REG - Croma Sec. Sol. Grp - Final Results <Origin Href="QuoteRef">CSSG.L</Origin>

Croma Security SolutionsAnnouncement

05/11/2015 07:01

RNS Number : 6199E
Croma Security Solutions Group PLC
05 November 2015
CROMA SECURITY SOLUTIONS GROUP PLC
("CSSG", the "Company" or the "Group")
FINAL RESULTS
FOR THE YEAR TO 30 JUNE 2015
CROMA SECURITY SOLUTIONS GROUP PLC ("the Group"), the AIM listed total security services provider,announces its results for the year ended 30 June 2015. 
Highlights
 Revenue growth to 15.83m, an increase of 7%
 Gross Profit steady at 3.61m 
 Adjusted EBITDA of 0.66m
 Balance sheet net assets at 9.19m 
 Positive earnings of 2.40p per share
 Strong growth in provision of guarding services
 FastVein Time and Attendance finished and released.
An electronic copy of the annual report is available from the Group's website www.cssgroupplc.com along with the Notice of AGM.
For further information Contact:
Croma Security Solutions Group plc
Sebastian Morley, Chairman Tel: +44 (0)7768 006 909
WH Ireland Limited (NOMAD and Broker)
Paul Shackleton / Nick Prowting Tel: +44 (0)207 220 1666
Chairman's Statement
I have pleasure in reporting to shareholders Croma Security Solutions Group's (CSSG) final results for the year to 30 June 2015, which show the Group delivering on its core strategy and investing to bring new revenue streams online.
We have seen pleasing levels of full service contract wins, and our core sales effort has been directed to reinforcing our ability to be the security systems adviser of choice to larger corporates and High Net Worth individuals. 
We have also spent time and money focussing our brand and the message we are promoting, and have renewed our communications strategy to ensure that we are identifiable as market leading security providers and innovators. High service levels, seamless management of diverse security strands, and an overall focus on quality remain key.
Vigilant has enjoyed a record year; the excellent start, as part of the security team for the Glasgow Commonwealth Games 2014, was used as a springboard for more and more profitable contracts, and the company has reported record levels of turnover and operating profit. Our geographical base has broadened, with good client wins in London and the South East as well as in Scotland and the North. This is in large part a result of our determination to maintain the highest standards at all times, and to refuse to cut corners on the delivery of service.
CSS Alarms and Locksmiths have had a more challenging year and have found continuing pressure on margin and a stretch of procurement times. Overall activity is comparable to prior years but is taking more time and effort to deliver. Total has strengthened the sales team and has continued to reach out to its target market.
CSS Total Security was delighted to be able to deliver a significant contract in Saudi Arabia, which involved all aspects of physical and electronic security systems. This was on time and on budget, and demonstrated the company's ability to operate overseas as well as at home. Total also secured the renewal of two major long term contracts, with Hilton Group and Odeon cinemas. 
Fastvein is now being actively marketed as a commoditised "out-of-the-box" product for time and attendance, as well as a bespoke solution for access control. Reception has already been encouraging and the board feels that the market for this product will prove strong both in UK and abroad. We have appointed representatives overseas and will continue to develop the functionality of the suite. 
During the year as well as the complex multi-faceted project in the Middle East, we were able to deliver a number of pure FastVein installations in the UK. These have been well received and have led to further orders. We have invested in engineers and software developers to hasten the delivery date as well as boost our install capacity. 
The focus of the Group remains that of delivering sustained organic growth by concentrating on our unique offering to the security market. Our aim is to offer a total, vertically integrated security service to clients who demand the most exacting service and technology. The security market remains fragmented and presents a clear opportunity for an integrated provider.

Strategy and Objectives

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.
2014/15 has seen the Group press forward with its plans for organic growth. Profitability has been maintained and gains consolidated, although the overall performance masks a small divergence in the subsidiaries' fortunes, as discussed below. The Group is now delivering the results which were forecast at the time of the acquisition.
Growth of the Group over the last three years has been purely organic, and whilst not as fast as originally hoped it has resulted in a strong, debt-free balance sheet. The Board are now looking at the various opportunities that exist for growth by acquisition, and are ready to acquire businesses which can add to the Group's service offering and profitability. Geography and technical ability will be key.
The maintenance and expansion of solutions to the present client base is fundamental. The Group continues to develop historical 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 Group is also looking at expanding overseas, and has opened a branch office in Abu Dhabi, as well as appointing representatives in Southern Africa, Scandinavia, and the Kingdom of Saudi Arabia. We see these markets as being key to the delivery of our services.
Croma Vigilant
Vigilant has had another successful year; Turnover has grown by 14% to 12.50M from 10.96M, on top of 11% in 2014 , and operating profit for the company has increased to 0.57M (2014: 0.42M). Our focus on delivering a quality premium service is being recognised by our clients who place value on a reliable and effective security provider who can act as a partner to them in all aspects of physical security.
Croma Vigilant continues to operate in the upper echelon of the manned guarding market with the delivery of its manned guarding, key holding and commissionaire services and is the largest revenue contributor to the revenues of CSSG plc.
The year began strongly for the company with the delivery of security services to Commonwealth Games Glasgow 2014. This contract lasted until the end of August and generated revenues of 0.8M overall (0.5M in this financial period) at very good margin. 
Quality of service has been demonstrated by our high levels of client retention, and whilst we like all operators have seen margins continue to come under pressure we have been able to hold the line on our refusal to compromise our service delivery.
Finally, we place great store on being a Group, with the skill set across our trading companies to handle all types of security manning and hardware requirements. We will always try to demonstrate a full range of capabilities and clients are finding considerable benefits in our unified approach.
Croma Security Systems 
Croma Security Systems has found trading conditions difficult and has found client lead times to be stretching and client budgets remaining tight. Turnover for the year has fallen 16% to 2.15M, with operating profit down to 0.28M.
Croma Security Systems has invested in a significantly increased sales effort which is starting to achieve good recognition and results. The message of an integrated security system, with or without a biometric identity system, is remaining attractive to discerning clients, but the much-trumpeted boost in the wider economy has not been immediately apparent.
Croma Security Systems have brought new products and solutions to the market this year, notably Croma Air alarm systems and a broader range of CCTV cameras. 
Croma Biometric - Fastvein
Development of the Fastvein suite of products has reached another milestone, with the release of the FastVein Time and Attendance product, and out-of-the-box time and attendance system based around our biometric technology. It is quickly deployed, easy to manage and its output reports can be easily tailored to customer requirements. 
Croma Locksmiths
Croma Locksmiths has gone through a change of emphasis during the year, with a continued move towards commercial and concurrent de-emphasis of consumers, and a parallel reduction in shop floor space and increase in mobile services. Turnover has declined by 8% to 1.18M but margin has increased to give an overall improvement of operating profit of 11 % to 0.15M. 
Locksmiths will be pursuing a strategy of geographical expansion this coming year, either by opening new stores or acquiring existing businesses. There certainly seems to be opportunity for further consolidation in the sector. 
Outlook and Priorities
The Group will remain focussed on driving growth organically, predominantly in the UK, unless opportunities for acquisition should present themselves. An enhanced sales team straddling the entire Group is in place and awareness of the Croma brand within the target market is growing.
Following our successful relaunch of its web presence earlier in the year the Group are actively promoting its services through email, social media, and exhibitions. 
The Board views the coming year with optimism tinged with caution. There is no doubt that the economic recovery has not yet filtered all the way through to the corporate market, especially SMEs, and CSSG will need to maintain its high energy sales drive to secure continued growth. The Board is aiming to maintain the dividend policy begun at the beginning of the year.
Group Financials
The financial results of the Group are satisfactory. They show a Group that is pursuing a core strategy with some success, but certainly with more to do.
Group turnover increased broadly ahead of expectations to 15.8M from 14.8M. This is growth of 7% this year, and 19% over the last two years. This improvement has been driven by Vigilant, which has delivered new contracts at better than previous margins. It has however been offset by a reduction in turnover at both Total Security and Locksmiths, both of which generate higher margins. Overall, Gross Profit has been broadly steady at 3.61M (2014: 3.67M). Ongoing cost control has allowed us to show a small improvement in operating profit to 0.4M. This result has been affected by exceptional costs relating to ongoing FastVein  development (0.13M) and a marketing and rebranding campaign during the year (0.06M). This is in line with expectations. 
The other important development of the last year was the payment of the Group's first dividend in January 2015, of 0.3p per share. The Board is aiming to maintain this dividend policy and will when appropriate increase the annual dividend per share paid.
S J F Morley
Executive Chairman
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 June 2014

Continuing operations:
2015

2014











Revenue
15,828,989

14,813,444 







Cost of sales
(12,218,705)

(11,150,460)







Gross profit
3,609,984

3,662,984 







Administrative expenses
(3,245,587)

(3,347,618)

Other operating income
26,578

21,453 

Operating profit
390,975

336,819 








Analysed as:





Earnings before interest, tax, depreciation, amortisation, impairment and acquisition costs
656,668

620,863 


Depreciation
(80,821)

(99,172)


Amortisation of intangible assets
(184,872)

(184,872)


Operating profit
390,975

336,819







Finance expenses
(32,138)

(32,235)












Profit before tax
358,837

304,584







Tax
(845)

15,973






Profit for the year attributable to owners of the parent
357,992

320,557 







Earnings per share










Basic and diluted earnings per share (pence)




- Basic earnings per share
2.40 

2.16

- Diluted earnings per share
2.40

2.16

Total
2.40

2.16








CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 June 2014












Assets
2015
2015

2014
2014


Non-current assets





Goodwill
5,866,961


5,866,961 

Other Intangible assets
1,041,323


1,141,290 

Property, plant and equipment
331,718


329,356 



7,240,002


7,337,607 
Current assets





Inventories
237,169


222,958 

Trade and other receivables
2,420,729


2,485,885 

Cash and cash equivalents
839,373


899,693 



3,497,271


3,608,536 
Total assets

10,737,273


10,946,143 
Liabilities





Non-current liabilities





Deferred tax
(244,033)


(299,474)

Trade and other payables
(39,956)


(5,263) 

Provisions



- 



(283,989)


(304,737)
Current liabilities











Trade and other payables
(1,258,440)


(1,596,053)

Borrowings
-


(166,682)



(1,258,440)


(1,762,735)
Total liabilities

(1,542,429)


(2,067,472)
Net assets

9,194,844


8,878,671
Issued capital and reserves attributable to owners of the parent











Share capital

743,307 


743,307 
Share premium

5,230,276 


5,230,276 
Merger reserve

2,139,454 


2,139,454 
Retained earnings

653,927


340,533
Undistributable Reserves

422,322 


422,322 
Other reserves

5,558


2,779
Total equity

9,194,844


8,878,671

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 June 2014

Share
Capital
Share
premium
Merger
Reserve
Retained
earnings
Undistributable
reserve
Other Reserves
Total
Equity
 








 
 
At 1 July 2013
725,127 
5,230,276 
2,139,454 
19,976
422,322 
-
8,555,335 
Profit for the year
- 
-
- 
320,557
- 
-
320,557 
Issue of Share Options
- 
-
- 

- 
2,779
2,779 
















At 1 July 2014
743,307 
5,230,276
2,139,454 
340,533 
422,322 
2,779 
8,868,671 
Profit for the year
-

-
357,992
-

357,992
Dividends paid



(44,598)


(44,958)
Issue of Share Options
-

-
-
-
2,779
2,779








At 30 June 2014
743,307 
5,230,276 
2,139,454 
653,927
422,322
5,558
9,194,884









CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 June 2014

2015

2014


 




Cash flows from operating activities







Profit before taxation
358,837

304,584 
Depreciation, amortisation and impairment
265,693

284,044 
(Profit)/loss on sale of plant and equipment
(2,119)

8,103 
Net changes in working capital
(285,594)

37 ,286 
Financial expenses
32,138

32,235 
Corporation tax paid
(83,460)

-
Net cash generated from operations
285,594

666,252 




Cash flows from Investing activities



Purchase of property, plant and equipment
(133,419)

(49,589)
Proceeds on disposal of property, plant and equipment
48,517

14,100 
Net cash used in investing activities
(84,902)

(35,489)




Cash flows from financing activities



Hire purchase loan repayments
(34,645)

(23,742)
Repayments of invoice discounting facility
(166,682)

(358,107)
Dividends paid
(44,598)


Interest paid 
(15,087)

(27,079)
Net (used) in financing activities
(261,012)

(408,928)




Net increase in cash and cash equivalents
(60,320)

221,835 
Cash and cash equivalents at beginning of period
899,693

677,858 
Cash and cash equivalents at end of the period
839,373

899,693 






Basis of preparation
The Group financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards (IFRS's), International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRS's"). 
While the financial information included in this preliminary announcement has been computed in accordance with International Financial Reporting Standards ("IFRSs"), this announcement does not itself contain sufficient information to comply with IFRSs.

The financial information set out in this announcement represent an abridged version of the Group's full Accounts for the year ended 30 June 2014, upon which the auditors have given an unqualified report.

The Annual report will be posted to all shareholders on 5th November 2014 and will be available on request from Unit 6 Fulcrum 4, Solent Way, Whiteley, Hampshire PO15 7FT . The Annual Report contains full details of the principal accounting policies adopted in the predation of these financial statements.
Going concern
The Group's activities are funded by a combination of long term equity capital, 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 Board have considered the expected trading and cash requirements of the Group until November 2016.
The Board remains positive about the retention of customers and outlook of its main trading operations. The Board's profit and cash flow projections suggest that the Group will meet its obligations as they fall due with the use of existing uncommitted invoice discounting facilities. The invoice discounting facility was renewed in June 2015. The overdraft facilities falls due for review on 30 November 2015 and the Board is confident this will be renewed.
The financial statements do not reflect the adjustments that would be necessary were the trading performance of the Group to deteriorate and in the unlikely event that the funding available from invoice discounting and the overdraft was not available. 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
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