TIDMCMG
RNS Number : 9160W
Croma Group PLC
29 November 2010
CROMA GROUP PLC
("Croma" or "the Group")
FINAL RESULTS
FOR THE YEAR TO 30TH JUNE 2010
The Board of Croma, the AIM listed asset protection, avionics,
and access security and installation systems specialist, is pleased
to announce its final results for the year to 30th June 2010 which
reflect a further improvement in trading and operating profit and
an increased pre tax profit.
KEY POINTS
-- A pre tax profit of GBP90,227 compared to GBP11,711 in the
previous year.
-- Turnover increasing by 8% to GBP7.04 million.
-- An improvement in gross profit of GBP234,892 and improvement
in operating profit of GBP44,996.
-- The effect of contract wins not fully reflected in 2010
accounts and will impact on current year.
-- The cash generation from operating businesses has improved
significantly and all are profitable.
-- Discussions continuing over potential sale of RDDS Avionics
subsidiary.
Nick Hewson, Non-Executive Chairman of Croma, said "The year
represented another year of steady and positive progress. The
successful restructuring of the Group has now been completed and we
can for the first time show two successive years of profitable
results. The three key business areas of the Group, asset
protection including man guarding and key holding (Vigilant),
avionics (RDDS), and access security and installation systems
(Photobase), all showed their strengths during the period.
Perhaps the most telling point to make about the three
businesses is the level to which all three continue to report
strong sales despite the current economic climate. Overall, margins
have improved, although certain of the new business of the avionics
subsidiary, RDDS, carries lower margins, but it spreads the
customer net wider, which is a positive step in these markets."
An electronic copy of the annual report is available from the
Group's website www.cromagroup.co.uk and copies have been sent to
shareholders together with the Notice of AGM.
For further information, contact;
Sandy Fraser, Brewin Dolphin (NOMAD) Tel: 0845 213 2072
Sebastian Morley, Croma Group Tel: 07768 006909
PLC, CEO
CHAIRMAN'S STATEMENT
FOR THE YEAR ENDED 30 JUNE 2010
I have pleasure in announcing the results of the Group for the
year ended 30 June 2010.
Financials
The year represented another year of steady and positive
progress. The successful restructuring of the Group has now been
completed and we can for the first time show two successive years
of profitable results.
Sales improved comfortably during the year reaching over GBP7m
against GBP6.52m for 2009. Gross profit was increased to GBP2.19m
(2009: GBP1.95m) and profit from operations was ahead at GBP292k
(2009: GBP247k). Due to lower finance charges, the pre-tax profit
for the year was over GBP90k against the prior year at GBP12k.
The profit attributable to shareholders for the year is
GBP90,227 due to no tax charge for the year, against the profit
attributable for 2009 of GBP52,902 which was assisted in part by a
GBP41k tax credit. Due to the continued improvement in trading, we
have now exhausted most of our tax losses within the subsidiaries,
and we expect to have a higher effective tax rate in future
periods.
Business Review and outlook
The three key business areas of the Group, asset protection
including man guarding and key holding (Vigilant), avionics (RDDS),
and access security and installation systems (Photobase), all
showed their strengths during the period and the financial results
of those business are set out in more detail in the Directors'
Report.
Perhaps the most telling point to make about the three
businesses is the level to which all three continue to report
strong sales despite the current economic climate. Likewise,
margins have improved, although certain of the new business of the
avionics subsidiary, RDDS, carries lower margins, but it spreads
the customer net wider, which is a positive step in these
markets.
The Vigilant security business won its largest ever contract
during the period and the success of the implementation of that
contact and its geographical location in the South of England,
together with the fact that it is an important contract with the
private sector, both widens the national reach of the business as
well as broadens the client base away from MOD and quasi-government
or local government business which the Board currently feels may be
more under threat from potential central government initiatives to
find cost savings in budgets generally from April 2011.
The new business won by Vigilant, worth over GBP3.5m on an
annualised basis, has only contributed to the period under review
since May 2010 so we can expect that new business to make a
considerable difference to the results to the half year to December
2010 and the full year to June 2011 and of course thereafter.
The Board is constantly reviewing opportunities to improve the
effectiveness and efficiencies within the three subsidiaries, as
well as considering more strategic opportunities as and when they
may arise. After the year end, the Board took the decision to
target the facilities services sector as the engine of the Group's
future growth, primarily based upon the continuing success of
Vigilant in expanding its spread of clients and contracts. We
announced on 28 July 2010 that we had entered into discussions to
sell the RDDS subsidiary, and talks are ongoing in this respect and
I look forward to reporting further progress in due course.
The restructuring of the business has enabled Croma to perform
robustly in challenging times and the Group has continued to grow
profitability and improve cash flows. The Group has taken the
opportunity to repay more expensive non convertible loan finance in
the period under review and as discussed more fully in the notes to
the accounts is actively considering the most appropriate means of
managing the upcoming redemption dates on its convertible loan
notes which may be assisted by the banking sector which is now
offering finance at more sensible rates.
The Group is now profitable and well placed to act when and
where the right opportunities come along. The success of our new
business gained over the period under review is testament to this.
This is in no small way due to the efforts of our management and
staff and I thank them wholeheartedly.
Nick Hewson
Non-executive Chairman
26 November 2010
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2010
2010 2009
GBP GBP
Revenue 7,036,860 6,519,436
Cost of sales (4,848,573) (4,566,041)
------------- -------------
Gross profit 2,188,287 1,953,395
Administrative expenses (1,896,394) (1,706,498)
------------- -------------
Profit from operations 291,893 246,897
Finance income - 2,231
Finance expense (201,666) (237,417)
------------- -------------
Profit before tax 90,227 11,711
Tax credit - 41,191
------------- -------------
Profit and total comprehensive
income 90,227 52,902
------------- -------------
Profit for the year and
total comprehensive income
attributable to owners
of the parent 90,227 52,902
------------- -------------
Earnings per share for
profit attributable to
the ordinary equity holders
of the parent during the
year
Basic and diluted (pence) 0.05 0.03
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2010: COMPANY NUMBER 3184978
2010 2010 2009 2009
GBP GBP GBP GBP
Assets
Non-current assets
Property, plant and
equipment 233,863 180,653
Goodwill 2,148,650 2,148,650
------------ ------------
2,382,513 2,329,303
Current assets
Inventories 189,385 282,035
Trade and other
receivables 2,271,121 1,720,618
Cash and cash
equivalents 187,248 3,674
---------- ------------
2,647,754 2,006,327
------------ ------------
Total assets 5,030,267 4,335,630
Liabilities
Non-current liabilities
Convertible loan notes (379,856) (1,339,120)
Provisions (28,900) (15,000)
Trade and other
payables (32,162) -
Deferred tax (1,373) (2,828)
---------- ------------
442,291 1,356,948
Current liabilities
Convertible loan notes (965,068) -
Trade and other
payables (313,412) (353,926)
Tax (450,609) (241,325)
Accruals and deferred
income (413,853) (358,660)
Bank overdrafts and
loans (632,342) (561,383)
---------- ------------
(2,775,284) (1,515,294)
Total liabilities 3,217,575 2,872,242
============ ============
Net assets 1,812,692 1,463,388
============ ============
Issued capital and
reserves attributable
to owners of the
parent
Share capital 189,338 177,384
Share premium 247,123 -
Profit and loss reserve 1,188,150 1,097,923
Other reserves 188,081 188,081
------------ ------------
Total equity 1,812,692 1,463,338
============ ============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2010
2010
Profit and
Share Share loss Other Total
Capital Premium reserve Reserve equity
GBP GBP GBP GBP GBP
At 1 July 2009 177,384 - 1,097,923 188,081 1,463,388
---------------- ------------ ------------ ------------ -------- ----------
Changes in
equity for
year 11,954 247,123 - - 259,077
---------------- ------------ ------------ ------------ -------- ----------
Profit and
total
comprehensive
income for the
year - - 90,227 - 90,227
------------ ------------ ------------ -------- ----------
Total
recognised
income and
expense for the
year - - 90,227 - 90,227
Balance at 30
June 2010 189,338 247,123 1,188,150 188,081 1,812,692
============ ============ ============ ======== ==========
2009
Profit and
Share Share loss Other Total
Capital Premium reserve Reserve equity
GBP GBP GBP GBP GBP
At 1 July 2008 9,161,453 1,388,522 (9,274,118) 188,081 1,463,938
Profit and
total
comprehensive
income for the
year - - 52,902 - 52,902
------------ ------------ ------------ -------- ----------
Total
recognised
income and
expense for the
year - - 52,902 - 52,902
Capital
reduction and
re-organisation (8,984,069) (1,388,522) 10,372,591 -
Share option
credit - - (53,452) - (53,452)
Balance at 30
June 2009 177,384 - 1,097,923 188,081 1,463,388
============ ============ ============ ======== ==========
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 30 JUNE 2010
2010 2009
GBP GBP
Cashflows from operating activities
Profit before taxation 90,227 11,711
Adjustments for:
Depreciation 75,516 44,499
Loss on sale of property, plant and
equipment 6,706 8,077
Amounts relating to share based payments - (53,452)
Onerous lease provision 13,900 15,000
Financial income - (2,231)
Financial expenses 201,666 237,417
----------- -----------
Cashflows from operating activities
before changes
in working capital and provisions; 388,015 261,021
Decrease in inventories 92,650 17,284
Increase in trade and other receivables (550,503) (236,215)
Increase/(decrease) in trade and
other payables 217,803 (191,187)
__________ __________
Cash generated from operations 147,965 (149,097)
Interest received - 2,231
Interest paid (158,995) (194,145)
Income taxes - 28,603
__________ __________
Net cashflows used in operating activities (11,030) (312,408)
Investing activities
Purchase of property, plant and equipment (139,432) (52,817)
Proceeds on disposal of property,
plant and equipment 4,000 54,148
__________ __________
Net cash used in investing activities (135,432) 1,311
Cash flows from financing activities
Issue of loan notes - 150,000
Repayment of borrowings (150,000) (40,722)
Issue of share capital - cash issue 259,077 -
__________ __________
Net cash from financing activities 109,077 109,278
__________ __________
Net decrease in cash and cash equivalents (37,385) (201,799)
__________ __________
Cash and cash equivalents at beginning
of year (407,709) (205,910)
__________ __________
Cash and cash equivalents at end
of year (445,094) (407,709)
========= =========
Note 1 - Basis of preparation
The financial information set out above does not constitute the
company's statutory accounts for 2009 or 2010. Statutory accounts
for the year to 30 June 2009 and 30 June 2010 have been reported on
by the Independent Auditors. The Independent Auditors' Report on
the Annual Report and Financial Statements for 2009 was
unqualified, did not draw attention to any matters by way of
emphasis, and did not contain a statement under 498(2) or 498(3) of
the Companies Act 2006. The Independent Auditors' Report on the
Annual Report and Financial Statements for 2010 was unqualified,
but did draw attention to matters by way of emphasis relating to
the basis of preparation which are reproduced below, and did not
contain a statement under 498(2) or 498(3) of the Companies Act
2006. Statutory accounts for the year ended 30 June 2009 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 30 June 2010, prepared under IFRS, will be delivered
to the Registrar in due course.
Note 2 - Going Concern
The Group's activities are funded by a combination of long term
equity capital, convertible loan notes, and short term invoice
discounting and bank overdraft facilities. The day to day
operations are funded by cash generated from trading and primarily
invoice discounting facilities.
In considering the ability of the Group to meet its obligations
as they fall due, the directors have considered the following
matters: the expected trading and cash requirements of the group
and the potential cash outflows associated with the convertible
loan notes whose 5 year maturity schedule commences in June
2011.
From a trading perspective, whilst there are inevitable
pressures from the current general economic climate, the Board
remains positive about the retention and outlook of its main
trading operations. The full year effect of recent contract wins
have been factored into the Board's profit and cash flow
projections, as have reasonably possible changes from the current
economic climate. These projections suggest that the Group will
meet its obligations as they fall due with the use of existing
uncommitted invoice discounting facilities, notwithstanding the
additional funds required for refinancing or repaying the
convertible loan notes discussed below. As the invoice discounting
and overdraft facilities fall due for review in the coming year,
based on the informal discussions the Board has had with these
finance providers, they have an expectation that these facilities
will continue to be available to the Group for the foreseeable
future.
In consideration of the potential cash outflows associated with
the convertible loan notes, the holders of the loan notes have the
option to either convert their debt into equity in the Group or
repayment in cash on the due dates. Given the current share price
the Directors consider it is unlikely that the debt will be
converted into shares. The redemption profile is as follows:
-- GBP800,000 on 20 June 2011
-- GBP200,000 on 30 June 2011
-- GBP120,000 on 20 December 2012
-- GBP200,000 on 29 January 2013
-- GBP100,000 on 28 February 2013
The Group's cash flow from operations are not expected to be
sufficient to finance the redemptions on the due dates and
accordingly either new funding facilities will need to be put in
place to finance the redemptions, the redemption dates deferred or
funds generated from other sources. The Directors have obtained
indications of intent from various parties who may be willing to
provide such finance as may be required to fund the loan note
redemptions due for June 2011, but these indications have not been
formalised as contractual offers to provide such funds.
The Board maintain a close working relationship with the holders
of these loans and expect to discuss maturity options with the loan
note holders in the near future and have obtained indications of a
willingness to enter into such negotiations from the note holders.
The Board note that if the RDDS Avionics subsidiary is disposed of,
it is likely sufficient cash will be raised to meet the June 2011
maturity payments. However, no sale has yet been agreed.
The Directors are confident that adequate funds will be raised
to fund the redemption or redemption dates deferred; however, there
can be no guarantee that these funds will be raised or redemption
dates deferred.
The financial statements do not reflect the adjustments that
would be necessary were the trading performance of the Group to
deteriorate and/or the funding available from invoice discounting
and the overdraft was not available. Furthermore, the reliance by
the Group to raise additional funding to finance the loan note
redemption or to successfully negotiate the redemption date of its
loan notes indicates the existence of a material uncertainty which
may cast significant doubt about the Group's ability to continue as
a going concern. The financial statements do not include the
adjustments that would result if the Group was unable to continue
as a going concern.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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