Interim Results 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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