2022 was a year of growth for Fort on all levels, foreshadowing our further development:
- 43% increase in business (up to 15 million RON)
- 17% increase in operating profit (up to 3.98 million RON)
- 20% team growth – 6 new colleagues joined us in 2022
- Diversification of revenue sources by starting a non-reimbursable funded project, which will result in the launch of an A.I. solution for the insurance and automotive industry.
Cybersecurity has been and continues to be an area of great interest worldwide, with great potential for development in the coming period. This is largely due to the increasing volume of threats faced by companies in all sectors.
It is estimated that by 2025 losses from cybercrime will reach $10.5 trillion, while the average cost of a single data breach event is around $4.35 million. This will lead to a global market for cybersecurity services of around $188 billion by 2023.
We aim to make use of this favourable context by meeting the unaddressed needs of our clients, with a view to identifying, understanding and remedying possible security gaps. Throughout 2022 we have seen a continued demand for our services, a trend we expect to continue in 2023, especially given the continued diversification of attacks and the increasing level of sophistication they have in the cyber space.
We believe that the potential for increasing the need for cybersecurity in Romania consistently exceeds the enormous potential for increasing the degree of digitization. Any digital interaction and the migration of as many services as possible into the digital realm implicitly increases the need for advice and protection against increasingly frequent cyber attacks. In addition, legislative changes are forcing public interest companies to conduct regular security audits, which is increasing the recurring business volume for cybersecurity companies like Fort.
The current business is focused on services that are delivered by the company’s experts. As a consequence, recruitment, training and retention of employees have been and still are points of utmost importance for FORT’s development and profitability.
The previous year was very prolific in terms of team consolidation, with the number of permanent employees increasing by about 20%, with 6 colleagues joining FORT. By comparison, in 2020 and 2021 the recruitment activity managed to attract at most 3 new employees each year.
The growth of the team allows to expand the number of projects delivered, increasing also the confidence of the staff in the company’s development direction. This can be seen even in 2022: we delivered a considerably higher number of projects than in the previous year. Our colleagues worked more than 60,000 hours for the safety of our customers: +50% security audit projects compared to 2021, and +35% security consulting projects.
On the other hand, there continues to be a need for recruitment, specialisation and retention of cyber security experts. Globally, it is estimated that there are around 3.5 million unfilled positions available to be addressed in 2023. This situation is also true for Fort, with the company’s growth being more of a challenge from a delivery team perspective and less of a challenge in terms of identifying and capitalizing on new sales opportunities.
In order to ensure an adequate level in terms of teams, the company has increased in 2022, but mainly in the second half of the year, its recruitment mechanisms, using in this regard collaborations with 5 “headhunting” and “talent scouting” service providers. The expenses generated by these activities, reflected in recruitment costs and in the increase of the payroll fund, amounted to 685,000 RON, an investment that is expected, for the most part, to yield results in the first half of the new fiscal year 2023.
The year 2022 marked a first for the company, generated by the start of the execution of a project co-financed by European Funds, through which an innovative solution based on artificial intelligence will be delivered. The value of the entire project is 7.34 million RON, of which the European funding represents 5.74 million RON. Compared to the total revenue in 2022, the grant funding represents about one third of the annual turnover – in other words we could not develop this project with our own resources.
In return, the project deliverables will be Fort’s intellectual property and represent the culmination of over 8 years of experience in the insurance industry, primarily in terms of instrumentation of the motor claims analysis and settlement process. The solution will provide users with the ability to automatically identify damaged elements of a vehicle and make predictions on the estimated cost of repair.
Although cybersecurity is only a tangible component of the project, Fort’s involvement was made possible thanks to the company’s long-standing collaborations in insurance and the know-how the project team has in the areas necessary for the research approach.
During 2022, the existence of the project affected the company’s profit by approximately 150,000 RON. For 2023 the financial impact of the project will be about 850,000 RON. However, as a result of the project, regular revenues of at least 250,000 RON per year are expected from 2024 onwards.
Perspectives for 2023
The company’s liquidity and financial solvency are at a good level, thanks to the positive results achieved over the previous year. As a result we will propose to the AGM to distribute a substantial dividend from the 2022 profit (60-70% of the year’s profit). Considering that FORT is a company that we expect to generate consistently positive operating cash-flow, we will suggest a dividend policy of at least 50% of annual profit upon listing.
We have started the process of selecting the broker to assist us in the listing process, together with our partners at Agista. We expect to finalize the broker selection in Q1 2023, and we are targeting a listing either in June-July 2023 or in September-October, depending on the market context and broker feedback (or Hidroelectrica listing).
Approximate budget 2023
The 2023 budget will be presented and submitted to you, the shareholders, for approval at the Annual General Meeting which we expect to be held in April, via the eVote system.
At the time of writing, the working draft of the 2023 budget looks as follows:
Achieving financial and operational objectives can only be accomplished through an efficient and highly productive organisation. To this end, 2023 will focus on the full integration of the Global Resolution Experts and ISEC teams, a process that will start in 2022. In order to achieve excellence in terms of internal organisation, Fort also aims to complete the full integration of administrative workflows into the processes and systems provided by the group. This will create the conditions for cost reductions and a rapid, thorough and effective analysis of the company’s performance indicators.
Also, in 2023 we will intensify our business development efforts by identifying new customers, mainly for recurring services offered by FORT, such as penetration testing or cybersecurity consulting. The initiation of new collaborations will also be possible through the provision of innovative or niche services, such as securing “DevOps” activities or performing audits on cyber security and resilience for companies that are part of M&A processes. 2022 brought a number of new collaborations but, given the needs of customers, the growth potential is far from being reached.
In terms of the geographical location of our clients, we aim to test an international presence, being of interest to companies operating in the financial and information technology industries, targeting mainly markets in the DACH (Germany, Austria, Switzerland), France, UK and the United States. Initial collaborations will be achieved by outsourcing certain prospecting and sales sub-processes to local partners, with the step of opening local offices to be taken after validating the potential of each market.