TIDMCSSG
RNS Number : 5582S
Croma Security Solutions Group PLC
07 November 2023
Croma Security Solutions Group Plc
("CSSG", "Croma", "the "Company" or the "Group")
Full Year Results
Core Business and Acquisitions Deliver Ahead of Expectations
Croma, the AIM listed innovation and service-focused security
solutions provider, is pleased to report its trading results for
the 12 months to 30 June 2023 (the "Period" or "FY23") as well as
provide an update on its strategy. The core businesses are
delivering strong organic growth and acquisitions are performing
ahead of expectations, affirming the Group's strategy to refocus on
its core businesses and to identify acquisition opportunities where
there is significant scope to enhance sales growth and
profitability.
Financial Highlights
-- Group revenue for the Period including Vigilant of GBP42.83
million (FY22: GBP35.17 million)
-- Revenues on continuing operations for the period up 38% at
GBP8.03 million (FY22: GBP5.83 million)
-- Like-for-like sales growth on continuing businesses of 21%
-- Gross margin improvement on continuing businesses of 300 basis points to 47% (FY22: 44%)
-- EBITDA on continuing businesses of GBP0.95 million (FY22: GBP0.55 million)
-- Strong balance sheet with net cash of GBP2.14 million at the end of the Period
-- Proposed final dividend of 2.2 p per share (FY22: 2.1 p)
Operational Highlights
-- Vigilant was sold on 30 June 2023 for a total consideration
of GBP6.5 million plus intercompany balances of GBP1.07 million
-- Acquisition of Southern Stronghold Limited and Safecell
Security Group Limited for net cash of GBP1.22 million adds an
online business and three new security centres to the network,
increasing our total security centres to 14
-- Refreshed Board of Directors - Jo Haigh joins as Chair, Steve
Naylor as a NED and Teo Andreeva, previously Group Financial
Controller was appointed CFO and joined the Board
Outlook
-- FY24 has started well with a number of new commercial orders and the ongoing sales of iLOQ
-- Acquisition pipeline is encouraging - the Group continues to
identify opportunities to expand its security centre network where
it sees the chance to enhance product offering to drive sales
growth as well as to benefit from efficiencies of scale and
expertise
-- The Group will continue to drive organic growth by investing
in our security centres and expanding its sales network
-- The acquisition pipeline is promising.
Croma CEO, Roberto Fiorentino commented: "We are truly excited
to be starting a new chapter for Croma as we focus our efforts on
our core businesses, Croma Locksmiths and Croma Fire & Security
(formerly branded Croma Systems), where we see strong growth
prospects. There is real scope for us to build out a nationwide
presence and we have a proven track-record of acquiring businesses
and enhancing their in-store product offer, sales growth,
profitability and delivering ahead of targets. FY24 has started
well and there are a number of acquisition opportunities in the
pipeline; I am confident that we will deliver a strong performance
this year."
For further information visit www.cssgroupplc.com or
contact:
Croma Security Solutions Group Plc Tel: +44 (0)1489 566166
Roberto Fiorentino, CEO
Teo Andreeva, CFO
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
Croma - Unlocking Growth Potential
Croma, the AIM listed innovation and service-focused security
solutions provider is pleased to report its trading results for the
12 months to 30 June 2023 (the "Period" or "FY23") as well as to
provide an update on its strategy.
Chairman's Statement
When I joined Croma Group as non-executive Chairman in April
this year, it was with the conviction that I was joining a Group
with a truly exciting future. My career has been focused on
providing advisory services to growth companies such as Croma.
Following the divestment of Vigilant, the management team has a
clear vision. I am thrilled to join the Board to help execute on
that vision. It is with great pleasure that I am able to report on
the progress that we have made this year with the successful
divestment of Vigilant; on the opportunity that lies ahead within
our core businesses; as well as on the financial results for the 12
months to 30 June 2023.
I am very pleased to report that our core businesses delivered a
strong performance in the Period and have performed ahead of
management expectations in spite of the time and energy devoted by
management to secure the disposal of Vigilant. For the Period,
sales growth within the Group's core businesses was up 38% with
total sales of GBP8.03 million (FY22: GBP5.83 million). EBITDA (as
analysed in the Consolidated Statement of Comprehensive Income) on
continuing businesses increased 73% to 0.95 million (FY22 GBP0.55
million). We are in a strong cash position with net cash of GBP2.14
million at the year-end after the GBP1.2 million expensed on
acquisitions and the share buyback from the Vigilant directors.
This demonstrates the cash generative nature of our core business
in addition to the proceeds received and to be received from the
Vigilant disposal.
The strategic decision to divest Vigilant was made in 2022 in
order to refocus efforts on our core businesses, Croma Fire &
Security (Rebranded from Croma Systems) and Croma Locksmiths and to
allow us to scale up these businesses. Vigilant was sold for a
total consideration of GBP6.5 million plus intercompany balances of
just over GBP1 million. I believe that this represents an excellent
outcome in terms of price and gives us the firepower to scale our
core businesses.
With a strong balance sheet, the business refocused and a
refreshed Board, we are excited to be entering a new chapter for
the Group. We are focused on growing our core businesses both
organically and via acquisition, fully capitalising on the
expansion opportunity ahead and investing in growth. We have
ambitions to roll out our security centre network nationwide,
building on our current network of 14 security centres. This will
allow us to exploit cross-selling opportunities as we expand our
full product offering into new locations and deliver cost
synergies. We already have a strong track record of acquiring
businesses, adding value and increasing returns.
The Board is determined to work with a sense of rigour,
openness, and transparency, both within the Group as well as with
our external stakeholders. As a team, we will carefully assess the
opportunities ahead and be accountable for delivery.
The current financial year has started well and I believe that
we will be able to build on the growth that we achieved last year
with a number of new clients and the expansion of current services
to new locations, alongside a good acquisition pipeline. This
expansion will require up-front investment in people and
infrastructure but we believe this is the right strategy to manage
anticipated future growth.
The Board is pleased to recommend a final dividend to
shareholders of 2.2p per share and subject to approval at the
Annual General Meeting to be held on 1 December 2023, the final
dividend will be paid on 15 December 2023 to all shareholders on
the register at the close of business on 1 December 2023. The
shares will be marked ex-dividend on 30 November 2023.
I would like to thank the team for welcoming me so warmly to
Croma as well as for their determination and hard work. I have no
doubt that as we turn the page to a new chapter, we do so with
renewed energy and focus and I look forward to working together
with the Croma team to unlock growth, capitalising on the
opportunities that lie ahead.
J Haigh - Chairman
6 November 2023
CEO's Statement
FY23 was a busy year for Croma. In December 2022, we announced
our intention to divest Vigilant in order to focus on our core
businesses and I am pleased to report that this disposal was
completed at the end of June 2023. I am delighted to confirm that
our core businesses, Croma Fire & Security and Croma
Locksmiths, have delivered results ahead of our expectations, very
much underlining the opportunity that lies ahead.
I am very pleased to welcome Jo Haigh and Steve Naylor to the
Board as we take this opportunity to reset. Their collective
experience and advice will be invaluable in supporting us on a new
growth path. Teo Andreeva was appointed CFO in April 2023, prior to
this she was Group Financial Controller and I would like to thank
her for her long-term support and welcome her to the Board. As a
Board, we are determined to work together, to be transparent with
all stakeholders and, with the completion of the Vigilant disposal,
we can fully focus our attention on the task ahead.
Our decision to divest Vigilant and focus on scaling up Croma
Locksmiths and Croma Fire & Security was based on our belief
that the real growth opportunity lies within these higher margin
businesses. Its disposal marks a transformational moment for Croma
and gives us the financial resource to unlock growth as we identify
and capitalise on the opportunities ahead.
The Croma Locksmiths and Croma Fire & Security businesses
are our heritage, they are where the business started and have
served us well over many years. Both businesses have a loyal client
base, reliable recurring and repeat revenues and are profitable and
cash generative. Croma Locksmiths currently operates out of 14
security centres across the UK which offer one-stop shop security
solutions to commercial and retail customers. This business boasts
a diversified and loyal customer base. Within the Croma Fire &
Security businesses, we have very strong relationships and
expertise within the hospital and leisure sector and are well-known
for our innovative and technology-led offers as well as for our
reliability and high levels of service.
There is significant scope for Croma Locksmiths and Croma Fire
& Security to grow as we build out a nationwide presence and
bring together our product offer and expertise across both
businesses in new locations. We are seeking to acquire retail
locksmith businesses typically located just off the high street.
The UK locksmith market is fragmented, characterised by small,
often family-owned, local players. We have a proven track record of
acquiring these businesses, significantly enhancing their in-store
offer and developing them into modern security centres with a full
product range for commercial and individual customers. We have
acquired many decades of expertise in the industry and are able to
apply our know-how and state-of-the-art software to acquired
businesses as well as deliver benefits of scale, as we drive real
efficiencies and support businesses with our central services.
This has proven very successful in the past and we believe that
many more such opportunities lie ahead at valuation levels where we
can apply the same template, add value and deliver good returns. Of
course, we will need to ensure that identified businesses and
valuations stand scrutiny and we are rigorous in due diligence but
we believe there are significant opportunities open on the
horizon.
Roberto Fiorentino - CEO
6 November 2023
The directors present the Group Strategic Report for Croma
Security Solutions Group plc and its subsidiary companies for the
year ended 30 June 2023.
Financial and Operational Review
Group sales for the Period were GBP42.83 million (FY22: GBP35.17
million) including a full year of Vigilant which was divested as at
close of year end on 30 June 2023.
Sales from continuing businesses, Croma Locksmiths and Croma
Fire and Security were up 38% to GBP8.03 million, (FY22 GBP5.83
million), reflecting acquisitions made during the period as well as
strong organic growth within the core businesses of 21% for the
year.
Gross margins on continuing businesses increased by 300 basis
points to 47% (FY22: 44%). EBITDA on continuing businesses before
central costs for the Period was GBP1.60 million (FY22: GBP1.34
million), an increase of 19%. Adjusting for central Group
overheads, EBITDA was up 73% at GBP0.95 million (FY22: GBP0.55
million).
Group net profit on continuing businesses for the Period was
GBP3.24 million (FY22: GBP(0.61) million) and EPS was 21.7p (FY22:
(4.1)p), including disposal proceeds, excluding disposal proceeds
EPS was 1.11p.
Over the year, we invested GBP1.68 million on acquisitions to
include two freeholds - Totton (Southampton) and Coventry. In
addition to the above figure, we purchased our existing security
centre property in Southsea (Portsmouth). These investments reflect
our long-term belief in the prospects of our security centre
network.
Vigilant posted sales of GBP34.80 million and EBITDA of GBP0.92
million for FY23. The total consideration to be received for the
disposal will amount to GBP6.5 million plus outstanding
intercompany balances of GBP1.07 million. The Group incurred
non-recurring costs related to the disposal of Vigilant totalling
GBP0.23 million for the Period.
The proceeds from the divestment of Vigilant as well as solid
underlying cash generation enabled us to end the year ungeared,
with a net cash balance of GBP2.14 million (FY22: GBP2.56 million).
Our cash position and ungeared balance sheet should allow us to
continue our stated strategy of acquiring locksmiths and building
out our security centres network where there is scope to enhance
the offering and deliver synergies.
Croma Locksmiths
Croma Locksmiths consists of the following subsidiaries - Croma
Locksmiths & Security Solutions Limited, Basingstoke Locksmiths
Limited, Safeguard (NW) Limited, Southern Stronghold Ltd and
Authorized Access Systems Ltd.
The Croma Locksmiths business delivers one-stop-shop security
solutions to both commercial and residential customers and now
comprises 14 security centres across the UK.
Sales for the Period within Croma Locksmiths were up 45% to
GBP4.70 million (FY22: GBP3.25 million), while EBITDA of GBP0.97
million was up 31% from GBP0.74 million. We see a significant
opportunity within this business for cross-selling. For example, we
have an important housing maintenance client who has moved from
using one local security centre to using a greater number of our
security centres on a national basis to service their needs. As a
result, this is expected to be a GBP0.20 million client for us in
FY24 vs GBP0.02 million in FY23.
Our partnership with ILOQ, as their preferred mainstream
Locksmith supplier in the UK market, continues to show great
potential. Sales for the Period were GBP0.32 million. We secured
further orders in the second half which will be delivered in the
first half of the current financial year.
Croma Fire and Security (formerly Croma Systems)
Croma Fire & Security consists of the following subsidiaries
- CSS Total Security Ltd, Safecell Security Ltd and The Safecell
Security Group Ltd.
Croma Fire and Security provides a full range of electronic
security solutions and services to commercial and individual
customers and has strong commercial relationships across the public
health and hospitality sectors.
Croma Fire and Security recorded sales for the Period of GBP3.48
million (FY22: GBP2.58 million) up 35%. EBITDA for the period was
up 5% to GBP0.63 million compared to GBP0.60 million in FY22. The
business invested for the future and appointed a commercial manager
as a new role. During the Period, sales were supported by ongoing
customer relationships as well as some new customer wins with CCTV
orders from transport and infrastructure clients. A number of new
hospital contracts were also secured in second half of the year
which will be recognised in current year numbers.
FASTVEIN/Biometrics - We have seen little progress in our
innovative technology and moving forwards it is unlikely to play a
large role in our strategic plan. However, we continue to provide a
number of established clients with software and maintenance
contracts contributing to our annual recurring revenues and will
also continue to support any new enquiries.
Sale of Vigilant
The Vigilant disposal was completed on 30 June 2023. The total
consideration to be received for the disposal will amount to
GBP6.50 million plus the outstanding intercompany balance of
GBP1.07 million. GBP0.67 million was paid in cash on completion
together with GBP1.07 million of intercompany loan repayments and
circa 800,000 shares owned by S. Morley and P. Williamson, former
Directors (with a value of GBP0.38 million) which have been placed
into treasury. Croma is scheduled to receive the balance of the
proceeds as the loan notes and redeemable shares are settled over
the next 36 months.
The consideration of GBP6.50 million (excluding the intercompany
balance of GBP1.07 million) is broken down as follows:
i) GBP0.67 million was paid in cash on completion
ii) GBP0.38 million via the buyback of shares from S. Morley and
P. Williamson (non-cash transaction)
iii) GBP4.13 million covered by the issue of Loan Notes and
iv) GBP1.30 million was paid on completion via the issue of redeemable shares.
Acquisitions
The Group completed two acquisitions for the Croma Fire &
Security and Croma Locksmiths division during the period, Southern
Stronghold Limited and Safecell Security Group Limited. These
acquisitions increased the number of the Group's security centres
to 14. Southern Stronghold Limited is a well-established locksmith
business that operates from two premises, one in Coventry which has
a large master key systems business, and one in Totton near
Southampton. Stronghold also has an online business, Stronghold
Direct, which has significant potential for the Group. Safecell is
a long-standing Greater Manchester security business with a focus
on electronic, physical security and fire systems, with a strong
commercial and retail customer base in the North of England. Both
these businesses provide an opportunity for Croma to roll out its
offering into new locations as well as to leverage its central
services and are performing well to date.
Outlook
The year has started well with a number of new commercial orders
and the continued success of ILOQ. We believe that we will be able
to drive sales growth organically through new sales and marketing
initiatives, expanding our network of sales people, and focusing on
the development of our online presence. We will also expand the
network via acquisition - the pipeline is promising. The Croma
balance sheet is strong, we are cash generative, and we are
well-placed to take advantage of the opportunities ahead.
Group financials FY2023 FY2022 FY2022
Continuing Continuing Continuing
operations operations and discontinued
operations
GBP000s GBP000s GBP000s
Revenue 8,025 5,831 35,165
Gross profit 3,749 2,558 6,396
Gross margin % 46.7% 43.9% 18.2%
Other operating income 3 56 86
Impairment of goodwill - (627) (627)
Operating profit 427 (479) 245
EBITDA 4,023 548 1,590
Profit for the year 3,235 (612) 63
Earnings per share* 1.11p (4.11p) 0.42p
Net assets 15,151 - 12,143
Cash (used in) / generated from
operations 2,406 - (860)
Cash and cash equivalents 2,144 - 2,556
Dividends per share in relation
to the year 2.2p - 2.1p
The above financials relate to continuing operations for 2023,
compared to 2022, which includes the divested division.
Profit from discontinued operations for FY2023 was GBP465k
(FY2022: GBP675k).
*The earnings per share figure stated excludes the profit from
disposal of discontinued operations of GBP3,069k which contributed
20.6p to the earnings per share figure for the year of 21.7p.
Below is a detailed EBITDA breakdown:
Croma Croma Group Total
Locksmiths Fire &
Security
GBP,000 GBP,000 GBP,000 GBP,000
EBITDA 970 630 2,423 4,023
Vigilant - Profit on Disposal (3,069) (3,069)
----------- --------- -------- ----------
EBITDA, Continuing Operations 970 630 (646) 954
----------- --------- -------- ----------
EBITDA on continued operations for 30 June 2023, on a like for
like basis, was GBP954k compared with GBP548k for 30 June
EBITDA on continued operations for 30 June 2023, on a like for
like basis, was GBP954k compared with GBP548k for 30 June 2022 an
increase of 73%.
Cash collection has improved in the year compared to last year
with debtors reducing by 11 days from 54 to 43.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR
ENDED 30 JUNE 2023
CONSOLIDATED STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED
30 JUNE 2023
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE
2023
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED
30 JUNE 2023
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2023
1. Basis of preparation
The Group financial statements have been prepared under the
historical cost convention and approved by the Directors in
accordance with UK-adopted international accounting standards.
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 announcement does not constitute statutory accounts of the
Group for the years ended 30 June 2022 or 30 June 2023.
The financial information has been extracted from the statutory
accounts of the Company for the year ended 30 June 2023. 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 2022 have been delivered
to the Registrar of Companies, whereas those for the year ended 30
June 2023 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 shortly 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.
2. Accounting policies
The accounting policies applied by the Group in this report are
the same as those applied by the Group in the consolidated
financial statements for the year ended 30 June 2023 and the year
ended 30 June 2022. The directors expect similar accounting
policies for the year ended 30 June 2024.
Discontinued operations
A discontinued operation is a component of the Group's business,
the operations and cash flows of which can be clearly distinguished
from the rest of the Group and which represents a separate major
line of business operation.
Classification as a discontinued operation occurs at the earlier
of disposal or when the operation meets the criteria to be
classified as held-for-sale under IFRS 5.
When an operation is classified as a discontinued operation, the
comparative statement of profit or loss and OCI is re-presented as
if the operation had been discontinued from the start of the
comparative year.
Disposal of subsidiaries
At the date of disposal of a subsidiary all assets and
liabilities of the disposed subsidiary are derecognised in the
financial statements. The fair value of consideration is recognised
in the financial statements and any resulting gain or loss in
profit or loss attributable to the parent.
6. Earnings per share
The calculation of basic earnings per share is based on the
profit attributable to ordinary shareholders, from continuing
operations, divided by the weighted average number of shares in
issue during the year, calculated on a daily basis.
The calculation of diluted earnings per share is based on the
basic earnings per share adjusted to allow for the issue of shares
and the post-tax effect of dividends and interest on the assumed
conversion of all other dilutive options and other potential
ordinary shares.
* Share options have an average exercise price of GBP0.9 and are
not dilutive at 30 June 2023.
EPS for earnings for the year on continuing operations
(excluding the profit on disposal of discontinued operations) and
used in basic and diluted EPS 1.11p.
The earnings per share figure stated excludes the profit from
disposal of discontinued operations of GBP3,069k which contributed
20.6p to the earnings per share figure for the year on continuing
operations of 21.7p.
Transaction costs of GBP23k relating to the acquisition of
Southern Stronghold Limited have been recognised as an expense and
included within administrative expenses in the statement of profit
or loss.
If the acquisition of Southern Stronghold Limited had been
completed on the first day of the financial year, Group revenues
for the period would have been GBP8,025k and Group profit
attributable to equity holders of the parent would have been
GBP3,700k. Southern Stronghold Limited contributed GBP607k to the
Group's revenue and GBP197k to the Group's profit before tax for
the period from the date of acquisition to the year-end date.
The amounts recognised at acquisition date in respect of
property, plant and equipment acquired include fair value
adjustments of GBP337k to recognise the uplift to market value.
Furthermore, the amounts recognised at acquisition date in respect
of inventories acquired include a negative fair value adjustments
of GBP274k to recognise inventories at the lower of cost and net
realisable value. All other book amounts are considered to
approximate their fair values.
In addition to the above acquisition, the group acquired
Manchester based Safecell Security Group Limited and its two 100%
owned subsidiaries on 19th December 2022, trading out of a retail
shop and office space in Bury, North Manchester.
Transaction costs of GBP30k relating to the acquisition of
Safecell Security Group Limited have been recognised as an expense
and included within administrative expenses in the statement of
profit or loss.
If the acquisition of Safecell Security Group Limited had been
completed on the first day of the financial year, Group revenues
for the period would have been GBP8,505k and Group profit
attributable to equity holders of the parent would have been
GBP3,748k. Safecell Security Group Limited contributed GBP499k to
the Group's revenue and GBP83k to the Group's profit before tax for
the period from the date of acquisition to the year-end date.
The amounts recognised at acquisition date in respect of
property, plant and equipment acquired include a negative fair
value adjustments of GBP16k to recognise the write down of plant
and equipment. All other book amounts are considered to approximate
their fair values.
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END
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