REG - Croma Sec. Sol. Grp - Half-year Report
09/03/2022 07:00
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RNS Number : 0933E Croma Security Solutions Group PLC 09 March 2022
Croma Security Solutions Group Plc
("CSSG", "Croma", "the "Company" or the "Group")
Interim Results
A Solid First Half
Croma Security Solutions Group plc (AIM:CSSG), the total security services
provider is pleased to announce its unaudited interim results for the six
months to 31 December 2021.
Financial Highlights:
· A good performance in a challenging market
· Continued steady demand for the Company's security solutions
· Revenues up by 9% to £17.87m (H1 2020: £16.36m)
· Generating EBITDA of £0.87m (H1 2020: £0.86m)
· Other than lease liabilities, the Group remains ungeared with
cash balances of £3.5m (31 December 2020: £3.9m)
· No interim dividend declared, however the Board expect to pay a
final dividend once the financial year has been completed
Operational Highlights: Expansion of Security Store Portfolio and New
Technology led Partnerships
· Acquired Manchester based security store in November 2021 and
further opportunities in the pipeline
· Systems and Locksmiths businesses increased revenues by 16%
despite closing security stores during Covid-19 restrictions
· In October 2021, announced the Group is the UK strategic partner
for iLOQ, a leading Finnish security business
· In January 2022, post the period end, the Group announced a new
strategic partnership with Fingo a biometric identity authentication and
payments platform
PROception leading the way for modern security solution
· Croma PROception the ground-breaking front of house business,
which combines reception and security is establishing a new standard in
building security
· Overall, manned guarding revenues increased by 8% alongside
offering increased optionality over a wider range of security solutions
Outlook
· Second half trading has started well and therefore the Board
believes the business is well placed to deliver a good a trading performance
for the year.
Sebastian Morley, Chairman of CSSG, said: "We are pleased to have delivered a
good performance amidst a challenging market. Demand from our client base
was steady which given the disruption caused by the pandemic was a solid
performance. We completed the acquisition of a new security store in
Manchester, and we believe we have a good pipeline of further opportunities.
Similarly, we see opportunity in technology led areas such as the tie up with
Biometric expert Fingo and iLOQ the specialist locks business. Overall, the
business is well placed, our balance sheet is strong, our core businesses are
profitable and cash generative and we are adding to them with bolt on
acquisitions and through partnerships with technology leaders."
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
Jessica Cave
Sarah Mather
Novella
Tel: +44 (0)203 151 7008
Tim Robertson
Fergus Young
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 Croma's unaudited interim results for the six months to
31 December 2021 which saw the Group generate revenues of £17.87 million and
EBITDA of £0.87 million. A good performance in a challenging market during
which we managed any change caused by the pandemic and continued to deliver
uninterrupted guarding services for the buildings, assets and individuals
under our protection. Alongside this, the Company continued to focus on
expanding our services and asset base in pursuit of our objective of
establishing Croma as the British security brand.
Group strategy
Our overall strategy remains focused on:
· setting new standards in providing premium guarding services,
community awareness schemes and innovative front of house solutions under the
Croma Vigilant and PROception brands;
· building a national network of Croma Security Centres, through
which all the Group's services are sold; and
· becoming the British security brand.
Like many businesses, as restrictions associated with the pandemic recede, we
can reflect on what we have learnt from operating under Covid-19 and have a
better understanding of the flexibility of our teams, operating structures and
have uncovered additional efficiencies all of which we are feeding into the
business and will further support the Company in achieving its objectives.
With the deeply saddening events unfolding in Ukraine coupled with the visible
inflationary cost increases, all businesses will need to adapt. While Croma
is reasonably positioned to manage inflationary cost increases, it is likely
some customers will be impacted and may well look to reduce the costs of their
security solutions. Anticipating this, Croma Vigilant has introduced a wider
range of security solutions with more flexible cost structures.
Longer term, the prospects look unchanged for the Group. The UK security
market continues to be made up of a large number of smaller enterprises laying
the ground for the Group to act as a consolidator. In the period, the Company
completed the acquisition of a security store in Manchester and there is a
good pipeline of similar opportunities.
The macro security trends also remain unchanged; individuals, government and
business all want to ensure their safety and that of their assets. Security
attacks are increasing and have become more sophisticated. Consequently,
technology is a central part of our security solutions, and to keep ahead we
are significantly evolving our offer every year. That said, at the heart of
all of Croma's security solutions is a strong military ethos and a focus on
security personnel being a part of a premium service in which individuals are
well trained, well-motivated and well paid. The combination of a strong team
and leading technology continues to prove to be a compelling commercial
proposition.
Croma Vigilant
Croma Vigilant is the largest part of our business providing manned guarding
for assets and individuals. Employing over 950 high-grade security personnel
throughout the UK and continued to deliver an uninterrupted service throughout
the period under review despite the restrictions and staff isolation required
to comply with Covid-19 related rules.
The adaptability of the whole team has been very impressive coupled with
excellent operational organisation. There is no doubt the pandemic has shown
the division what it is capable of, if required. Croma Vigilant's point of
differentiation is that it offers a premium security solution in all aspects
and has built a successful business based on this proposition. That said, more
recently due to rising cost pressures on customers, it is providing the same
premium manned guarding services but on a more flexible basis. For example,
replacing a 24-hour guarding service of an office building with regular patrol
visits. This flexibility is important to retain and meet the full range of our
customers' needs and budgets.
Improving on the traditional security offering is fundamental to the success
of the business. The introduction and subsequent demand for the PROception
service is an excellent example of the Group leading the way for modern
security solutions. Making the reception desk part of a building's security
solution has improved the appearance of the security team, introduced a more
technology led solution and created economies of scale with reception duties
being combined with security. The success of this new modern guarding concept
is reflected in the strong customer demand.
Reflecting the prevailing trends in the market, an increasing proportion of
this division's income is now contracted which increases visibility over
future earnings and enhances our ability to invest for the future.
Croma Systems & Locksmiths
Croma Systems & Locksmiths, the provider of a range of innovative security
technology services including CCTV, Intruder Alarms, FastVein (Biometrics) and
high security locks, delivered a resilient performance.
The division now operates through 11 security centres with one added following
the acquisition of a site in Manchester in October 2022. The security
centres are all operating under the Croma brand and are marketing, under one
roof, the entire range of the Group's services.
The Company has also formed two new strategic partnerships both of which have
significant future potential.
In October 2021, the Company announced it had agreed to be the UK strategic
partner for iLOQ, a leading Finnish security business. Specialising in locks,
iLOQ has developed a new battery free door lock which can be opened by
smartphone. The lock is powered by the mobile phone opening it, a unique
feature clearly differentiating it from competing products. The potential
applications for the mobile iLOQ are significant across multiple industries
given its' advantages relating to security, data collection and central
control. Under the partnership, Croma will sell, install and maintain iLOQ
equipment in the UK.
In January 2022, the Company announced a new strategic partnership with FinGo,
a biometric identity authentication and payments platform. The Company's
existing biometrics solution, FASTVEIN™ which provides quick, easy to use,
accurate and cost-effective identity management, is a natural fit with FinGo.
Working together will allow Croma to expand its product suite to include
payments alongside existing identity and access control offerings in these
sectors. This partnership will also expand FinGo's digital identity management
and payment expertise to include access management.
Financial Review
Revenue increased by 9% for the six months to 31 December 2021 to £17.87m (H1
2020: £16.36m). Cash balances at 31 December 2021 are £3.5m (30 December
2020: £3.9m). Earnings per share increased 13.8% to 2.97p per share (H1
2020: 2.61p).
Other than lease and short-term trading liabilities, the Group remains free
from borrowings.
Dividend
The Board has decided to maintain the decision to not pay an interim dividend
and instead to consider the payment of a single final dividend, allowing the
business to complete the financial year before deciding on the level of the
dividend to be paid for the 12-month period. This maintains a slightly more
prudent approach, started during the pandemic, and now reflecting the
continuation of challenging market conditions.
Outlook
Looking ahead, we believe the business is well placed with no long-term
borrowings and £3.5m of cash to support future investment. All business units
are performing well and we are seeing opportunities to expand organically and
via acquisition.
Sebastian Morley
Chairman
9 March 2022
CROMA SECURITY SOLUTIONS GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR 6 MONTHS ENDED 31 DECEMBER 2021
6 months ended 6 months ended Year
ended
31-Dec-21 31-Dec-20 30-Jun-21
unaudited unaudited audited
Notes £000s £000s £000s
Revenue 17,869 16,362 32,539
Cost of sales (14,431) (13,560) (27,154)
Gross profit 3,438 2,802 5,385
Administrative expenses (2,936) (2,676) (4,898)
Other operating income 62 377 764
Operating profit 564 503 1,251
Analysed as:
Earnings before interest, tax, depreciation, impairment, and amortisation of 866 863 1,982
intangible assets
Impairment - - -
Amortisation (45) (83) (166)
Depreciation (257) (277) (565)
Operating profit 564 503 1,251
Finance costs (24) (24) (40)
Profit before tax 540 479 1,211
Tax (97) (91) (234)
Profit/(loss) for the year from continuing operations 443 388 977
Profit and total comprehensive income for the period attributable to owners of 443 388 977
the parent
Earnings per share 3
Basic and diluted earnings/(loss) per share (pence) from continuing operations
2.97 2.61 6.56
CROMA SECURITY SOLUTIONS GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2021
31-Dec-21 31-Dec-20 30-Jun-21
unaudited unaudited audited
£000s £000s £000s
Assets
Non-current assets
Goodwill 6,464 6,454 6,454
Other Intangible assets 246 373 290
Property, plant and equipment 1,433 535 488
Right-of-use assets 894 943 997
9,037 8,305 8,229
Current assets
Inventories 800 620 681
Trade and other receivables 6,047 5,440 5,097
Cash and cash equivalents 3,509 3,879 5,433
10,356 9,939 11,211
Total assets 19,393 18,244 19,440
Liabilities
Non-current liabilities
Deferred tax (88) (116) (91)
Lease liabilities (586) (685) (753)
(674) (801) (844)
Current liabilities
Trade and other payables (5,844) (5,353) (5,925)
Borrowings and Lease liabilities (352) (301) (293)
(6,196) (5,654) (6,218)
Total liabilities (6,870) (6,455) (7,062)
Net assets 12,523 11,789 12,378
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 3,805 3,071 3,660
Total equity 12,523 11,789 12,378
CROMA SECURITY SOLUTIONS GROUP PLC
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR 6 MONTHS ENDED 31 DECEMBER 2021
6 months ended 6 months ended Year
ended
31-Dec-21 31-Dec-20 30-Jun-21
unaudited unaudited audited
Notes £000s £000s £000s
Cash flows from operating activities
Profit before taxation 540 479 1,211
Depreciation, amortisation and impairment 314 360 731
(Profit) on sale of property, plant and equipment (12) (4) (19)
Net changes in working capital 4 (1,017) (420) 374
Financial expenses 24 24 40
Corporation tax paid (131) (72) (182)
Net cash (used)/generated from operations (282) 367 2,155
Cash flows from investing activities
Purchase of business including acquisition costs net of cash
acquired (137) - -
Purchase of property, plant and equipment (1,093) (65) (138)
Proceeds on disposal of property, plant and equipment 18 8 28
Net cash used in investing activities (1,212) (57) (110)
Cash flows from financing activities
Payments to reduce lease liabilities (123) (213) (408)
Increase/(reduction) in borrowings (1) 3 11
Dividends paid (298) (291) (291)
Interest paid (8) (6) -
Net cash used in financing activities (430) (507) (688)
Net (decrease)/increase in cash and cash equivalents (1,924) (197) 1,357
Cash and cash equivalents at beginning of period 5,433 4,076 4,076
Cash and cash equivalents at end of the period 3,509 3,879 5,433
CROMA SECURITY SOLUTIONS GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Treasury Shares Share Merger Capital Retained Total
Capital
Premium
Reserve
Redemption
Earnings
Equity
Reserve
£000s £000s £000s £000s £000s £000s £000s
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)
At 31 December 2021 794 (399) 6,133 2,139 51 3,805 12,523
Balance at 1 July 2020 794 (399) 6,133 2,139 51 2,974 11,692
Profit for the period - - - - - 388 388
Dividends paid - - - - - (291) (291)
Balance at 31 December 2020 794 (399) 6,133 2,139 51 3,071 11,789
Balance at 1 July 2020 794 (399) 6,133 2,139 51 2,974 11,692
Profit for the year - - - - - 977 977
Dividends paid - - - - - (291) (291)
Balance at 30 June 2021 794 (399) 6,133 2,139 51 3,660 12,378
NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR 6 MONTHS TO 31 DECEMBER 2021
1. Basis of preparation
The interim financial information in this report has been prepared using
accounting policies consistent with IFRS as adopted by the UK. 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 2022. 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 2021 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 2021 and 31
December 2020 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 2021.
A number of other new and amended standards and interpretations are effective
from 1 January 2021 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 ended 6 months ended Year
ended
31-Dec-21 31-Dec-20 30-Jun-21
Numerator
Profit/(loss) for the year on continuing operations and used in EPS (£000s) 443 388 977
Denominator
Number of shares (thousands)
Weighted average number of shares used in basic and diluted EPS 14,902 14,902 14,902
4. Note supporting the cash flow statement
6 months ended 6 months ended Year
ended
31-Dec-21 31-Dec-20 30-Jun-21
unaudited unaudited audited
£000s £000s £000s
Net changes in working capital
(Increase)/Decrease in inventories 17 144 61
(Increase)/decrease in trade and other receivables (895) (905) 1,628
Increase in trade and other payables (138) 341 9
(1,017) (420) 1,698
5. Financial Information
The Board of Directors approved this interim report on 9 March 2022.
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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