration During the year the Group obtained the following services from the Company’s auditors: Remuneration receivable by the Company’s auditors for the audit of consolidated and Company financial statements Remuneration receivable by the Company’s auditors and its associates for the supply of other services to the Company and its associates, including remuneration for the audit of the financial statements of the Company’s subsidiaries: – the audit of the Company’s subsidiaries pursuant to legislation – other services pursuant to legislation – tax services 7. Employee benefit expense Wages and salaries, including termination benefits Social security costs Other pension costs Share options granted to employees 2015 £ 18,500 2014 £ 17,500 15,500 16,930 4,500 55,430 7,500 8,250 – 33,250 2015 £ 2014 £ 1,386,954 1,309,428 139,863 7,077 91,875 128,088 6,148 – 1,625,769 1,443,664 The average monthly number of employees, including Directors, employed by the Group during the year was: Researchers & analysts SOC operations & analysts Sales Administration and management Directors’ emoluments Emoluments, including benefits in kind Pension costs The emoluments of the highest paid Director were as follows: Emoluments, including benefits in kind Pension costs 2015 2014 9 2 2 13 26 7 – 2 12 21 2015 £ 2014 £ 227,500 214,500 – – 227,500 214,500 2015 £ 2014 £ 100,000 100,000 – – 100,000 100,000 25 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continuedFalanx Group Limited | Report and financial statements year ended 31 March 2015 8. Finance income and costs Interest received Interest payable – other Net finance income recognised in profit/(loss) 9. Income tax expense Group Current tax Current tax on profits for the year Total current tax Deferred tax Deferred tax charge for the year Total deferred tax Income tax expense 2015 £ 525 – 525 2015 £ – – 2014 £ 122 (1) 121 2014 £ – – 217,855 217,855 217,855 54,339 54,399 54,399 The tax charge for the year is different from the standard rate of corporation tax in the United Kingdom of 20%. The difference can be reconciled as follows: (Loss)/Profit before tax 2015 (2,205,273) Tax calculated at the applicable rate based on the profit for the year 20% (2014: 20%) (441,054) Tax effects of: Creation/(Utilisation) of tax losses Expenses not deductible for tax purposes Accelerated capital allowances Re-measurement of deferred tax Short term timing differences Tax charge 406,247 33,035 – – 1,772 – 2014 9,488 1,898 (5,112) 3,308 (853) 55,158 – 54,399 26 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continuedfor the year ended 31 March 2015Falanx Group Limited | Report and financial statements year ended 31 March 2015 10. Basic and diluted earnings per share Basic earnings per share is calculated by dividing the profit/(loss) attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year. There are no dilutive share options at present as these would currently increase the loss per share. Earnings attributable to equity holders of the Company (£) Weighted average number of ordinary shares in issue Basic and diluted loss per share (pence per share) 2015 (2,423,128) 2014 (44,911) 50,992,482 37,343,121 (4.75) (0.12) Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue to assume the conversion of all dilutive potential ordinary shares. The Company’s dilutive potential ordinary shares arise from warrants. In respect of the warrants, a calculation is performed to determine the number of shares that could have been acquired at fair value, based upon the monetary value of the subscription rights attached to the outstanding warrants. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the warrants. At the year ended 31 March 2015, the potentially dilutive ordinary shares were anti-dilutive because the Group was loss- making. The basic and diluted earnings per share as presented on the face of the income statement are therefore identical. All earnings per share figures presented above arise from continuing and total operations and, therefore, no earnings per share for discontinued operations is presented. 11. Share based payment expense The Company operates share-based payment arrangements to remunerate key employees in the form of a share option scheme. Vesting of the options is conditional on the completion of three years’ service from the date of grant of the options (the vesting period). The exercise price of the option is normally equal to the market price of an ordinary share in the Company at the date of grant. The options may be exercised over periods ranging from one to ten years from the date of grant and lapse if not exercised by that date. 2015 2014 At 1 April Granted Forfeited Exercised Expired At 31 March Average exercise price (pence) – Options – 42.88 2,106,583 – – – – – – 42.88 2,106,583 – – – – – – Average exercise price (pence) Options Share options outstanding at the end of the year have the following expiry date and exercise prices: Expiry date – 31 March 2016–2023 2024 2024 Exercise price (pence) – 44.5 28.0 Shares 2015 – 1,899,440 207,143 2,106,583 – – – – – – 2014 – – – – The weighted average fair value of the 2,106,583 options granted during the year was determined using the Black-Scholes option pricing model and was 10.70 pence per option. The significant inputs to the model were exercise price as shown above, an expected option life of three and a half years, expected volatility of 50% and a risk-free rate of return estimated between 1.2% and of 1.59%. The volatility is based on analysis of the volatility of the company’s historical share price. The total share-based payment expense recognised in the income statement in respect of share options granted to Directors and employees is £91,875. 27 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continuedFalanx Group Limited | Report and financial statements year ended 31 March 2015 12. Property, plant and equipment Fixtures and fittings £ Computer equipment £ Cost At 1 April 2014 Additions Disposals At 31 March 2015 Depreciation At 1 April 2014 Charge for the year Released on disposal At 31 March 2015 Net book value At 31 March 2015 At 31 March 2014 13. Intangible assets Cost At 1 April 2014 Additions Disposals At 31 March 2015 Amortisation and impairment At 1 April 2014 Amortisation charge for year Impairment charge At 31 March 2015 Net book value At 31 March 2015 At 31 March 2014 Total £ 17,326 70,110 (475) 86,961 8,293 8,862 (158) 14,149 26,885 (475) 40,559 7,377 7,506 (158) 14,725 16,997 25,834 6,772 69,964 9,033 3,177 43,225 – 46,402 916 1,356 – 2,272 44,130 2,261 Software licence Other intangibles £ – 75,000 411,301 – – – Total £ 75,000 411,301 – 411,301 75,000 486,301 – 133,634 – 45,000 7,500 – 45,000 141,134 – 133,634 52,500 186,134 277,667 – 22,500 30,000 300,167 30,000 The other intangible asset arose as a result of the purchase of Assynt Associates by Stirling Assynt (Europe) Limited in April 2008. The customer base acquired consisted of a number of companies that subscribed to the Stirling Assynt (Europe) reporting service. 28 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continuedfor the year ended 31 March 2015Falanx Group Limited | Report and financial statements year ended 31 March 2015 Impairment review The Group has undertaken impairment review of cash generating units (CGU’s) and identified CGU subject to impairment testing, listed below. Business Cyber Security Subsidiary Falanx Assuria Limited Management performed impairment testing of software licenses at the balances sheet date. The recoverable amount of software licenses relating to this operation is determined based on a value in use calculation which uses future cash flow projections over the estimated useful life (see note 2.8). Key assumptions Cyber Security In determining value in use, financial and business forecasts have been prepared by management and approved by the Board. These forecasts also indicate growth rates that increase by various rates throughout the forecasted period. Management used pre-tax discount rate of 24% in estimating the value in use. The key assumption used in the value in use calculations is the level of future cash flows estimated by management over the budget period, which does not exceed 2 years. Management notes that a 5 % increase in the discount rate or a 15% reduction in expected revenues would not give rise to impairment. Following the impairment testing of the CGU Directors do not believe that the carrying value of software licences need to be impaired and, hence, no charge has been made. However, if the business model is not successfully implemented, the carrying value of the intangible may be impaired and may require writing down in the future. 14. Subsidiaries Principal subsidiaries The Company holds more than 20% of the share capital of the following companies: Name Country of incorporation Nature of business Stirling Assynt (Acquisition) Limited British Virgin Islands Holding of investments Stirling Assynt (Europe) Limited England and Wales Stirling Risk (Asia) Limited Hong Kong International business intelligence consultancy Provision of risk assessments and investigation services Falanx Assuria Limited England and Wales Cyber defence solution Falanx Protection Limited British Virgin Islands Blast protection and security consultancy FG Consulting Services DMCC United Arab Emirates Management consultancy Falanx (UK) Limited England and Wales Dormant Proportion of ordinary shares held by parent 100% 100% 100% 100% 100% 100% 100% Falanx Assuria Limited was incorporated on 14 April 2014 and FG Consulting Services DMCC was incorporated on 7 July 2014. 29 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continuedFalanx Group Limited | Report and financial statements year ended 31 March 2015 15. Deferred taxation UK Subsidiary Balance at 1 April Deferred tax asset (net) recognised through acquisition Charge to the income statement Effect of change in tax rate in the income statement Balance at 31 March The deferred tax asset (net) represents: Deferred tax asset Deferred tax liability 2015 £ 2014 £ 203,862 258,261 – – (217,855) (54,399) – – (13,993) 203,862 2015 £ – (13,993) (13,993) 2014 £ 205,605 (1,743) 203,862 The deferred tax liability relates to accelerated capital allowances on capital expenditure. In the year ended 31 March 2014, the deferred tax asset was recognised on the expectation of related entities generating sufficient trading profit. 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 above deferred tax liability was calculated based on the expected UK corporation tax rate of 20%, being the rate which we expect to apply in the future when the liability is settled. 16. Inventories Work in progress Finished goods 17. Trade and other receivables Trade receivables Less: provision for doubtful receivables Other receivables Prepayments and accrued income The current portion of trade and other receivables is stated at fair value. 30 2015 £ 23,902 33,075 56,977 2014 £ – 33,075 33,075 2015 £ 2014 £ 263,447 1,035,537 (6,225) 257,222 158,067 244,870 660,159 – 1,035,537 28,900 195,869 1,260,306 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continuedfor the year ended 31 March 2015Falanx Group Limited | Report and financial statements year ended 31 March 2015 18. Cash and cash equivalents Cash at bank and in hand Cash and cash equivalents in statement of cash flows 19. Share capital 2015 £ 428,084 428,084 2014 £ 210,414 210,414 2015 2014 Number of shares Nil par value Number of shares Nil par value Allotted, called up and fully paid at the beginning 39,704,583 New shares issued 12,472,221 52,176,804 – – – 32,500,000 7,204,583 39,704,583 – – – On 17 April 2014 the Company issued 11,166,667 at 18 pence each raising £2,010,000. Subscription proceeds were used to support the development and general working capital requirements of Falanx’s international Cyber Security proposition. A further 277,778 ordinary shares valued at £50,000 were issued conditional upon admission in consideration for services in connection with the subscription. The Company also announced the issue of warrants to subscribe for 5,583,334 shares at an exercise price per of 30 pence per share with an exercise period of 3 years from 17 April 2014. On 28 July 2014 the Board resolved to issue share options to employees under the EMI scheme. The share option pool will be no larger than a number equal to 10% of the total number of shares in issue. On 7 August 2014 the Company issued 13,888 ordinary shares at 30 pence each from the exercise of warrants. On 1 December 2014 the Company issued 1,013,888 ordinary shares at 30 pence each from the exercise of warrants. At 31 March 2015 a total of 5,493,058 warrants issued to various shareholders remained outstanding. 937,500 were issued at an exercise of price of 18 pence per share expiring on 23 September 2016 and the remaining 4,555,558 were issued at an exercise price of 30 pence expiring on 17 April 2017. 20. Share Premium At 1 April Premium on issue of shares Costs of share issue At 31 March 21. Retained earnings At 1 April Loss for the year At 31 March 2015 £ 540,964 2,368,333 (67,500) 2,841,797 2015 £ 54,514 (2,423,128) (2,368,614) 2014 £ 128,150 900,956 (488,142) 540,964 2014 £ 99,425 (44,911) 54,514 31 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continuedFalanx Group Limited | Report and financial statements year ended 31 March 2015 22. Trade and other payables Trade payables Other payables Taxation and social security Accruals and deferred income 2015 £ 458,333 11,619 45,478 450,094 965,524 2014 £ 329,669 326,412 118,330 376,801 1,151,212 Included in other payables is a 2015: £nil (2014: £300,000) advance receipt for ordinary shares subscription. The shares were issued on 17 April 2014 (see note 19). 23. Financial instruments 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. Market risk The main risks arising from the Group’s financial instruments are liquidity risk, credit risk and foreign currency risk. The Directors regularly review and agree policies for managing each of these risks and are set out in the subsections below. 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: Loans and receivables Trade and other receivables Cash and cash equivalents Trade and other payables Trade and other payables 2015 £ 285,903 428,084 713,987 2015 £ 469,952 469,952 2014 £ 1,064,437 210,414 1,274,851 2014 £ 656,081 656,081 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 requirements. The Group manages liquidity risks by maintaining adequate reserves by continuously monitoring monthly expected forecasts and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. 32 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continuedfor the year ended 31 March 2015Falanx Group Limited | Report and financial statements year ended 31 March 2015 The trade and other payables maturity profile, based on contractual undiscounted cash flows, of the Group is as follows: Trade and other payables due in: Less than one month Six months to one year Total 2015 £ 2014 £ 460,785 9,167 469,952 329,669 326,412 656,081 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 anyone 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 £713,987 (2014: £1,274,851). 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 £257,222 (2014: £1,035,537). 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. Credit quality of financial assets The Group’s credit risk is mainly attributable to trade receivables. The Group’s customers are spread across a wide range of industries and service sectors and consequently the Group is not exposed to material concentrations of credit risk on trade receivables with there being a preponderance of blue chip companies. The credit quality of financial assets can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates: Cash at bank and short term deposits Counterparties with external credit rating (Moody’s) A2 Barclays Bank plc Aa2 HSBC Bank Baa2 Mashreq Bank Total 2015 £ 2014 £ 10,263 365,601 51,162 427,026 73,550 136,864 – 210,414 33 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continuedFalanx Group Limited | Report and financial statements year ended 31 March 2015 23. Financial instruments continued Foreign currency risks The Group’s exposure to foreign currency risk is as follows. This is based on the carrying amount for monetary financial instruments: Financial assets At 31 March 2015 Cash and cash equivalent Trade receivables Other receivables Financial liabilities At 31 March 2015 Trade payables Other payables Sterling £ US Dollar £ Euro £ Canadian Dollar £ Hong Kong Dollar £ Total £ 149,585 204,524 23,194 75,247 42,138 201,603 10,173 – – 377,303 117,385 211,776 – 387 – 387 1,649 428,084 – 257,222 5,487 7,136 28,681 713,987 Sterling £ US Dollar £ Euro £ Canadian Dollar £ Hong Kong Dollar £ Total £ 423,741 11,619 435,360 32,366 – 32,366 2,226 – 2,226 – – – – – – 458,333 11,619 469,952 Foreign exchange sensitivity analysis A 10 percent strengthening of £ sterling against the above currencies would increase the loss by £30,209 (2014: £14,192) in the coming financial 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. 24. Capital risk management Total capital managed in the Group is the shareholders’ funds as shown in the statement 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. Other risks management The Group operations expose it to a variety of financial risks that include the effects of changes in interest rates, liquidity risk and credit risk. Given the size of the Group, the Directors have not delegated the responsibility of monitoring financial risk management to a sub-committee of the Board. The policies set by the Board of Directors are implemented by the Group’s finance department. 34 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continuedfor the year ended 31 March 2015Falanx Group Limited | Report and financial statements year ended 31 March 2015 25. Pension The Group does not operate a Group pension scheme. However, one of its subsidiaries, Stirling Assynt (Europe) Limited, contributes 8% of the gross salary of one of its Directors to a pension scheme of the Directors’ choice. Total contribution for the year £6,400 (2014: £6,148). 26. Financial commitments The Group’s total obligations under operating leases are as follows: Due within one year Between two and five years 2015 £ 70,115 27,625 97,740 2014 £ 21,196 47,125 68,321 Operating lease payments represent rentals payable by its subsidiaries (Stirling Assynt (Europe) Limited and Falanx Assuria Limited) for its office premises at The Europoint Centre in London and Green Park in Reading. 27. Control No ultimate party controls Falanx Group Limited. 28. Related party transactions The following transactions were carried out with related parties during the year: Key management compensation Key management includes Directors (Executive and Non-executive) and members of the Executive Committee. £nil (2014: £10,000) representing remuneration to J R Blamire, the Chief Executive Officer (director of the company), was paid to Kay Reynard (his sibling and a shareholder). Payment for services Andrea Barclay, the partner of K P A Barclay, Executive Chairman was paid £10,650 (2014: £11,862.50) in respect of research and report writing for the 100% owned subsidiary Stirling Assynt (Europe) Limited. Fees and commissions On 18 August 2014 the Company signed an agreement with KC Investments (a shareholder) to pay £28,750 being a 5% commission on funds raised from third parties in September 2013 and April 2014. Of this amount £17,500 has been included in the accounts for the year under review (2014: £11,250). 29. Events after the reporting period Equity transactions On 8 May 2015 the Company announced the issue of 18,878,564 new ordinary shares of no par value at a price of 14 pence each raising net proceeds of £2.49m after deducting commission and transaction related costs. £500,000 of the subscription proceeds to be used to extend the global licence agreement with Assuria with the remainder to be used for continued sales and marketing development of Falanx’s cloud-based cyber managed services. 30. Exceptional items During the year the Group settled a legal dispute with a consultant sub-contractor. The Group incurred £92,626 in legal fees and settlement costs. 35 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continuedFalanx Group Limited | Report and financial statements year ended 31 March 2015 COMPANY INFORMATION Company number 1730012 (British Virgin Islands) Registered office PO Box 173 Kingston Chambers, Road Town Tortola, British Virgin Islands Registered Agents Maples Corporate Services (BVI) Limited PO Box 173 Kingston Chambers, Road Town Tortola, British Virgin Islands Auditors Kingston Smith LLP Devonshire House 60 Goswell Road London EC1M 7AD Nominated adviser Charles Stanley Securities 131 Finsbury Pavement London EC2A 1NT Bankers Barclays Bank PLC UK Banking 1 Churchill Place London E14 5HP Solicitors Hamlins LLP Roxburghe House 273–287 Regent Street London W1B 2AD Registrars Computershare Investor Services (BVI) Limited Woodbourne Hall PO Box 3162 Road Town, Tortola British Virgin Islands VG1110 36 Falanx Group Limited | Report and financial statements year ended 31 March 2015 COMPANY INFORMATION 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 Unit 12, Europoint Centre 5 – 11 Lavington Street London SE1 0NZ Telephone: 0207 856 9457 Email: info@falanxgroup.com