REG - Croma Sec. Sol. Grp - Half-year Report
24/02/2025 07:00
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RNS Number : 0991Y Croma Security Solutions Group PLC 24 February 2025
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.
24 February 2025
Croma Security Solutions Group PLC
("CSSG", "Croma", the "Company", or the "Group")
Interim Results
'Entering Acquisition Led Growth Phase'
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 2024 ("H1" or the "Period").
Strong financial performance in H1
· Group revenue of £4.6 million (HY24: £4.3 million) up 8%
· Like for like growth of 4%
· EBITDA of £0.572 million (HY24: £0.509 million) up 12%
· Profit before tax of £0.456 million (HY24: £0.362 million) up
26%
· Earnings per share of 2.25p (HY24: 1.78p) up 26%
· Strong balance sheet with no debt and cash at Period end of £4.2
million with a further £2.5 million due from the disposal of Vigilant over
the next six quarters
· Net asset value per share 111p (HY24: 109p)
Delivering on strategy
· Strategy set to deliver acquisition led growth supported by
organic growth in both divisions
· Excellent progress on expanding the pipeline of retail locksmith
acquisition targets
· Good demand from education, utilities, health and leisure sectors
with a similar mix of both repeat and new business
· The Company is preparing to support customers that will require
additional security measures as a result of Martyn's Law when the new
government bill is introduced
Trading in H2
· Solid trading performance since the half-year
· Completed the acquisition of Meridian Security Systems Ltd in
February for £0.150 million
o A family-owned Leeds security and locksmith provider with a mix of online
and retail sales
o Annual revenues of £0.836 million and PBT of £0.046 million for 12
months to 31 December 2023
o Natural fit with the Group's acquisition criteria and is expected to
become significantly more profitable as part of the Croma Group
· The Board intends to declare a single final progressive dividend
with the FY25 results
Croma Chairman, Jo Haigh commented: "We have a strong pipeline of
value-enhancing acquisitions that present compelling opportunities for the
business and anticipate completing additional transactions in FY25. Our
strategy is both clear and repeatable: acquiring well-priced, independent
locksmiths and transforming them into full-service security centres with an
expanded product offering, operational efficiencies, and enhanced
profitability. With this approach, we are confident in our ability to drive
sustainable growth over the long term."
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
Zeus
Tel: +44 (0)203 829 5000
(Nominated Adviser and Broker)
Mike Coe
James Bavister
Novella
Tel: +44 (0)203 151 7008
Tim Robertson
Safia Colebrook
Notes to editors:
Croma Security Solutions is an expanding technology led security solutions
provider with over 50 years of specialist experience, delivering high-quality
security solutions across locksmith, fire and security services for both
domestic and commercial environments. The Group's network currently stands at
17 security centres, stretching from its headquarters in Southampton, across
the Midlands and up to the Northwest. Croma services a range of sectors
including health, education, leisure and entertainment, and utilities, and is
trusted by national brands, including multiple NHS Trusts, with their complex
security needs.
Croma's growth strategy is focused on establishing a national security
network. In 2023, it sold its man-guarding business Vigilant for £6.5m, which
has provided the capital to fund the expansion of the business. Croma is a
proven acquirer of local, traditional locksmith businesses, which are
developed into its network of modern security centres, offering both total
security solutions and locksmith services to retail and commercial customers.
The new security centres benefit from extended product ranges, centralised
group services, and both a local and national customer base. Since the sale in
2023, Croma has added new businesses to its network, and has a strong pipeline
of further locksmiths stores to be acquired into the network.
Croma is listed on the AIM market of the London Stock Exchange. Founded in
1970, it is headquartered in Southampton and has over 90 employees.
CEO Statement
Interim Results for the Six Months Ended 31 December 2024
I am pleased to report that Croma Security Solutions has delivered a strong
financial performance in the first half of the year, reflecting the continued
execution of our strategic priorities. The Group has delivered solid revenue
growth, enhanced profitability, and a strengthened balance sheet. It is
noteworthy that this performance has been achieved against a challenging
market environment, which reflects well on the business and our ability to
continue to deliver both organic and acquisition-led expansion.
Our priority is to create significant further value for our shareholders,
through:
· Pursuing a strategy of reinvesting the proceeds from the sale of
Vigilant into generating a higher return by growing Croma into a national
security brand;
· This will be achieved primarily through an acquisition-led roll-out
of the Group's security centre network;
· The Board aims to acquire modestly valued, independent locksmith
stores, and add value by converting them to security centres with a broader
product range, securing cost savings and thus delivering significantly greater
earnings potential;
· The acquisition and conversion model is well-established with a good
pipeline of opportunities ahead and an annual ROI target of at least 15%.
Since the end of the period under review, the Company has acquired Meridian
Security Systems, a family-owned locksmith business based in Leeds. The
acquisition aligns perfectly with the Group's strategy and we have several
similar transactions lined up in our pipeline, of which we expect to complete
additional acquisitions FY25.
Financial Performance
For the six months to 31 December 2024, we achieved Group revenue of £4.6
million, an 8% increase compared to £4.3 million in the same period last
year. There has been like-for-like growth across both divisions, overall up
4%, and we are seeing the benefits of our ongoing investments and strategic
focus.
EBITDA for the period was £0.572 million (HY24: £0.502 million), a 12%
improvement against the previous year. Profit before tax for the period rose
26% to £0.456 million (HY24: £0.362 million), benefitting in part from an
increase in interest income to £0.135 million (HY24: £0.103 million). As a
result, earnings per share increased by 26% to 2.25p (HY24: 1.78p).
Our balance sheet remains robust, with no debt and cash at the period end of
£4.2 million. Additionally, having sold manned guarding business Vigilant for
£6.5 million in June 2023, we expect a further £2.5 million in cash to be
received from the disposal over the next six quarters, further bolstering our
financial position.
Dividend
In line with last year, the Company is not proposing an interim dividend but
intends to declare a single final progressive dividend with the FY25 results.
Operational Progress
We continue to execute a strategy that combines organic growth with strategic
acquisitions. During the first half we achieved organic growth across both our
fire and security and locksmith divisions, with strong demand from key sectors
such as education, utilities, health, and leisure. This mix of repeat and new
business has driven our sales growth. As the strategy progresses and
additional acquisitions are completed, we expect the increased scale to drive
both revenue growth and economies of scale across the two divisions of our
business.
The impending introduction of Martyn's Law, the new government bill aimed at
improving safety in public premises, has generated new enquiries and when
passed in full may present a promising opportunity for the Group.
In our opinion, Croma is now more than ever ideally positioned to develop its
profile and brand as a national UK security business.
We are acquiring independent stores operating on low single digit EBITDA
margins, then transforming them into modern security centres with a
significantly broadened product range and Croma's inbuilt advantages in terms
of software, central purchasing and cost duplication elimination. The
objective of which is to lift the acquired stores EBITDA margins to those
currently achieved by the Group.
There is no shortage of potential acquisitions, many of which fit the Group's
acquisition criteria. Using this criteria and our decades of industry
experience, we have identified an healthy pipeline of opportunities.
To accelerate our acquisition strategy, we are planning to expand our senior
team to support the Company's growth. This investment, whilst impacting our
margins in the short term, will enhance our financial capabilities, strengthen
operational management, and enable the seamless integration of newly acquired
businesses in the long term. With this added expertise, the Board is confident
that going forward the Company is well-positioned to drive its acquisition
pipeline and sustain growth.
In February 2025, we completed the acquisition of Meridian Security, a
Leeds-based security and locksmith business, for £150,000 with an additional
payment of £275,000 to acquire the freehold for the retail property where the
business has built-up from. Meridian, with annual revenues of £836,000 and a
profit before tax of £46,000 for the year ending 31 December 2023, is a
natural fit with our Group and is expected to generate greater profitability
as part of the Croma Security family.
Currently, the business operates a mix of 9 freehold and 8 leasehold
properties. We are comfortable acquiring freehold properties as they fit well
within our acquisition strategy. Freehold ownership ensures long-term control
over sites with established customer bases, provides the flexibility to
upgrade retail locations into modern Croma security stores, offers cost
stability for greater financial predictability, and if required, flexibility
to raise capital by leveraging our freehold portfolio.
Outlook
Croma is in a strong position. We understand the UK security market and we
have a clear and proven acquisition strategy to build the business upon.
Having sold Vigilant in 2023, we have the capital and also the pipeline of
opportunities to drive the expansion of our network. The underlying business
is trading well in what is still a challenging market environment, and this
combined with our acquisition programme means we are confident in the outlook
for Croma.
CROMA SECURITY SOLUTIONS GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR 6 MONTHS ENDED 31 DECEMBER 2024
31-Dec-24 31-Dec-23 30-Jun-24
Unaudited Unaudited Audited
6 months 6 months 12 months
Notes £000s £000s £000s
Revenue 4,580 4,257 8,737
Cost of sales (2,537) (2,409) (4,738)
Gross profit 2,043 1,848 3,999
Administrative expenses (1,716) (1,570) (3,395)
Other operating income 6 - 3
Operating profit 333 278 607
Analysed by:
Earnings before interest, tax, depreciation, impairment and amortisation of 572 509 1,061
intangible assets (EBITDA)
Amortisation (30) (24) (62)
Depreciation (209) (207) (392)
Operating profit 333 278 607
Financial expenses (12) (19) (27)
Interest receivable 135 103 217
Profit before tax 456 362 797
Tax (146) (116) (254)
Profit for the period from continuing operations 310 246 543
Profit and total comprehensive income for the period attributable to owners of 310 246 543
the parent
Earnings per share 3
Basic and diluted earnings per share (pence) from total operations 2.25 1.78 3.94
CROMA SECURITY SOLUTIONS GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2024
31-Dec-24 31-Dec-23 30-Jun-24
Unaudited Unaudited Audited
£000s £000s £000s
Assets
Non current assets
Goodwill 5,042 5,042 5,042
Other intangible assets 55 123 85
Property, plant and equipment 2,846 1,987 2,576
Right-of-use assets 496 541 552
Other receivables 1,651 3,122 1,651
Total non current assets 10,090 10,815 9,906
Current assets
Inventories 1,230 990 1,203
Trade and other receivables 2,202 3,556 4,818
Cash and cash equivalents 4,174 1,728 2,142
7,606 6,274 8,163
Total assets 17,696 17,089 18,069
Liabilities
Current liabilities
Trade and other payables (1,576) (1,300) (1,876)
Borrowings and lease liabilities (114) (102) (114)
(1,690) (1,402) (1,990)
Non current liabilities
Provisions (151) (161) (161)
Deferred tax (217) (154) (217)
Lease liabilities (420) (445) (477)
Total non current liabilities (788) (760) (855)
Total liabilities (2,478) (2,162) (2,845)
Net assets 15,218 14,927 15,224
Equity attributable to owners of the parent
Share capital 794 794 794
Treasury shares (946) (946) (946)
Share premium 6,133 6,133 6,133
Merger reserve 2,139 2,139 2,139
Capital redemption reserve 51 51 51
Retained earnings 7,047 6,756 7,053
Total equity 15,218 14,927 15,224
CROMA SECURITY SOLUTIONS GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR 6 MONTHS ENDED 31 DECEMBER 2024
31-Dec-24 31-Dec-23 30-Jun-24
Unaudited Unaudited Audited
6 months 6 months 12 months
£000s £000s £000s
Notes
Cash generated from operating activities 4 222 213 723
Cash flows from investing activities
Purchase of subsidiaries, net of cash acquired - - (73)
Purchase of property, plant and equipment (479) (130) (793)
Proceeds on disposal of discontinued operations 2,538 - 538
Net cash generated in investing activities 2,059 (130) (328)
Cash flows from financing activities
Payments to reduce lease liabilities (56) (113) (117)
Dividends paid (316) (302) (302)
Interest paid (12) (20) (27)
Interest income 135 104 217
Treasury shares acquired - (168) (168)
Net cash used in financing activities (249) (499) (397)
Net increase in cash and cash equivalents 2,032 (416) (2)
Cash and cash equivalents at beginning of period 2,142 2,144 2,144
Cash and cash equivalents at end of period 4,174 1,728 2,142
CROMA SECURITY SOLUTIONS GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR 6 MONTHS ENDED 31 DECEMBER 2024
Share capital Treasury shares Share premium Merger reserve Capital redemption reserve Retained earnings Total
equity
£000s £000s £000s £000s £000s £000s £000s
Balance at 1 July 2024 794 (946) 6,133 2,139 51 7,053 15,224
Profit for the period - - - - - 310 310
Dividends paid - - - - - (316) (316)
Balance at 31 December 2024 794 (946) 6,133 2,139 51 7,047 15,218
Balance at 1 July 2023 794 (778) 6,133 2,139 51 6,812 15,151
Treasury shares acquired - (168) - - - - (168)
Profit for the period - - - - - 246 246
Dividends paid - - - - - (302) (302)
Balance at 31 December 2023 794 (946) 6,133 2,139 51 6,756 14,927
Balance at 1 July 2023 794 (778) 6,133 2,139 51 6,812 15,151
Treasury shares acquired - (168) - - - - (168)
Profit for the year - - - - - 543 543
Dividends paid - - - - - (302) (302)
Balance at 30 June 2024 794 (946) 6,133 2,139 51 7,053 15,224
CROMA SECURITY SOLUTIONS GROUP PLC
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR 6 MONTHS ENDED 31 DECEMBER 2024
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 2025. 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 2024 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 2024
and 31 December 2023 is unaudited.
Going concern
The interim financial report has been prepared on a going concern basis. The
Group's activities are funded by long-term equity capital and by cash
generated from trading. Further cash supporting the Group trading has become
available from the disposal of the Vigilant business with £4 million received
to date and a further £2.5 million due over the next 6 quarters. In
considering the ability of the Group to meet its obligations as they fall due,
the Board has considered the expected trading and cash requirements of the
Group until the end of June 2026. The Board continues to be positive about the
retention of customers and the outlook of its trading operations. Profit and
cash flow projections support the Board's view that the Group will meet its
obligations as they fall due with the use of cash surpluses from trading.
2. Accounting policies
The accounting policies applied by the Group in this interim report are
consistent with those applied by the Group in the consolidated financial
statements for the year ended 30 June 2024.
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:
31-Dec-24 31-Dec-23 30-Jun-24
Unaudited Unaudited Audited
6 months 6 months 12 months
£000s £000s £000s
Earnings
Earnings from continuing operations for the purposes of basic and diluted 310 246 543
earnings per share being net profit attributable to equity shareholders
Number of shares (thousands)
Weighted average number of shares used in basic and diluted Earnings per Share 13,730 13,801 13,766
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. Cash generated from continuing operations
31-Dec-24 31-Dec-23 30-Jun-24
Unaudited Unaudited Audited
6 months 6 months 12 months
£000s £000s £000s
Operating profit 333 278 607
Depreciation and amortisation 295 231 454
(Increase)/decrease in inventories (27) 114 (63)
Decrease/(increase) in trade and other receivables 78 (5) (317)
(Decrease)/increase in trade and other payables (348) (405) 244
Corporation tax paid (109) - (202)
Cash generated from continuing operations 222 213 723
4. Subsequent events
As part of the ongoing strategy to expand our network of security centres, on
31 January 2025, the Group acquired 100% of the share capital of Meridian
Security Systems Limited. This business, already operating as a security
centre in Leeds, Yorkshire, was purchased for £0,150 million, with a minimum
net asset value of £0.015 million. Additionally, the Group bought the
freehold property from the vendor's pension fund for a cash sum of £0.275
million.
5. Financial information
The Board of Directors approved this interim report on 21 February 2025.
A copy of this report can be obtained by writing to the Chief Financial
Officer at our registered office; Unit 7 & 8, Fulcrum 4, Solent Way,
Whiteley, Hampshire PO15 7FT or from our website at www.cssgplc.com
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