TIDMCSSG
RNS Number : 4460Q
Croma Security Solutions Group PLC
21 October 2019
21 October 2019
Croma Security Solutions Group Plc
("Croma", "CSSG", the "Company" or the "Group")
Final Results for the Twelve Months to 30 June 2019
Contracted Income driving increased Shareholder Returns
Croma Security Solutions Group plc, the AIM listed total
security services provider, announces its final results for the
year end ended 30 June 2019.
Financial Highlights
-- Sustainable step-change achieved in sales and earnings over the last four years
2019 2018 2017 2016
Revenues GBPm 34.6 35.1 22.1 19.0
------ ------- ------ ------
EBITDA GBPm 1.9 2.5 0.8 0.6
------ ------- ------ ------
EPS 7.82p 10.1p* 2.13p 0.96p
------ ------- ------ ------
Dividend per share 1.8p 1.6p 0.5p 0.4p
------ ------- ------ ------
-- In 2019, trading patterns normalised with lower levels of
higher margin project work which were experienced in 2018, an
exceptional year
-- Contracted revenues in 2019 represented 79% of total revenues
(2018: contracted revenue accounted for 72%)
-- Underlying sustainable increase in sales and earnings over
the last four years driven by demand for Croma's premium security
solutions from both government and corporations
-- Group has net cash of GBP1.7 million as at 30 June 2019,
after investing GBP0.589 million during the year
-- Recommended 10% increase in final dividend to 1.1p per share
making a total dividend for the year of 1.8p per share with
dividend cover of 4x
*Adjusted for the purchase and re-issue of treasury shares in
the prior year.
Operating Highlights
-- Continued strong demand as corporations and government bodies choose to outsource security
-- Key long-term manned guarding contracts won by Croma Vigilant
particularly in the Estate Management, Health and Utilities
sectors
-- In its first year PROception, a ground-breaking new service
which makes the reception part of a building's security, generated
revenues of GBP0.2m (annualised GBP0.8m), significantly ahead of
budget
-- Good progress made towards establishing a national chain of
modern security centres with three locksmith businesses acquired
during the year, funded by the Group's cash resources
2020
-- Current financial year has begun well with good forward visibility from contracted revenues
-- Board believe Croma is well placed to improve upon 2019 trading performance
Sebastian Morley Chairman of CSSG said:
"The business has made a step change in performance reflecting
increased demand and the strength of our premium offer within the
security market. While one-off project work distorts comparisons
with 2018, the underlying run rate in earnings has more than
doubled over the last three years driven by the increase in
contracted income. This, together with our progress towards
developing a national chain of security centres and the speed with
which the PROception concept has caught on, has made this another
good year for the business.
Looking ahead, as a highly cash generative business we are well
placed to continue to invest behind making Croma the British
homeland security brand and maintain progressive returns to
shareholders."
For further information visit www.cssgroupplc.com or
contact:
Croma Security Solutions Group Plc Tel: +44 (0)7768 006 909
Sebastian Morley (Chairman)
WH Ireland Limited Tel: +44 (0)207 220 1666
(Nominated Adviser and Broker)
Mike Coe
Chris Savidge
Novella Tel: +44 (0)203 151 7008
Tim Robertson
Fergus Young
This announcement contains inside information as defined in
Article 7 of the Market Abuse Regulations No. 596/2014 and is
disclosed in accordance with the Company's obligations under
Article 17 of those Regulations.
Chairman's Statement
I am very pleased to report Croma Security Solutions Group Plc's
("Croma" or the "Group") Final Results for the year ended to 30
June 2019. The Group generated revenues of GBP34.6 million, profit
before tax of GBP1.4m and EBITDA of GBP1.9 million and did so
without the benefit of significant levels of short term, higher
margin project work that boosted results in 2018. Instead, trading
in 2019 was notable for the increase in the levels of contracted
work which have risen to 79% (2018:72%) of revenues and thereby
provides greater visibility on the normalised run rate for the
business which has achieved a step-change in earnings over the last
four years.
At the heart of the Group's security activities is a strong
ex-military ethos. It is this ethos that ensures Croma provides a
premium level approach to every aspect of delivering security
services and solutions. With the increase in demand across the UK
for security solutions from both the private and public sector,
Croma has benefitted as these bodies have opted for a premium
service to ensure the safety of individuals, customers, employees
and assets.
This increase in demand for recurring work is reflected in the
trading performance for 2019 and in the positive outlook for 2020
and beyond.
Strategy for Growth within UK Security Market
At the beginning of 2019, the Group set out its strategy for
establishing Croma as the British security brand. The increase in
demand for Croma's premium services was recognised as an
opportunity to expand the Group's market position and create a
national network of Croma Security Centres alongside setting new
standards in providing premium guarding services.
The Board believes there is an opportunity in its market to
establish a national chain of modern security centres offering the
full range of the Group's services from manned guarding to CCTV,
intruder alarm and advanced security systems as well as high
security locks. The format is proven to work for both commercial
and domestic customers and therefore to create the network the
Group intends to acquire locksmith premises and converting them
into modern security centres. During the year three locksmiths were
acquired and the sites are under conversion.
Croma's core business is manned guarding and success has come
from providing capable, well trained and highly motivated officers
compared with the more traditional model of the low paid and lowly
motivated officer. Known for providing this premium service, Croma
is focused on continuing to set new standards across the market. In
2019, the growth and success of PROception is an example of this,
as it is currently transforming the way front of house security is
performed in offices, hotels and government building up and down
the country.
Our business strategy has considered the challenges ahead and
the changing market place. We are investing in the appropriate
resources and technologies to bring industry leading solutions. We
believe the continuous development and use of data analytics and
real time communications will be an essential part of the future of
security services.
Trading Performance
All three divisions have performed well in the year under
review, delivering good levels of profitability. Financial prudence
and responsibility continue to be central to our ongoing strategy
in order to shape an outstanding security services group that
delivers for clients, staff and shareholders.
Croma Vigilant, our manned guarding division had a good year.
The division grew contracted revenues so that they now represent
79% of total revenues. Key client wins were achieved in the estate
management, health and utility sectors and a number of existing
clients' contracts have been extended. In addition to providing
manned guarding solutions, Croma Vigilant also provides
complementary police services to local councils under the
'Community Safety Accreditation Scheme', a growing incremental
revenue stream.
Croma Security Systems and Locksmiths performed well reflecting
the increased demand for their services and the ability of the
Group to introduce products across the business. Croma Locksmiths
in particular made a strong contribution to both revenues and
profits. Croma Biometrics remains a significant opportunity for the
Group with FastVein(TM) coming to the forefront as a potent
biometric high-speed human identifier.
Dividend
Reflecting the strong financial performance over the year the
Board is pleased to recommend a final dividend to shareholders of
1.1p per share (total 1.8p per share for the year) and subject to
approval at the Annual General Meeting to be held on 27 November
2019, the final dividend will be paid on 29 November 2019 to all
shareholders on the register at the close of business on 8 November
2019. The shares will be marked ex-dividend on 7 November 2019.
Outlook
Heightened concern over the real or perceived threats to
security of individuals, customers and assets has led to an
increased requirement for Croma's services. We view this demand to
be long-term and it has already created a step change in the
financial performance of the business.
The future challenge is to use this opportunity to build a
larger business with the capability to service and reach a wider
customer base across the UK. We are working to achieve this
exciting objective whilst ensuring we remain a well-balanced
business and operate prudently.
Finally, I would like to thank all employees of the Group for
their excellent work over the last year and I look forward to
working together again this year to achieve another strong
performance.
Sebastian Morley
Chairman
21 October 2019
Operational Review
The Group's strategic objectives are:
-- to deliver market leading full-service security offerings to
the upper quartile end of both large corporations and government.
Achieved by maintaining quality of service as a priority, focusing
on meeting the full range of our clients' security needs, and
leveraging our brand and client base;
-- to produce consistent growth in financial performance, by
maintaining our margins and managing our costs. Acquisitions will
be pursued only when they can be seen clearly to add value to the
Group;
-- to develop and bring to market new technologies, and;
-- to deliver attractive shareholder returns.
Each company has Key Performance Indicators which are monitored
and reported to the executive Directors on a monthly basis. These
are discussed below.
The Group's longer-term objectives are to grow our core
offerings in the UK and abroad until we are the security provider
of choice to leading large corporates, to expand our service
offering to include e-security, and to develop specific high-end
national projects.
The maintenance and expansion of solutions to the present client
base is fundamental. The Group continues to expand the services to
long-term clients, some of whom currently use a diverse range of
contractors, in order to bring all their needs under one roof when
this makes good business sense for both parties.
The performance of each business segment is discussed below:
Croma Vigilant
Croma Vigilant, our largest division, generated sales of
GBP28.5m (2018: GBP29.0m) and operating profit of GBP1.4m (2018:
GBP2.6m). Importantly, from the perspective of sustainable
earnings, contracted revenues represented 88% of revenues (2018:
82%) and while 2018 generated exceptional profits for the Group,
the reliability of contracted income provides a stronger base upon
which to expand this division.
Croma Vigilant provides manned guarding for assets and
individuals and now employs over 750 security personnel throughout
the UK. Fundamental to the division's success is the military ethos
that pervades through all aspects of the way the division is run to
all contact with customers. Croma personnel have a market
reputation for being smart, punctual, professional and courteous on
a consistent basis which is in stark contrast to the average
security guard. The growing retained customer base is increasingly
opting for Croma's premium services and takes reassurance from the
high standards and professionalism Croma Vigilant brings.
Following previous patterns, the split between private and
public revenues remains an approximately two thirds/one third
respectively. In the period under review, Croma Vigilant increased
its market share in five of its six key target markets the
exception being in local government where in 2018 the division had
gained significant high margin income from one-off project work.
Local government work remains an important market, however, income
is now primarily contracted as opposed to being short term
projects. During the year the Group recorded key wins in the
health, estate management and utilities sector.
Last year, we were proud to publish our gender pay gap reports
for the first time which showed that there is no significant pay
gap between men and women in our organisation. This continues to be
the case and we remain focused on ensuring everyone has an equal
opportunity across the organisation.
Led by ex-policewoman Ruth McGowan, PROception is the Group's
innovative new front of house concept, making the modern reception
part of a building's security. PROception provides security trained
receptionists to both manage the front desk and play an active role
in security and is transforming the way manned security services
are delivered in offices, hotels and public institutions. Responses
from the property and leisure sector has been excellent with
annualised revenues reaching GBP0.8m since launch. This is an
excellent achievement and bodes well for the future prospects of
PROception.
In 2018 Vigilant completed the Community Safety Accreditation
Scheme enabling the division to provide private security within
communities using mobile and foot patrol officers. Reduced
government budgets have increased the focus on outsourcing and to
meet the reduction in the number of police officers patrolling the
streets, our highly disciplined force of security personnel is well
placed to support the regular police and local communities.
The current year has begun well with a good pipeline of new
business opportunities.
Croma Security Systems
Croma Security Systems recorded sales of GBP2.70m (2018:
GBP2.97m) and operating profit up over 60% to GBP0.34m (2018:
GBP0.21m).
In support of the Group's focus on providing total security
solutions, Croma Security Systems continues to provide a full range
of electronic security solutions from CCTV, high security locks to
FastVein biometrics technology for high speed human
identification.
Croma Locksmiths
Croma Locksmiths, which operates through ten retail outlets on
the South Coast of the UK and centrally through the Group,
delivered a strong performance for the year growing sales to
GBP3.42m (2018: GBP3.15m) and operating profit increased over 100%
to GBP0.48m (2018: GBP0.24m).
In February 2019, the Board set out its strategy to become the
British Homeland security brand through establishing a national
chain of modern security centres. These centres offer the full
range of Croma's security solutions from manned guarding, CCTV,
intruder alarm and advanced security systems as well as high end
security locks. Conversion of the retail outlets into modern
Security Centres is well advanced enabling the stores to sell the
Group's security capabilities to both domestic and commercial
customers.
To establish a national chain of security centres, the Group is
looking to acquire locksmith businesses and convert the premises
into a Croma security centre. During the year, three locksmith
businesses were acquired for conversion.
The locksmith market is highly fragmented and relatively
unsophisticated in the UK. With demand for security advice and
services increasing, these traditional locksmith stores provide a
working base upon which to build a national network. While still in
its formative stage, the initial income increases being achieved
from the three new sites are encouraging, contributing income of
GBP0.21m (GBP0.55m on an annualised basis).
With the three completed acquisitions, the Company now has ten
retail stores which will all be converted to Croma Security Centres
by 2020. The current centres are located in affluent areas close to
London in the South West of the UK.
Croma Biometrics
With no new significant installations during the year, Croma
Biometrics turnover fell to GBP101k (2018: GBP308k), however, our
FastVein(TM) biometrics technology provides significant future
potential for the Group. Currently deployed across the retail,
education and construction sectors it provides customers with
quick, easy to use, accurate and cost-effective data. FastVein(TM)
has clear commercial advantages and while sales have slowed in the
period under review, its potential remains unchanged and we are
involved in discussions which could well generate significant
long-term income.
Group Financials
2019 2018
The Group financials can be summarised as
follows: GBP000's GBP000's
Revenue 34,599 35,119
Gross profit 6,490 7,149
Gross margin % 18.8% 20.4%
EBITDA 1,871 2,500
Operating profit 1,449 2,013
Earnings per share (2018 restated) 7.82p 10.10p
Net Assets 11,990 11,077
Cash generated from operations 462 2,689
Dividend per share in relation to the year 1.8p 1.6p
While gross profits margins reduced from 20.4% to 18.8%, close
control of the Group's cost base saw overheads reduce by a
noteworthy 2% whilst supporting similar levels of revenue.
Without a one-off benefit from a deferral in its payroll date in
2018, cashflow generated from operations was GBP0.46m (2018:
GBP2.69m) and Group remains in a strong financial position with no
borrowings and net cash of GBP1.7m after funding GBP0.6m of
investments during the period.
The Board maintains the progressive dividend policy adopted in
previous periods and is pleased to recommend a final dividend to
shareholders of 1.1p per share (2018:1.0p).
.
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
FOR THE YEARED 30 JUNE 2019
Continuing operations:
2019 2018
GBP000's GBP000's GBP000's GBP000's
Revenue 34,599 35,119
Cost of sales (28,109) (27,970)
--------- ---------
Gross profit 6,490 7,149
Administrative expenses (5,041) (5,136)
Operating profit 1,449 2,013
Analysed as:
Earnings before interest, tax, depreciation
amortisation 1,871 2,500
Depreciation (232) (161)
Amortisation of intangible assets (190) (326)
Operating profit 1,449 2,013
Finance expenses (2) (38)
Profit before tax 1,447 1,975
Tax (281) (359)
Profit for the year from continuing operations 1,166 1,616
Total comprehensive income for the year
attributable to owners of the parent 1,166 1,616
========= =========
Earnings per share
Basic and diluted earnings per share (pence)
Earnings from continuing operations (2018
restated) 7.82 10.1
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2019
Assets 2019 2018
GBP000's GBP000's
Non-current assets
Goodwill 7,311 7,213
Other Intangible assets 647 835
Property, plant and equipment 668 476
8,626 8,524
Current assets
Inventories 825 668
Trade and other receivables 6,163 6,077
Cash and cash equivalents 1,729 2,154
8,717 8,899
Total assets 17,343 17,423
Liabilities
Non-current liabilities
Deferred tax (158) (197)
Trade and other payables (23) (12)
(181) (209)
Current liabilities
Trade and other payables (5,126) (6,071)
Borrowings (46) (66)
(5,172) (6,137)
Total liabilities (5,353) (6,346)
Net assets 11,990 11,077
========= =========
Issued capital and reserves attributable to owners of the
parent
Share capital 794 794
Treasury shares (399) (399)
Share premium 6,133 6,133
Merger reserve 2,139 2,139
Capital redemption reserve 51 51
Retained earnings 3,272 2,347
Share options - 12
Total equity 11,990 11,077
========= =========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
Capital
Share Redemption Treasury Share Merger Retained Share Total
Capital Reserve Shares Premium Reserve Earnings Options Equity
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
At 1 July
2017 845 - - 6,133 2,139 1,176 12 10,305
Shares
redeemed (51) 51 - - - (354) - (354)
Treasury
shares
acquired - - (406) - - - - (406)
Treasury
shares
issued - - 7 - - (2) - 5
Profit for
the year - - - - - 1,616 - 1,616
Dividends
paid - - - - - (89) - (89)
At 1 July
2018 794 51 (399) 6,133 2,139 2,347 12 11,077
========= ============ ========= ========= ========= ========== ========= =========
Profit for
the year - - - - - 1,166 - 1,166
Dividends
paid - - - - - (253) - (253)
Transfer on
lapse of
options - - - - - 12 (12) -
At 30 June
2019 794 51 (399) 6,133 2,139 3,272 - 11,990
========= ============ ========= ========= ========= ========== ========= =========
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
2019 2018
GBP000's GBP000's
Cash flows from operating activities
Profit before taxation 1,447 1,975
Depreciation amortisation and impairment 422 487
Net changes in working capital (973) 263
Financial expenses 2 38
Corporation tax paid (436) (74)
Net cash generated from operations 462 2,689
Cash flows from investing activities
Purchase of business including acquisition costs
net of cash acquired (245) -
Purchase of property, plant and equipment (356) (264)
Proceeds on disposal of property, plant
and equipment 12 47
Net cash used in investing activities (589) (217)
Cash flows from financing activities
Purchase of treasury shares - (406)
Buy back and cancellation of shares - (354)
Sale of treasury shares - 5
Payments to reduce Hire Purchase (42) (52)
Payments to reduce borrowings (1) (154)
Dividends paid (253) (89)
Interest paid (2) (38)
Net cash used in financing activities (298) (1,088)
Net (decrease)/increase in cash (425) 1,384
Cash and cash equivalents at beginning
of period 2,154 770
Cash and cash equivalents at end of period 1,729 2,154
Basis of preparation
The Group financial statements have been prepared and approved
by the directors in accordance with International Financial
Reporting Standards (IFRSs), International Accounting Standards and
Interpretations (collectively "IFRS") issued by the International
Accounting Standards Board (IASB) as adopted by the European Union
("Adopted IFRS's").
During the year the Group adopted IFRS 9: Financial Instruments
and IFRS 15: Revenue from Contracts with Customers. Neither
standard had a material impact on the financial statements.
While the financial information included in this preliminary
announcement has been computed in accordance with Adopted IFRSs,
this announcement does not itself contain sufficient information to
comply with Adopted IFRSs.
This preliminary announcement does not constitute statutory
accounts of the Group for the years ended 30 June 2019 or 30 June
2018.
The financial information has been extracted from the statutory
accounts of the Company for the year ended 30 June 2019. The
auditors reported on those accounts; their reports were unqualified
and did not include references to any matters to which the auditors
drew attention by way of emphasis without qualifying their report
and did not contain a statement under either Section 498 (2) or
Section 498 (3) of the Companies Act 2006.
The accounts for the year ended 30 June 2018 have been delivered
to the Registrar of Companies, whereas those for the year ended 30
June 2019 will be delivered to the Registrar of Companies following
the Company's Annual General Meeting.
The Annual Report will be posted to all shareholders who have
requested a copy on 22 October 2019 and will be available on
request from Unit 7 & 8 Fulcrum 4, Solent Way, Whiteley,
Hampshire PO15 7FT and on the Company website at
http://www.cssgplc.com/investors/. The Annual Report contains full
details of the principal accounting policies adopted in the
preparation of these financial statements.
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END
FR CKFDQPBDDPKD
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