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 intangible assets

 

 

 

866

 

 

863

 

 

1,982

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 the parent

 

 

443

 

 

388

 

 

977

 

 

 

 

 

 

 

 

 

 

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
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 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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