Embargoed: 0700hrs 1 March 2005
Croma Group Plc
Interim Results for the six months to 31 December 2004
Highlights:
* Continued improvement in sales in the period
* Turnover for the half year already approximately 42% higher than that of
the last full financial year
* Sales of approx. �1m - an increase of over 1,600% on the corresponding
period last year
* New products in development have already secured orders from 3 UK police
forces
* Investment made in sales and marketing teams
* New significant contracts, either won or pending, expected to impact on
full year performance including �500,000 order from the MOD
John French, Chairman and Chief Executive, commented,
"We have made some significant investment during this period in boosting
Croma's sales and marketing force. This investment should position us well for
a very positive outcome for the full year.
In the first two months of the second half, performance is again improving and
a number of potentially lucrative orders are expected to materialise in time to
impact on the June year end accounts. I am encouraged by the progress
throughout the Group, in each subsidiary, and am actively seeking to acquire
more businesses in our field to boost the performance further still."
Contacts:
John French, Chairman & Chief Executive
Croma Group Plc, Tel. 07836 722 482
Chris Roberts / Ben Simons
Hansard Communications, Tel. 020 7245 1100
Chairman's Statement
I am pleased to report the financial results of the Group for the six months to
31 December 2004. The improving sales performance during the final quarter of
the year ending June 2004 has continued during the first six months of the
current year. The turnover for the six-month period to 31 December 2004 was �
993,594 compared with �61,136 for the same period last year. An increase of
approximately 1,625 %.
As a result of the investment in additional resources the loss before tax and
amortisation of goodwill in the six months to 31 December 2004 is �295,320
compared to �279,353 for the same period last year.
In addition, the holding company costs in the period include a full six months
costs of running as an AIM listed company.
Trading in the first six months of this financial year is already 42% higher
than it was during the last full financial year.
The improved sales performance is primarily a result of the acquisitions of R&D
Design Services Limited and of Shawley Products, the latter now operating as a
division of Croma Defence Systems Limited. Both acquisitions have settled in
well and are making a valuable contribution to the ongoing performance of the
Group.
Croma Defence Systems has continued to complete the design of a number of new
products of its own and has expanded its list of factored products. This is
enabling us to present a broad-based range of products, systems and solutions
to various aspects of the overt, covert surveillance and defence related
market. Three UK Police forces have already placed orders for a number of new
products for trial purposes. Other new products in the course of introduction
include a short-range covert monitoring system for use by surveillance
operatives in the built environment, able to monitor up to eight personnel at a
time. Another new product is a remote sensor, designed for a variety of field
surveillance applications. A number of other new products are expected to be
announced by Croma Defence Systems in the coming weeks. Shawley products are
looking to capitalise on its experience in wireless CCTV. Shaw-Tel is the name
of a new system being introduced by Shawley, which allows the transmission of
digital video images, combined with digital video recordings and which is an
intelligent video reception concept for CCTV surveillance.
R&D Design Services continues to benefit from repeat business from existing
customers whilst at the same time expanding its international distributor
network, thereby strengthening relations with key customers. Agents have been
added in Asia and South Africa to service key markets in these regions. The
success being achieved by R&D is such that a number of significant appointments
have been made during the last few months in terms of marketing and technical
management teams to support the increased level of business and indeed the
increase in activity resulting from additional new enquiries for R&D's
products. This has obviously resulted in the short term in an increase in
overhead, but that is more than justified by the extensive order book and
activities.
As such it is our intention to relocate R&D Design Services to new premises
less than three miles from our current location to facilitate the increase in
activity. It is hoped that the move will be carried out efficiently with little
or no effect on our ability to meet our customers needs and can be completed by
the end of April.
In the first six months we have added additional software and mechanical design
capability with the employment of new engineers at R&D Design Services. The
benefits of this investment will materialise in the second half of the current
financial year. Following the acquisition of Shawley Products in March 2004, we
have now identified cost savings within Croma Defence Systems Limited which
will be implemented in the third quarter of this financial year, with full
benefits in quarter four of this financial , and the new financial year. These
changes include a planned relocation of the development and assembly operations
of Croma Defence Systems products from Hereford to the Risca, Newport, the
plant of Shawley products. The benefits of this will be seen going forward, and
will include lower labour costs and a reduction in other operating costs that
relate to premises and establishment. A small unit at Hereford will still be
retained as Group Headquarters.
Outlook
Prospects going forward are encouraging and justify all the changes that are
now being introduced with the distinct change in emphasis from product
development to sales and marketing as is beginning to be reflected. The second
half should see a continuation of the improvement in trading. We hope to see
the benefits of a number of outstanding potential orders impacting in the
coming months as well as the benefits from our new products being sold.
Croma is breaking into new customers and new markets on a regular basis with
its innovative products. Of course, the nature of our industry is that some
major contracts have a significant lead time from the point of receiving an
order to actual delivery, when it can be taken into sales revenue. We have
recently secured a number of such contracts which will benefit the ongoing
performance partly in the current year and partly in the new financial year. In
respect of new business, R&D recently entered into a contract with a major UK
defence electronics firm for the supply of 50 video monitors to the MoD. The
total contract value is over �500,000 and is scheduled to be completed during
2005 with most, if not all of the work impacting, on the second half of the
current financial year. A number of other long-term contracts have been
concluded which will impact on following years. Having said that, products from
Croma Defence Systems do not all fall in this category and with some of the new
products having shorter lead times we expect to see improvement in the sales
performance on a short term basis.
The ongoing policy of the Group is to continue to seek compatible acquisitions
to consolidate the sector. As such we are actively exploring a number of such
opportunities at this moment in time.
John French
Chairman
1 March 2005
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS ENDED 31 DECEMBER 2004
Notes 6 Months ended 6 Months ended Year ended
31 December 31 December 30 June
2004 2003 2004
Unaudited Unaudited Audited
� � �
Turnover 993,594 61,136 695,320
Cost of Sales (505,081) (38,134) (338,270)
__________ __________ __________
Gross Profit 488,513 23,002 357,050
Administrative Expenses (883,933) (284,554) (855,974)
__________ __________ __________
Operating loss 3 (395,420) (261,552) (498,924)
Interest receivable 300 92 7,192
Interest payable (1,231) (17,893) (5,917)
__________ _________ _________
Loss on ordinary activities (396,351) (279,353) (497,649)
before taxation
Taxation 2 - - 40,090
_________ _________ _________
Loss after taxation and for (396,351) (279,353) (457,559)
period
========== ========== ==========
Loss per share 4 (0.43)p (1.30)p (1.00)p
========== ========== ==========
Fully diluted loss per share 4 (0.43)p (1.30)p (1.00)p
========== ========== ==========
CONSOLIDATED BALANCE SHEET
FOR THE SIX MONTHS ENDED 31 DECEMBER 2004
6 Months ended 6 Months ended Year ended
31 December 31 December 30 June
2004 2003 2004
Unaudited Unaudited Audited
� � �
Fixed assets
Intangible assets 2,230,740 - 2,331,771
Tangible assets 102,447 51,423 106,632
_________ __________ _________
2,333,187 51,423 2,438,403
_________ __________ _________
Current assets
Stock 556,473 126,722 462,964
Debtors 573,297 237,199 403,081
Cash - 822,268 207,839
__________ _________ _________
1,129,770 1,186,189 1,073,884
Creditors: Amounts falling due within (789,559) (83,024) (442,538)
one year
________ _________ ________
Net current assets 340,211 1,103,165 631,346
________ _________ _________
Total assets less current liabilities 2,673,398 1,154,588 3,069,749
Creditors: Amounts falling due after (2,185) (15,000) (2,185)
one year
________ ________ ________
2,671,213 1,139,588 3,067,564
========== ========== ==========
Share capital and reserve
Called up share capital 4,890,341 2,872,160 4,890,341
Share premium account 1,108,616 1,057,959 1,108,616
Profit and loss account (3,327,744) (2,790,531) (2,931,393)
________ ________ ________
Equity shareholders' funds 2,671,213 1,139,588 3,067,564
========== ========== ==========
This interim financial information was approved by the Board of Directors on 28
February 2005
DJ Bretel
Director
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 31 DECEMBER 2004
Notes 6 Months ended 6 Months ended Year ended
31 December 31 December 30 June
2004 2003 2004
Unaudited Unaudited Audited
� � �
Net cash outflow from 5 (412,311) (396,413) (761,590)
operating activities
__________ __________ __________
Return on investments
and servicing of financing
Interest received 300 92 7,192
Interest paid (1,231) (17,893) (5,917)
__________ __________ __________
(931) (17,801) 1,275
__________ __________ __________
Taxation recovered - - 27,640
Capital expenditure and
financial investment
Purchase of intangible - - (1,000)
fixed assets
Purchase of tangible fixed (8,803) (7,348) (23,434)
assets
Proceeds from sale of - - 3,148
tangible fixed assets
__________ __________ __________
(8,803) (7,348) (21,286)
Acquisitions and disposals __________ __________ __________
Purchase of subsidiary - - (2,500,100)
undertaking
Net cash acquired with - - 21,529
subsidiary
__________ __________ __________
- - (2,478,571)
__________ __________ __________
Cash outflow before use (422,045) (421,562) (3,232,532)
of liquid resources and
financing
__________ __________ __________
Financing
Issue of equity share - 1,743,213 4,221,467
capital
Costs of issue of equity - (236,224) (502,089)
share capital
Repayment of other loans - (194,358) (209,358)
Repayment of the capital (1,630) - (815)
element of hire purchase
__________ __________ __________
(1,630) 1,312,631 3,509,205
(Decrease)/increase in cash __________ __________ __________
(423,675) 891,069 276,673
========== ========== ==========
NOTES TO THE INTERIM FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 31 DECEMBER 2004
1.Financial Information
The financial information above does note constitute statutory accounts within
the meaning of Section 240 of the Companies Act 1985.
The interim financial information has not been audited but has been reviewed by
the Company's auditors.
2.Taxation
No liability to taxation arises due to the loss incurred.
3.Operating loss
6 Months ended 6 Months ended Year ended
31 December 31 December 30 June
2004 2003 2004
Unaudited Unaudited Audited
� � �
This is stated after
charging:
Depreciation of tangible 12,988 9,741 23,201
fixed assets
Amortisation of intangible 101,031 - 34,410
fixed assets
========== ========== ==========
4.Loss per share
The loss per share is based on the loss for the period and the weighted average
number of ordinary shares in issue and ranking for dividend.
6 Months ended 6 Months ended Year ended
31 December 31 December 30 June
2004 2003 2004
Unaudited Unaudited Audited
� � �
Loss for the period (396,351) (279,353) (457,559)
========== ========== ==========
Weighted average number of 91,961,744 21,426,363 45,323,440
shares
Fully diluted loss per share: ========== ========== ==========
Loss for the period (396,351) (279,353) (457,559)
========== ========== ==========
Weighted average number of 92,569,143 21,426,363 45,323,440
shares
========== ========== ==========
5.Reconciliation of operating loss to net cash outflow from operating
activities
6 Months ended 6 Months ended Year ended
31 December 31 December 30 June
2004 2003 2004
Unaudited Unaudited Audited
� � �
Operating loss (395,420) (261,552) (498,924)
Depreciation of tangible 12,988 9,741 23,201
fixed assets
Amortisation of intangible 101,031 - 34,410
fixed assets
(Increase) in stock (93,509) (18,723) (63,819)
(Increase)/decrease in (170,216) 22,012 (226,751)
debtors
Increase in creditors 132,815 (147,891) (29,707)
__________ __________ __________
Net cash outflow from (412,311) (396,413) (761,590)
operating activities
========== ========== ==========
END
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