RNS Number:8177K
Croma Group PLC
31 December 2007
RNS ANNOUNCEMENT
CROMA GROUP PLC
("Croma" or "the Group")
FINAL RESULTS
FOR THE YEAR TO 30TH JUNE 2007
The Board of Croma, the AIM listed surveillance security and homeland defence
specialist, is pleased to announce its final results for the year to 30th June
2007, which reflect an increase in turnover, new contracts won and repeat
business.
KEY POINTS
*100% increase in turnover for the year;
*Unaudited turnover up 38% for the first 4 months of the current year and
a move into profit;
*New acquisitions fully embedded and trading well;
*New contracts secured, together with strong repeat business;
*Heightened awareness of surveillance and homeland security needs;
*Closure of non-profitable subsidiary, Croma Shawley;
*Board restructuring;
*Issue of convertible loan stock.
John French, Non-Executive Chairman of Croma, said: "The current year has
started well with turnover on continuing operations for the first 4 months to
October up from �1,584,301 to �2,180,589, an increase of 38%. More significantly
the Group has moved into profitability. This improvement is due to contributions
from acquisitions, which are now fully integrated as well as new business from
both new and existing clients throughout the Group. I expect to be able to
indicate the progress made at the AGM scheduled for 1st February. The Board
believes the progress to date will continue and be reflected in the results
going forward."
Enquiries:
Croma Group plc
John French, Non-Executive Chairman Mobile: 07836 722 482
Seymour Pierce Ltd.
Mark Percy / Jeremy Garrett-Cox 020 7107 8000
CHAIRMAN'S STATEMENT
FOR THE YEAR ENDED 30 JUNE 2007
I have pleasure in announcing the results for the year ended 30 June 2007.
Financials
Turnover for the year was �5,644,382 compared with �2,817,875 for the
comparative period last year, an increase of 100%. Gross profit was �1,263,108
(2006: �1,250,134), an increase of 1% but administrative costs at �2,891,076
(2006: �2,106,361) resulted in an operating loss for the period before goodwill
amortisation and impairment of �1,627,968 (2006: loss �856,227).
Furthermore, after a fuller review of the Group's businesses, a decision was
taken to write down goodwill by �1,587,807, in addition to the annual
amortisation charge of �507,660 (2006: �333,164) with the result that the
pre-tax loss for the period was �3,819,594. As a result of this, the Group has
taken a decision to close all operating subsidiaries that do not make a profit
and have no reasonable prospect of so doing, and also to pare head office costs
to the basic minimum we can, consistent with remaining on the AIM market of The
London Stock Exchange.
The Group's first six months of trading in the current financial year have shown
profit and positive cash flow in all continuing divisions and I expect to be
able to make a more detailed and positive statement at the Annual General
Meeting.
Business Review
In June 2007, after a strategic review, the Board took the decision to close
further non-profitable subsidiaries including Croma Defence Systems Limited,
which incorporates the Shawley CCTV operation in the event that they remained
unprofitable. Despite the introduction of some new products and financial
support from the parent company, the operation has not achieved the targets set
and the decision to close the business was confirmed. The company was put into
liquidation on 10th December 2007 and the impairment of assets held at 30th June
2007 has been recognised in the 2007 accounts. The Board felt that the resources
available to the Group would be best applied to the other operations, allowing
them to be both profitable and to have the ability for sustained growth going
forward. The impact on the Group of the closure of Croma Defence Systems Limited
is a loss of �548,248.
During the last three years the Group has acquired three new businesses and it
has been the success of these businesses which is now bringing the prospect of
continued growth to the group. The business of Vigilant Security (Scotland)
Limited, acquired in 2006, has proven to have been a major contributor to the
Group. It has seen an increase in its turnover since joining the Group and
continues to secure additional business from both existing and new customers. In
particular it has established a very strong and developing relationship with
government agencies as a result of securing a number of contracts both in the
period to June 2007 and during the early part of the current year.
Photobase Limited was also acquired in the previous year and has undergone a
number of material changes in management and product. The benefits of these
changes are beginning to show themselves in terms of business development and
securing new contracts as well as cross selling within the Group.
R&D Design Systems Ltd, one of the Group's earlier acquisitions, has seen a
significant and positive turn around in terms of business activity resulting in
a strong performance over recent months and is now a major contributor to the
Group.
With the closure of all of our defence systems operations in Hereford in the
prior year, and the closure since the year end of the entire Shawley business in
South Wales, and with the decreasing emphasis of the Group's activities in South
Wales and the increasing emphasis of the Group's activities elsewhere in the UK
and overseas, it became apparent that the need to maintain even a reduced Head
Office function in Hereford was no longer necessary, resulting in the closure of
all Head Office functions, and the necessary residual operations being relocated
to the Vigilant offices in Leuchars, Scotland. This substantial restructuring,
together with a number of other operational changes, has had a material
beneficial impact on the costs of operating the Group and this will show through
into profits going forward.
Board Changes
A number of changes have taken place during the last few months. Keith Wheeler
stepped down as a non-executive director in June 2007 and in August 2007 David
Bretel advised the Board of his wish to step down as Finance Director and
Company Secretary and of his intention to leave the Group at the expiry of his
contract in May 2008. In October 2007, Gerald McGill was appointed to the board
as non-executive finance director and Company Secretary and operates from
Scotland where he will work closely with the CEO at the new Leuchars based Head
Office.
I have in the past indicated my wish, at the appropriate time, to relinquish the
duties of Chief Executive. As part of that process, Sebastian Morley, Managing
Director of Vigilant, joined the Group board in 2006 and took on the role of
Group Managing Director to assist in the development of operations. That has
proven to be a success, so much so that in June, the decision was taken to split
my role so that Sebastian Morley could take on the role of Group Chief Executive
Officer.
For the last few months I have been acting as non-executive chairman working
with my colleagues on overall planning and restructuring of the Group going
forward and I am delighted to say that it is in no small measure due to the
efforts of Sebastian and his new management team that the Group has enjoyed such
a strong performance as is reflected in the early months of the year.
I have every confidence in the future of the Croma Group and the management team
as it now stands, so much so that now is the right time for me to step down from
the Group. Nick Hewson, non-executive director and chairman of the audit
committee, has agreed to take on the role of non-executive Chairman, and will, I
know, assist our
CEO, Sebastian Morley, and Gerald McGill, with the benefit of his extensive
business experience. Gerry Thompson has been one of our long serving
non-executive directors and he too is also taking the opportunity to step down
from the Board. I would like to take this opportunity to pay tribute to the
contribution both Nick and Gerry have made during the last few years in helping
to build the base upon which the Group can now expand confidently into the
future. Gerry Thompson and I will be stepping down from the Board at the
forthcoming AGM.
Going forward the board will consist therefore of Nick Hewson as non-executive
Chairman, Sebastian Morley as CEO and Gerald McGill as non-executive Finance
Director and Company Secretary.
Outlook
The prospects for the Group are now encouraging. We have every reason to believe
that the stronger start to the current year will continue. The turnover for the
current year to the end of November is up on the equivalent period, and the cost
base has been substantially reduced and I hope to be able to report more and
better news at the Annual General Meeting. At the same time the Group recently
raised �220,000 of Convertible Loan Stock from existing institutional investors
with a coupon of 7% and a conversion price of 5p.
In conclusion I would like to express my appreciation to all the management,
staff and shareholders for their continued support during the year.
John French
Non-executive Chairman
December 2007
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE 2007
2007 (As Restated)
2006
� �
Turnover 5,644,382 2,817,875
Cost of sales (4,381,274) (1,567,741)
------- -------------
Gross profit 1,263,108 1,250,134
-------------------- --------- ---------
Goodwill amortisation
and impairment (2,095,467) (333,164)
Other operating
expenses (2,891,076) (2,106,361)
-------------------- --------- ---------
Administrative costs (4,985,543) (2,439,525)
------------- --------------
Operating loss (3,723,435) (1,189,391)
Interest receivable 1,655 920
Interest payable and
similar charges (97,815) (25,016)
----------- -----------
Loss on ordinary
activities before
taxation (3,819,595) (1,213,487)
Taxation - 45,312
---------------- -----------------
Loss on ordinary
activities after
taxation (3,819,595) (1,168,175)
-------------- -----------------
Loss per share (2.54)p (1.11)p
-------------- -----------------
The Group had no recognised gains and losses other than the prior year effect of
adopting FRS 20, the cumulative effect of which is to reduce profit and loss
reserves by �95,902 at 30 June 2006, and the loss for the financial year.
The results relate to continuing activities.
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2007
(AsRestated)
2007 2007 2006 2006
� � � �
Fixed assets
Intangible assets 2,594,136 4,949,606
Tangible assets 191,109 237,855
-------- ---------
2,785,245 5,187,461
Current assets
Stock 311,212 540,961
Debtors 1,427,328 1,306,835
Cash at bank 131,792 242,083
-------- --------
1,870,332 2,089,879
Creditors: amounts
falling due
within one year (2,232,513) (2,963,570)
-------- --------
Net current (362,181) (873,691)
liabilities -------- ---------
Total assets less 2,423,064 4,313,770
net current
liabilities
Creditors: amounts
falling due
after more than one (1,136,450) (268,544)
year
Provision for (2,828) (27,414)
liabilities
-------- ---------
1,283,786 4,017,812
======== =========
Share capital and
reserves
Called up share 8,441,413 7,703,591
capital
Share premium 1,388,522 1,272,554
account
Profit and loss (8,909,130) (5,089,535)
account
Other reserves 362,981 131,202
-------- ---------
Shareholders' funds 1,283,786 4,017,812
======== =========
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 JUNE 2007
2007 2007 2006 2006
� � � �
Net cash outflow from
operating activities (489,810) (584,346)
Return on investments and
servicing of financing
Interest paid (97,815) (25,016)
Interest received 1,655 920
(96,160) (24,096)
Taxation (paid)/received (222,021) (128,084)
Capital expenditure and
financial investment
Purchase of tangible assets (35,990) (15,654)
--------- --------
Receipts from sales of tangible 5,909 4,875
assets
--------- --------
(30,081) (10,779)
Acquisitions and disposals
Purchase of subsidiary - (2,096,000)
undertakings
--------- --------
Net cash acquired with - (151,844)
subsidiaries
--------- --------
(2,247,844)
Cash outflow before use of (838,072) (2,995,149)
liquid resources and
financing
Financing
Issue of equity share capital 100,000 2,815,133
Issue of convertible loan notes 750,000 231,203
Capital element of finance lease - (9,876)
--------- --------
850,000 3,036,460
--------- ---------
11,928 41,311
========= =========
Financial information
The financial information included in the above statement is extracted from the
Group's accounts for the period ended 30 June 2007, and does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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