CSSG — Croma Security Solutions News Story

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REG - Croma Sec. Sol. Grp - Half-year Report

Croma Security SolutionsAnnouncement

21/02/2024 07:00

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RNS Number : 8128D Croma Security Solutions Group PLC 21 February 2024

Croma Security Solutions Group PLC

("CSSG", "Croma", the "Company", or the "Group")

Interim Results

'Investment in Security Network Delivering'

Croma (AIM:CSSG), the AIM listed innovation and service-focused security
solutions provider, is pleased to announce its unaudited interim results for
the six months to 31 December 2023 ("H1" or the "Period"). The Group's
businesses have performed in line with management expectations in H1
delivering organic and acquisitive growth. In addition, the Company continues
to successfully identify acquisition opportunities to enhance sales growth and
profitability.

Financial Highlights

· Group revenue of £4.26 million (2022: £3.77 million) up 13 %

· Like for like growth of 7% within the Croma Locksmiths Security
Centres

· EBITDA of £0.509 million (2022: 0.455 million) up 11.9%

· EBITDA margin maintained at 12.0% (2022: 12.1%)

· Net profit of £0.246 million (2022: £0.209 million) up 17.7%

· Strong balance sheet with net cash at end of Period of £1.73
million

· 400,000 shares bought back into treasury at 45p on 3 August 2023

Operational Highlights

· The Group invested £80,000 to enhance its infrastructure and
central services over the Period.

· A number of new commercial orders were won in the Period
including further sales of iLOQ

Outlook

· Promising start to H2 with solid pipeline.

· The Group acquired two profitable locksmith businesses with a
combined turnover of £0.5 million, operating from Peterborough and Worthing.
This expands the network to a total of 16 security centres nationwide in H2,
as announced on 8 January 2024.

· Croma was re-awarded a three-year maintenance contract by an NHS
Trust to cover the security needs of their hospitals, as announced on 29
January 2024. Strategy on track to enhance growth and profitability.

· Group is scheduled contractually to receive £5.78 million from
the sale of Vigilant due in stage payments starting in March 2024 with the
final payment scheduled for June 2026.

· The Group intends to declare a single final progressive dividend
with the FY24 results.

Croma Chairman, Jo Haigh commented: "I am delighted by our resilient
performance to date, achieved in spite of a difficult macro backdrop. Our
growth in profits is all the more impressive given the investment that we have
made in the business over the Period. This very much underlines that our
decision to refocus the business is the right one. Our acquisition strategy
aims to enhance sales growth as we expand our security centres nationwide and
focus on innovation as well to deliver cost synergies through shared expertise
and services. I am confident in our ability to continue to drive sustainable
growth both organically and through expanding our network and would like to
thank the team for their unwavering determination to deliver."

For further information visit www.cssgplc.com or contact:

Croma Security Solutions Group Plc
Tel: +44 (0)1489 566 166

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.

CEO's Statement

This year marks a milestone for Croma as it will be the first full year of
trading for the Group without Vigilant, the man guarding business sold in June
2023, and we are focused on delivering on the growth opportunities ahead.

With our reset and renewed focus, our H1 results are testament to our
determination and strategy. I am therefore pleased to report sales growth of
13% for the Period with like-for-like growth within the security centres of
7%. A number of new commercial orders were won in the Period including further
sales of iLOQ.

We have invested in improving our internal processes such that we have the
right infrastructure in place as we scale. We have stepped up marketing spend,
underlining our belief in the business and our commitment to long term growth.
We have delivered solid growth in EBITDA and net profits.

At the end of 2022, we added three new security centres to our network as well
as an online business with the acquisition of Safecell Security Group and
Southern Stronghold Limited. These businesses delivered in line with
management expectations last year and continue to perform well and we expect
to see some acceleration in their contribution to growth and profitability
this current financial year. In January 2024, we announced two further
acquisitions which generate annual revenue of £0.5 million. Located in
Worthing and Peterborough, these businesses have a strong local customer base
and will be able to benefit from the Croma model which merges traditional
locksmith services with more comprehensive and innovative security solutions.
Once fully integrated, these centres will cater to both their existing local
customer base as well as a broader network of commercial clients currently
served by Croma. The Group's security centre network now comprises 16 sites.

The Group's strategy remains to roll out its security centre network
nationwide and the management team is constantly on the look-out for further
acquisitions. As we expand and acquire new sites, we are able to identify
cross-selling opportunities as well as elevate the in-store product offering.
We deliver synergies as we apply the Croma model and acquired businesses
benefit from our expertise, central services and software. The pipeline is
promising. In addition, the management team are open to acquiring businesses
operating in complementary security areas where there is a strong commercial
overlap.

Financial and Operational Review

Group revenue for the period was £4.26 million, up 13%. This reflects both
solid underlying growth (like for like growth of our Croma Locksmiths Security
Centres and Croma Fire and Security businesses was 7% and 3% respectively) as
well as an acceleration in contribution from acquisitions that were made last
year and which are performing in line with initial management expectations.

Gross margins for the period were down 160 basis points to 43.4% (H122: 45%)
whilst EBITDA of £0.509 (H122: £0.455) was up 11.9%, maintaining EBITDA
margin at 12%. The Group continues to invest in growth with investment in
existing security centres and central services. As part of a phased investment
plan, the Group spent £80,000 in modernising facilities and premises across
the Group.

Group net profit of £0.246 million was up 17.7% on the previous period (H122:
£0.209 million), a reflection of an improvement in profits at the operational
level as well as net interest receivable contribution.

Net cash at the end of the Period was £1.73 million (Period ended June 30(th)
2023: £2.14 million).

With regard to the £5.78 million due from the sale of the Vigilant business,
the first payment of £0.538 million is due to be received in March 2024 with
further staged payments to follow and a final payment due in June 2026.

Outlook

We have had a promising start to H2. In January 2024 we acquired two
profitable locksmith businesses with a combined turnover of £0.5 million,
operating from Peterborough and Worthing. We have been successful

in delivering a number of new contracts including being re-awarded a
three-year maintenance contract by an NHS Trust to cover their hospitals'
security needs. This success reflects the high levels of service that make
us a preferred supplier in the health sector. In addition, there are a
number of contracts in the pipeline in the utilities and entertainment sector
and we believe that these customers represent a material long term
opportunity. A solid underlying performance, coupled with the success of our
ongoing strategy to identify acquisitions where there is a significant
opportunity to enhance sales growth and profitability, leaves us well-placed
to deliver year-on-year growth despite continuing difficult macro conditions.

In line with last year, the Company is not proposing an interim dividend but
intends to declare a single final progressive dividend with the FY24 results.