TIDMCSSG
RNS Number : 8125S
Croma Security Solutions Group PLC
14 March 2023
Croma Security Solutions Group Plc
("CSSG", "Croma", "the "Company" or the "Group")
Interim Results
Expanding Security Centre Network Showing Returns
Croma Security Solutions Group plc (AIM:CSSG) is pleased to a
nnounce its unaudited interim results for the six months to 31
December 2022 (the "Period")
Financial highlights from continuing operations:
-- Revenues grew by 25% to GBP3.77 million (H1 2021: GBP3.01 million)
-- EBITDA of GBP0.46 million (H1 2021: GBP0.39 million), represented an increase of 18%
-- Revenues from existing security centres grew 35% on a like for like basis to GBP1.32 million
-- Revenues from our strategic partnership with iLOQ were encouraging at over GBP0.38 million
-- Ungeared with cash balances of GBP0.61 million (31 December 2021: GBP0.65 million)
-- As with recent previous years, the Group is not paying an interim dividend
Operational highlights from continuing operations:
-- The Group acquired Southern Stronghold Limited and Safecell
Security Group Limited (with three security centres between them)
for net cash of GBP1.27 million
-- A further GBP0.085 million was invested in improvements to
the existing portfolio of security centres
-- Identified acquisition opportunities supporting the further
expansion of the security centre network
Assets held for sale:
-- As announced on 6 December 2022, the Board is considering the
proposed divestment of Vigilant Security (Scotland) Limited ("Croma
Vigilant") and expects this process to be resolved by the end of
the financial year
-- Croma Vigilant generated revenues up 7% during the Period to
GBP15.9 million (H1 2021: GBP14.86 million)
-- Profit before tax was GBP0.13 million (H1 2021: GBP0.35
million), held back by a mix of factors including some
non-recurring exceptional costs, general wage inflation which is
beginning to be passed on in adjusted contract rates and upfront
investment in people ahead of a new substantial contract win
commencing in January 2023.
Outlook:
-- Second half trading in our core businesses has started well
-- Croma Vigilant has begun the second half positively with the
substantial new contract commencing as planned
Nick Hewson, Non-Executive Chairman of CSSG, said : "We are
pleased that our decision to invest heavily in our security systems
and locks businesses is beginning to show strong returns. As set
out in December, we will look to deploy the proceeds of the sale of
the manned guarding business as and when it is sold into further
geographic expansion of our network of security centres".
For further information visit www.cssgroupplc.com or
contact:
Croma Security Solutions Group Plc Tel: +44 (0)7834 482 400
Roberto Fiorentino, CEO
Teo Andreeva, CFO designate
WH Ireland Limited Tel: +44 (0)207 220 1666
(Nominated Adviser and Broker)
Mike Coe
Sarah Mather
Novella Tel: +44 (0)203 151 7008
Tim Robertson
Claire de Groot
Safia Colebrook
This announcement contains inside information for the purposes
of Article 7 of the UK version of Regulation (EU) No 596/2014 which
is part of UK law by virtue of the European Union (Withdrawal) Act
2018, as amended ("MAR"). Upon the publication of this announcement
via a Regulatory Information Service, this inside information is
now considered to be in the public domain
Chairman's Statement
Introduction
I am pleased to report the Group's unaudited interim results for
the six months to 31 December 2022 ("H1" or the "Period").
The Group currently comprises two distinct businesses, Croma
Vigilant and Croma Systems and Locks. In December 2022, the Board
announced its intention to divest Croma Vigilant, its manned
guarding business and concentrate on its systems and locks
businesses. The intention to divest means that the trading
performance of Croma Vigilant is reported separately in the
consolidated statement of comprehensive income ("SOCI") and its
assets and liabilities are grouped and shown separately in the
consolidated statement of financial position. The results for the
continuing businesses of systems and locks ("the Continuing Group")
and comparative numbers have been restated in the SOCI.
The Continuing Group generated revenues from continuing
operations of GBP3.77 million (H1 2021: GBP3.01 million) and EBITDA
of GBP0.46 million (H1 2021: GBP0.39 million).
The Continuing Group provides a range of innovative security
technology services including CCTV, intruder alarms, FastVein
(Biometrics) and high security locks. It operates through 14
security centres, the majority operating under the Croma brand and
each security centre markets and sells the entire range of the
Continuing Group's services. Eventually, all of our security
centres will be operating under our Croma brand, providing a
comprehensive security services solution in each location.
Revenues from security centres grew 63% to GBP1.61 million (H1
2021: GBP0.99 million) and like for like growth (excluding the
three new centres that came on stream during the Period) was up 35%
to GBP1.32 million. Footfall in those same centres grew 7% like for
like, and by 30% when taking into account the new centres
acquired.
To complement and improve its range of services, the Continuing
Group also engages in strategic partnerships with various providers
of innovative security solutions, and I am pleased to report that
our strategic partnership with our Scandinavian partner iLOQ
continues to develop positively. 'iLOQ' is a new battery free door
lock which can be opened by smartphone. The lock is powered by the
mobile phone itself, an important feature clearly differentiating
it from competing products. The potential applications for the
mobile iLOQ are significant across multiple industries, given its
advantages not only in security, but also in data collection,
identity, access and control applications. Under the partnership,
Croma sells, installs and maintains iLOQ equipment in the UK. This
strategic collaboration contributed over GBP0.38 million to our
revenues for the Period and we confidently expect this revenue
stream to grow.
Financial review - Continuing Group
Revenue from continuing businesses increased by 25% for the
Period to GBP3.77m (H1 2021: GBP3.05m). Cash balances (excluding
cash in the subsidiary to be sold) at 31 December 2022 were GBP0.61
million (31 December 2021: GBP0.65 million). The Continuing Group
spent GBP1.29 million during the Period investing in new security
centres, including three freehold premises, and a further GBP0.085
million improving our existing network of centres. Earnings per
share from continuing businesses increased over 30% to 1.40p per
share (H1 2021: 1.07p). As with recent previous years, the Group is
not paying an interim dividend.
Other than lease and short-term trading liabilities, the
Continuing Group is debt free.
Acquisitions
During the Period, the Continuing Group completed two
acquisitions for the Croma Systems and Locks division, being
Southern Stronghold Limited and Safecell Security Group
Limited.
Southern Stronghold Limited ("Stronghold") was acquired in July
2022 for a total consideration of GBP0.96 million. Stronghold is a
long-standing locksmith business that operates from two freehold
premises, one in Coventry and a second near Southampton in Totton.
Coventry is the larger of the operations and is a main Assa/Abloy
service centre and provides a large number of Master Key systems to
local businesses. Stronghold also has an on-line business
"Stronghold Direct".
Safecell Security Group Limited was acquired in December 2022
for a total consideration estimated to be GBP0.75 million, part of
which is deferred and dependant on the working capital of the
business at the completion date. Safecell is a well-known and
long-standing security business based in Manchester, providing a
comprehensive range of services with a particular focus on
electronic and physical security together with fire systems, to
retail and commercial customers across the North of England.
Safecell's locksmith business operates from premises in Bury (North
Manchester).
The acquisitions have increased the number of the Continuing
Group's security centres which now number 14, and have
significantly enhanced the geographic reach of the Continuing Group
and its ability to service nationwide security clients.
I am pleased to report that both acquisitions have performed
well since acquisition and their integration is proceeding
smoothly.
Asset held for sale
As announced on 6 December 2022, the Board is considering the
proposed divestment of Croma Vigilant. Discussions in relation to
the proposed divestment remain ongoing, and although there can be
no certainty that the Group will complete the disposal, the Board
hopes to resolve a sale by the end of the current financial year.
If the proposed divestment of Croma Vigilant were to proceed, it
would be classified as a fundamental disposal under the AIM rules
and, as a result, would be subject to shareholders' approval.
Revenues from Croma Vigilant were up 7% for the Period to
GBP15.92 million (H1 2021: GBP14.86 million). However, profit
before tax was GBP0.13 million (H1 2021: GBP0.36 million) held back
by a number of factors including non-recurring exceptional costs,
up-front investment in staff costs ahead of the start of a
substantial contract that commenced successfully, as planned, in
January 2023, as well as general wage inflation which has impacted
staff retention and the ability to recruit. The increased wage
costs are beginning to be passed on in adjusted contract rates and
will be reflected in all new contracts.
Board changes
During the Period, the former executive directors of the Group,
Sebastian Morley and Paul Williamson, stepped down from the Board
in order to pursue the purchase of Croma Vigilant, following which
I was appointed Non-Executive Chairman. In addition, post Period
end, Richard Juett, CFO gave notice of his intention to resign with
effect from 31 March 2023. We thank them for their service. Teo
Andreeva, currently the Group's financial controller, will become
CFO from 1 April 2023 and we welcome her to the Board.
Outlook
The sale process for Croma Vigilant continues and the Board
hopes it will be resolved by the end of the financial year. The
Continuing Group is trading well and has the potential for further
growth. We will continue to seek out opportunities to further
expand our national chain of security centres.
A N Hewson
Non-executive Chairman
14 March 2023
CROMA SECURITY SOLUTIONS GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR 6 MONTHSED 31 DECEMBER 2022
6 months 6 months Year
ended ended ended
31-Dec-22 31-Dec-21 30-Jun-22
unaudited unaudited audited
as restated as restated
Notes GBP000s GBP000s GBP000s
Revenue 3,770 3,005 5,831
Cost of sales (2,072) (1,790) (3,273)
------------
Gross profit 1,698 1,215 2,558
Administrative expenses (1,431) (1,055) (2,902)
Other operating income - 42 55
---------- ------------
Operating profit/(loss) 267 202 (289)
Analysed as:
Earnings before interest, tax, depreciation,
impairment, and amortisation of intangible
assets 455 394 738
Impairment - - (627)
Amortisation (30) (45) (82)
Depreciation (158) (147) (318)
Operating profit/(loss) 267 202 (289)
Finance costs (13) (13) (31)
Profit before tax 254 189 (320)
Tax (45) (30) (89)
Profit/(loss) for the period from continuing
operations 209 159 (409)
Profit for the period from discontinued
operations 6 101 284 472
Profit and total comprehensive income
for the period attributable to owners
of the parent 310 443 63
Earnings per share 3
Basic and diluted earnings/(loss)
per share (pence) from continuing
operations 1.40 1.07 (2.74)
Basic and diluted earnings per share
(pence) from discontinued operations 0.68 1.91 3.17
CROMA SECURITY SOLUTIONS GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2022
31-Dec-22 31-Dec-21 30-Jun-22
unaudited unaudited audited
GBP000s GBP000s GBP000s
Assets
Non-current assets
Goodwill 4,851 6,464 5,827
Other intangible assets 177 246 207
Property, plant and equipment 1,953 1,433 1,477
Right-of-use assets 706 894 1,120
7,687 9,037 8,631
Current assets
Inventories 1,232 800 1,076
Trade and other receivables 1,298 6,047 6,778
Cash and cash equivalents 613 3,509 2,556
Assets classified as held for sale 8,922 - -
12,065 10,356 10,410
Total assets 19,752 19,393 19,041
Liabilities
Non-current liabilities
Deferred tax (104) (88) (117)
Lease liabilities (601) (586) (796)
(705) (674) (913)
Current liabilities
Trade and other payables (2,098) (5,844) (5,609)
Borrowings and lease liabilities (140) (352) (376)
Liabilities directly associated with (4,668) - -
assets classified as held for sale
(6,906) (6,196) (5,985)
Total liabilities (7,611) (6,870) (6,898)
Net assets 12,140 12,523 12,143
========== ========== ==========
Issued capital and reserves attributable
to owners of the parent
Share capital 794 794 794
Treasury shares (399) (399) (399)
Share premium 6,133 6,133 6,133
Merger reserve 2,139 2,139 2,139
Capital redemption reserve 51 51 51
Retained earnings 3,422 3,805 3,425
Total equity 12,140 12,523 12,143
========== ========== ==========
CROMA SECURITY SOLUTIONS GROUP PLC
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR 6 MONTHSED 31 DECEMBER 2022
6 months 6 months Year
ended ended ended
31-Dec-22 31-Dec-21 30-Jun-22
unaudited unaudited audited
as restated as restated
Notes GBP000s GBP000s GBP000s
Cash generated from/(used in) operating
activities 5 755 (282) (860)
Cash flows from investing activities
Purchase of subsidiaries net of
cash acquired (1,287) (137) (94)
Purchase of property, plant and
equipment (160) (1,093) (1,216)
Proceeds on disposal of property, plant
and equipment - 18 31
Net cash used in investing activities (1,447) (1,212) (1,279)
Cash flows from financing activities
Payments to reduce lease liabilities (196) (123) (445)
Increase/(reduction) in borrowings 6 (1) 5
Dividends paid (313) (298) (298)
Interest paid (6) (8) -
Net cash used in financing activities (509) (430) (738)
Net decrease in cash and cash equivalents (1,201) (1,924) (2,877)
Cash and cash equivalents at beginning
of period 2,556 5,433 5,433
Cash and cash equivalents at end
of the period 1,355 3,509 2,556
Total cash and cash equivalents at the end of
the period can be analysed as:
Included as part of continuing
operations 613 3,509 2,556
Included as part of assets held
for sale 742 - -
1,355 3,509 2,556
CROMA SECURITY SOLUTIONS GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Capital
Share Treasury Share Merger Redemption Retained Total
Capital Shares Premium Reserve Reserve Earnings Equity
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
Balance at 1 July 2022 794 (399) 6,133 2,139 51 3,425 12,143
Profit for the period - - - - - 310 310
Dividends paid - - - - - (313) (313)
At 31 December 2022 794 (399) 6,133 2,139 51 3,422 12,140
========= ========= ========= ========= ============ ========== ========
Balance at 1 July 2021 794 (399) 6,133 2,139 51 3,660 12,378
Profit for the period - - - - - 443 443
Dividends paid - - - - - (298) (298)
Balance at 31 December
2021 794 (399) 6,133 2,139 51 3,805 12,523
========= ========= ========= ========= ============ ========== ========
Balance at 1 July 2021 794 (399) 6,133 2,139 51 3,660 12,378
Profit for the year - - - - - 63 63
Dividends paid - - - - - (298) (298)
Balance at 30 June
2022 794 (399) 6,133 2,139 51 3,425 12,143
========= ========= ========= ========= ============ ========== ========
NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR 6 MONTHS TO 31
DECEMBER 2022
1. Basis of preparation
The interim financial information in this report has been
prepared using accounting policies consistent with UK-adopted
international accounting standards ("IFRS"). IFRS is subject to
amendment and interpretation by the International Accounting
Standards Board (IASB) and the IFRS Interpretations Committee and
there is an ongoing process of review and endorsement by the UK
Endorsement Board. The financial information has been prepared on
the basis of IFRS that the Directors expect to be adopted by the UK
and applicable as at 30 June 2023. The Group has chosen not to
adopt IAS 34 "Interim Financial Statements" in preparing the
interim financial information.
Statutory accounts
Financial information contained in this document does not
constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006 ("the Act"). The statutory accounts for the
year ended 30 June 2022 have been filed with the Registrar of
Companies. The report of the auditors on those statutory accounts
was unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under section 498(2) or
(3) of the Act.
The financial information for the six months ended 31 December
2022 and 31 December 2021 is unaudited.
2. Accounting policies
The accounting policies applied by the Group in this interim
report are the same as those applied by the Group in the
consolidated financial statements for the year ended 30 June 2022,
however IFRS 5 "Non-current Assets Held for Sale and Discontinued
Operations" has been applied following the Boards' decision in
December 22 to divest itself of the operations of Croma Vigilant.
Specifically the assets and liabilities of Croma Vigilant are
classified as "held for sale" and shown separately in the statement
of financial position from continuing operations. In the statement
of comprehensive income the results of Croma Vigilant is presented
separately from continuing operations as a single line "profit for
the period from discontinued operations" with all comparatives
restated accordingly.
A number of other new and amended standards and interpretations
are effective from 1 January 2023 but they do not have a material
effect on the Group's financial statements.
3. Earnings per share
Earnings per share is based upon the profit for the period and
the weighted average number of shares in issue and ranking for
dividend. The following reflects the profit and share data used in
the basic and diluted EPS computations:
6 months 6 months Year
ended ended ended
As restated As restated
31-Dec-22 31-Dec-21 30-Jun-22
Earnings
Earnings/(loss) for the purposes of
basic and diluted earnings per share
being net profit attributable to equity
shareholders
- continuing operations 209 159 (409)
- discontinued operations 101 284 472
Number of shares (thousands)
Weighted average number of shares
used in basic and diluted EPS 14,902 14,902 14,902
The calculation of diluted earnings per share assumes conversion of all
potentially dilutive ordinary shares, all of which arise from share options.
A calculation is performed to determine the number of share options that
are potentially dilutive based on the number of shares that could have
been acquired at fair value, considering the monetary value of the subscription
rights attached to the outstanding share options.
4. Acquisition of subsidiaries
As part of the continuing strategy to expand the network of
security centres, on 6 July 2022 the company purchased a business
comprising 100% of the share capital of Southern Stronghold
Limited, a business trading out of Locksmiths branches in Coventry
and Totton for GBP965,000 in cash.
The estimated fair value of net assets acquired is set out
below:
Book Fair value Fair
Value Adjustments Value
GBP000s GBP000s GBP000s
Freehold property 131 289 420
Plant and equipment 2 48 50
Inventories 338 (88) 250
Trade receivables 95 95
Cash and cash equivalents 116 116
Trade and other payables (46) (46)
Goodwill 80 80
Purchase consideration 636 329 965
======== ============= ========
On 20 December 2022 the company purchased Safecell Security
Group Limited for an estimated consideration of GBP750,000 to be
satisfied in cash. The Acquisition extends the geographic reach of
the Group and through its Bury site provides a base from which the
company can better service, support and expand existing
relationships with clients that have operations in the area. The
Bury systems business will operate alongside the successful
acquisition last year of Safeguard (N/W) Ltd in Warrington.
The estimated fair value and book value of net assets acquired
is set out below:
Book
& Fair
Value
GBP000s
Plant and equipment 67
Inventories 63
Trade receivables 95
Cash and cash equivalents 312
Trade and other payables (120)
Goodwill 334
Estimated Purchase consideration 750
========
5. Cash generated from/(used in) operating activities:
6 months 6 months Year
ended ended ended
31-Dec-22 31-Dec-21 30-Jun-22
unaudited unaudited audited
As restated As restated
GBP000s GBP000s GBP000s
Operating profit/(loss) 267 202 (289)
Depreciation and amortisation 188 192 1,006
Decrease/(Increase) in inventories 157 17 (258)
(Increase)/decrease in trade and
other receivables (265) 2,410 37
Increase in trade and other payables 390 78 78
Cash generated from continuing operations 737 2,899 574
Cash generated/ (used in) assets
held for sale 95 (3,050) (1,096)
Tax paid (77) (131) (338)
755 (282) (860)
========== ============ ============
6. Discontinued operations
As announced in December 2022 the board has decided to divest
itself of its manned guarding division, Croma Vigilant and
accordingly the results of this division are set out separately as
follows:
6 months 6 months Year
ended ended ended
31-Dec-22 31-Dec-21 30-Jun-22
unaudited unaudited audited
GBP000s GBP000s GBP000s
Revenue 15,925 14,864 29,334
Cost of sales (13,908) (12,640) (25,496)
Gross profit 2,017 2,224 3,838
Operating profit 139 363 534
Finance costs (12) (11) (14)
Profit before tax 127 352 520
Tax (26) (68) (48)
Profit after tax 101 284 472
================ ================ ================
The results of the discontinued activities of the group for the year ended
30 June 2022 and the six months ended 31 December 2021 have been re-presented,
as required by IFRS 5, so that the disclosures relate to all operations
that have been discontinued by 31 December 22 for all periods presented.
6. Financial information
The Board of Directors approved this interim report on 14 March
2023.
A copy of this report can be obtained by writing to the Finance
Director at our registered office; Unit 7 & 8, Fulcrum 4,
Solent Way, Whiteley, Hampshire PO15 7FT or from our website at
www.cssgroupplc.com
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