|
|
|
|
|
Secure Fortress - Speculative Buy The Business Secure Fortress is a secure communications company engaged in the provision of services for the protection of information systems for a broad array of international clients. The group’s feature project, bestowed with the formidable name, ‘Fortress’, uses protected technology to enhance security and to prevent unauthorised access to systems using 'plug-and-play' devices that speed up network construction, are more secure, less expensive, and significantly easier to install in high security environments than any traditional cabling methods currently available. Fortress was originally designed and tailored to meet the security requirements of the US Department of Defense but the group has since delivered more than 200 projects, engineering more than 16 million square feet in facilities, and going forward, expects to further increase its market penetration. Secure Fortress was incorporated in January 2007 to acquire two companies, SF1 and Zephyr Communications. SF1 is a UK based company focused on providing the Fortress service, while US based Zephyr, incorporated in 1995, provides copper and fibre cabling infrastructure for its customers. Washington-based Zephyr, has already established a reputation for quality in the cabling business, both regionally and nationally, forming relationships with a number of companies, serving as their exclusive contractor. The company prides itself on being an active combatant in the developing war against cyber-terrorism and cyber-crime, which it claims are the two fastest-growing threats to the 21st century’s Internet-based communications infrastructure. Ensured security of communications is vital for government agencies and commercial corporations. In a global digital age where sensitive information is commonly shared between parties via technological mediums, the potential consequences and repercussions of certain lines of information being intercepted could be severe. Organisations attach great importance to maintaining confidentiality of information and are increasingly recognising the necessity to shore up their communication network defences. The secure communications market is therefore growing in significance and adopting a nature of necessity rather than luxury, providing a wider market to which the company can offer its services. Secure Fortress has only released one set of interim results since listing on Plus in April 2007, which, more than anything, highlighted the costs associated with floating and the establishment of the company's new London office as part of its European expansion plans. For the five months ended 30th June 2007, the group recorded turnover of £248,623 and gross profit of £40,792. However, large administrative costs dealt the company a pre-tax loss of £532,392. Turnover was lower than management forecasts, which was attributed to a delay in implementation dates of several significant contracts. Secure Fortress further revealed in its results statement that sales during the subsequent two months exceeded that of the entire reporting period, while subsidiary, Zephyr Communications continued to make good progress and was bidding on contracts worth over $55 million. This prospective pipeline is greater than had been expected and suggests the group continues to grow in confidence, as it seeks record levels of operations. The Fortress product was recently the subject of a $4 million contract award from the US Department of Justice. The contract entails the supply of Fortress secure voice and data infrastructure for all wiring and cabling of a Department of Justice facility in Houston, Texas. This latest agreement follows a $1.3 million contract award from the US Department of State to Zephyr, for the provision of secure cabling to the new American embassy complex in Macedonia. The deal involves the installation of Fortress secured voice and data infrastructure across the seven building complex. Secure Fortress claims to have a number of further tender offers under consideration and backlog of orders worth $5.5 million, to be implemented in the first half of the current year to 30th June 2008. Having secured breakthrough deals with major clients in a fairly short space of time, the company has made a good start to the current year. The long-term quality and reliability of the group's products and services are yet to be confirmed, however, the awards of such substantial contracts to the group is certainly a demonstration of confidence, especially from high profile US Government agencies. The group’s shares are priced at 9.25p, valuing the business at £11.16 million. If Secure Fortress can deliver on its current backlog of orders and obtain further deals from those it is in the process of bidding for, the group could establish a dominant position in a market with significant growth potential. Forthcoming final results and accounts should reveal much more about the group's standing however the spate of large contract wins give us some confidence that the share price can be more than justified and ahead of the numbers the stock is a speculative buy. Market: PLUS Unquoted-Analyst.com is a free-to-join website providing impartial analysis on PLUS quoted stocks. |
|
