30 May 2008
GB00B1RP7Y72/GBP/PLUS-exn
SECURE FORTRESS PLC (Tickers: PLUS: SCFP; XETRA: SFK)
FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007
CHAIRMAN'S STATEMENT
Consolidated turnover for the period was £928,111 resulting in a loss of £1,164,657. The Group's total assets
amounted to £2,128,064 at the period end.
The focus for the period under review was on taking the necessary steps to position and capitalise the Group,
while at the same time accelerating efforts to build its reputation and presence in its target marketplace.
The UK holding company was formed on 31st January 2007 and floated on the London PLUS market on 10th April
2007. A series of private equity placings took place during and after the year resulting in the introduction of
approximately £1 million of new equity investment in the holding company.
During the period, the Group undertook certain steps to strengthen its Balance Sheet. In December 2007, the
preference shareholders in Zephyr agreed to swap their holdings totalling £475,748 for equity in the parent at
12 pence per share and noteholders totalling £53,400 were repaid out of the proceeds of Equity investments in
the Holding Company. An additional £93,940 of debt due by the Holding Company's subsidiary, Zephyr
Communications, to a creditor was cancelled in return for the cancellation of the preferred shares owned in the
same. In total, £623,088 pounds of debt was retired or converted to equity as of year-end. Since the Balance
Sheet date, an additional £234,119 of new equity was issued and Convertible Unsecured Loan Notes were issued by
the parent company which has attracted additional investment of £179,000. The new notes carry a mandatory
conversion into equity on flotation on the AIM market of the London Stock Exchange. Members of the Board of
Directors and certain staff of Zephyr Communications Inc. also converted all of their company held debt of
£437,000 into the same mandatory convertible note. The various note instruments which were all classified as
short term liabilities as at the period end on the company's Balance Sheet have now all been reclassified as
long-term debt according to UK GAPP.
The Group continued its push into the government sector, culminating with the recent decision to transition the
business completely away from traditional cabling to focus exclusively on the opportunities created by its
patented Fortress product. Particular emphasis has been placed on identifying opportunities within the US
Federal Government departments as well as teaming with large commercial groups such as Kellogg Brown Root,
Northrop Grumman and General Dynamics. These efforts have already begun to prove their validity as the Group
has recently been awarded two substantial contracts. These contracts will be realized in 2008 and together
total more than quadruple the Group's entire turnover in 2007. These awards represent a welcome return on the
investment of time and effort spent during the previous two years in promoting the Fortress business, obtaining
the necessary government approvals and tendering for projects.
The challenge for the remainder of 2008 is to continue to develop the Fortress tendering pipeline, and to then
successfully translate those opportunities into awarded contracts. At the same time, the directors are looking
at developing the group's presence in the fast-growing high technology sector by the judicious acquisition of
companies with high margin products
R Berman Chairman
29 May 2008
REVIEW OF BUSINESS
The loss for the period after taxation was £1,164,657. This includes the small loss returned by the group's
trading subsidiary, Zephyr Communications Inc, at £261,689 as well as the significant costs incurred in
establishing the UK holding company, obtaining a listing on PLUS and raising working capital for the group
which resulted in a loss at that level of £728,510. The directors do not recommend the payment of a dividend. A
more detailed review is in the Chairman's Statement on page 1.
PRINCIPAL RISKS AND UNCERTAINTIES
The Company's business lies in supplying Government Departments and major companies as its customers. The
benefit of this customer base is that when contracts are awarded, after an admittedly protracted selling
process, short term profitability and cash flow can be reliably expected. For example, contracts to a value in
excess of $8 million have been awarded since the period end by Government Departments and will ensure the Group
breaks even for the current year. The risks are minimal and are principally limited to movements in raw
material prices and the performance of suppliers and subcontractors, both of which can be selected from a
number of competing entities. In the longer term, the availability of contracts can be affected by budgetary
cuts and performance delays.
Analysis of performance by reference to key performance indicators.
The most important measure of the group's performance is the profitability of its trading subsidiary. In 2007
this returned a loss of £261,689 (a year of transition from its traditional form of business to the new focus
on its high technology, higher margin products) and, on the basis of contracts unconditionally awarded to date
in 2008, can confidently be forecast to at least break even for the year ending December 2008.
FUTURE DEVELOPMENTS
The directors consider that the Company's trading subsidiary will continue to gather new contracts from its
bidding pipeline of $224 million and the holding Company will continue its search for additional high
technology, high margin acquisitions. Further details are provided in the Chairman's Statement on page 1.
The Directors of the Issuer accept responsibility for this announcement.
Financial Statements at 29 MAY 2008 at 15:56:24
SECURE FORTRESS PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE PERIOD ENDED 31 DECEMBER 2007
Period
ended
31 December
2007
£
Turnover 928,111
Cost of sales (723,569)
------------
Gross profit 204,542
Distribution costs (113,382)
Administrative expenses (1,178,804)
------------
Operating loss (1,087,644)
Investment income (2,912)
Interest payable and similar charges (74,101)
------------
Loss on ordinary activities before taxation (1,164,657)
Tax on (loss)/profit on ordinary activities -
------------
Loss on ordinary activities after taxation (1,164,657)
------------ ------------
Earnings per share
Loss per share 0.97p
Fully diluted loss per share 0.97p
The profit and loss account has been prepared on the basis that all operations are continuing
operations.
There are no recognised gains and losses other than those passing through the profit and loss
account.
Financial Statements at 29 MAY 2008 at 15:56:26
SECURE FORTRESS PLC BALANCE SHEETS
AS AT 31 DECEMBER 2007
Group Company
2007 2007
£ £
Fixed assets
Intangible assets 1,880,040 -
Tangible assets 22,205 -
Investments - 1,828,639
------------ -----------
1,902,245 1,828,639
------------ -----------
Current assets
Stocks
Debtors 37,056 -
Cash at bank and in hand 168,206 6,800
20,557 10,560
------------ -----------
225,819 17,360
Creditors: amounts falling due within one year (1,084,653) (391,857)
------------ -----------
Net current liabilities (858,834) (374,497)
------------ -----------
Total assets less current liabilities 1,043,411 1,454,142
Creditors: amounts falling due after more than one year (25,416) -
------------ -----------
1,017,995 1,454,142
------------ ----------- ------------ -----------
Capital and reserves
Called up share capital 1,206,414 1,206,414
Share premium account 976,238 976,238
Profit and loss account (1,164,657) (728,510)
------------ -----------
Shareholders' funds 1,017,995 1,454,142
------------ -----------
------------ -----------
The above figures are an abridged version of the Company's Audited accounts.
CONTACT:
Secure Fortress Plc Alex Clug aclug@securefortress.com
St Helen's Capital Plc Duncan Vasey Duncan.vasey@sthelenscapital.com
Henry L Gewanter, Public Relations, Tel: 020-7489-2028 (Office) 07774-228845 (Mobile) Email:
HenryG@PositiveProfile.com
Secure Fortress plc