TIDMCSSG
RNS Number : 5875E
Croma Security Solutions Group PLC
02 March 2020
Croma Security Solutions Group Plc
("CSSG", "Croma", "the "Company" or the "Group")
Interim results for the six months to 31 December 2019
Croma Security Solutions Group plc (AIM: CSSG), the AIM listed
total security services provider, announces its unaudited interim
results for the six months to 31 December 2019.
Sebastian Morley, Chairman of CSSG, said:
"We have made a good progress in the first half of this
financial year maintaining the step change in sales and profits
achieved over the last 24 months whilst continuing to invest in the
growth drivers of the business. Our store refurbishment plan
continues as we convert our existing traditional locksmiths'
businesses into security centres, offering the full range of our
premium security services, whilst we remain focused on developing
our centres into a national network. At the heart of our offer is
the delivery of a premium security service organised with a
military ethos behind it and this approach continues to resonate
strongly amongst existing and new clients. Our business is well
positioned and with healthy cash balances we are well placed to
continue to expand."
Steady progress with strong cash generation
-- Demand for Croma's innovative security solutions remains strong
-- H1 revenues of GBP17.36 million (H1 2018: GBP17.98 million)
-- Generating EBITDA of GBP1.1 million (H1 2018: GBP1.2 million)
-- Gross margin percentage improvement to 18.8% (H1 2018 18.4%)
-- Healthy cashflow with cash balances of GBP2.3 million (H1 2018: GBP1.7 million)
-- 7.1% increase in interim dividend to 0.75p per share
Further investment in new services and security centres
-- Croma's brand is synonymous with premium security services
and is focused on becoming the British security brand
-- Faster than anticipated growth of Croma PROception, the
ground-breaking front of house business, transforming building
guest services
-- Ex-military ethos remains core part of Group culture and key
to new contract wins and retention
-- Continuing the conversion of the current store network into security centres
Outlook for H2 2020
-- Healthy pipeline of acquisition opportunities to further extend the security centre network
-- Well placed for a satisfactory result for the year
This announcement contains inside information as defined in
Article 7 of the Market Abuse Regulations No. 596/2014 and is
disclosed in accordance with the Company's obligations under
Article 17 of those Regulations.
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
Chris Savidge
Novella Tel: +44 (0)203 151 7008
Tim Robertson
Fergus Young
Chairman's Statement
Introduction
I am very pleased to report Croma's interim results for the six
months to 31 December 2019 which saw the Group generate turnover of
GBP17.36 million and EBITDA of GBP1.10 million. This was a
satisfying performance reflecting good demand for our premium
security services from both government and commercial entities. We
are an ambitious business with a clear strategy focused on becoming
the British security brand and during this period we continued to
invest in the business and people towards achieving this
objective.
Group strategy
In 2019, the Group set out a clear strategy around which to
develop the business, the central themes of which were:
-- 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.
Croma is very focused on these objectives and has been helped by
the real and perceived increases in security risk across the UK.
There is a shift amongst government, business and high net worth
individuals seeking to reduce their risk exposure by opting for
premium security services. This trend is to Croma's advantage. The
reputation of the security industry has been tarnished
historically, with negative images of security personnel being
underpaid, poorly dressed individuals with limited training. Croma
has always operated with 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. This,
combined with the innovations in security Croma is introducing such
as PROception, is positioning the Group well to increase its share
of the growing premium security market.
Building a national network of Croma Security Centres is a
central focus for the business. There is currently no nationwide
security brand in the UK. Instead there are many independently
owned security stores catering to the domestic market with limited
ranges of locks and alarms. There is significant scope for Croma
Security Centres to introduce a new format which caters to both the
domestic and commercial markets offering innovative technology
driven security solutions and making use of a wide range of
products. The Group currently operates 10 security centres with a
pipeline of further sites in varying stages of negotiation for
potential acquisition.
Croma Vigilant
Croma Vigilant is the largest part of our business providing
manned guarding for assets and individuals. It has completed a
successful six-month period, maintaining contracted sales at
similar levels to the prior year and investing in the business.
Reflecting the prevailing trends in the market, approximately 79%
of this division's income is now contracted over a period exceeding
1 year. We expect the proportion of contracted income to increase
during H2 which gives more certainty over future earnings and
enhances our ability to invest for the future.
The division currently employs over 900 high-grade security
personnel throughout the UK who are responsible for guarding a wide
range of assets, individuals and communities. PROception is a part
of Croma Vigilant and existing clients have been very receptive to
the idea of incorporating the reception desk and reception
personnel into a building's security. Another emerging growth area
is providing security within communities under the Community Safety
Accreditation Scheme.
Croma Systems and Locksmiths
Croma Systems and Locksmiths, a provider of a range of
innovative security technology services including CCTV, Intruder
Alarms, FastVein (Biometrics) and high security locks, delivered a
good performance, with an 11% increase in turnover on H1 2018,
maintaining the step change in contribution whilst investing in the
continued development of security centres.
The current network of security centres all operating under the
Croma brand are for the first-time marketing the entire range of
the Group's services under one roof.
During H1 we have signed framework agreements with a hospital, a
major facilities management company and a local authority. Also, we
have continued to win new work from our long-standing client
partnerships including the education sector, sports facilities,
cinema chains and high value residential work.
Financial Review
As expected with the loss of some project work, our guarding
division saw a drop in revenue of 7%, however both our Systems and
Locksmiths divisions produced increases in revenue of 11% leading
to an overall decrease in revenues of 3.5% to GBP17.36 million (H1
2018: GBP17.98 million). The change in the sales mix contributed to
a stable gross margin of GBP3.27 million (H1 2018: GBP3.31m) and an
improvement in the gross margin percentage to 18.8% (H1:2018:
18.4%).
Investment in staff both through internal expansion and through
acquisition led to an increase in administrative expenses to
GBP2.55 million (H1 2018: GBP2.29 million) and as a result
operating profits decreased to GBP0.72 million (2018: GBP1.03
million).
The adoption of IFRS16 did not significantly impact operating
and retained profit, however EBITDA was enhanced by approximately
GBP0.20 million to GBP1.10 million (H1 2018: GBP1.22 million). We
expect to see a similar enhancement of EBITDA in H2.
Cashflow remains positive with cash balances at 31 December 2019
of GBP2.31 million (H1 2018: GBP1.71 million).
Dividend
The Board is pleased to declare a 7.1% increased interim
dividend of 0.75p (H1 2018: 0.7p) per share, to be paid on 8 April
2020 with an ex-dividend date of 26 March 2020 and an associated
record date of 27 March 2020.
Outlook
We have made a positive start to the second half of this
financial year. We have in place a clear strategy around which we
are developing the business. Importantly our customers are
generally looking to upgrade and increase their security measures
which further supports our confidence in the outlook for the
business.
Sebastian Morley
Chairman
2 March 2020
CROMA SECURITY SOLUTIONS GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR 6 MONTHSED 31 DECEMBER 2019
6 months 6 months Year
ended ended ended
31-Dec-19 31-Dec-18 30-Jun-19
unaudited unaudited audited
Notes GBP000s GBP000s GBP000s
Revenue 17,357 17,981 34,599
Cost of sales (14,087) (14,669) (28,109)
---------- ----------
Gross profit 3,270 3,312 6,490
Administrative expenses (2,551) (2,287) (5,041)
Operating profit 719 1,025 1,449
Analysed as:
Earnings before interest, tax, depreciation,
and amortisation of intangible assets 1,105 1,223 1,871
Depreciation (286) (102) (232)
Amortisation (100) (96) (190)
---------- ---------- ----------
Operating profit 719 1,025 1,449
Finance costs (29) (9) (2)
Profit before tax 690 1,016 1,447
Tax (123) (188) (281)
Profit for the year from continuing operations 567 828 1,166
Profit and total comprehensive income
for the period attributable to owners
of the parent 567 828 1,166
Earnings per share 3
Basic and fully diluted earnings per
share (pence)
- From continuing operations 3.8 6.00 * 7.82
*Adjusted for the purchase and re-issue of treasury shares in
the prior year.
CROMA SECURITY SOLUTIONS GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2019
31-Dec-19 31-Dec-18 30-Jun-19
unaudited unaudited audited
GBP000s GBP000s GBP000s
Assets
Non-current assets
Goodwill 7,311 7,233 7,311
Other Intangible assets 546 739 647
Property, plant and equipment 621 535 668
Right of use assets 1,290 - -
9,767 8,507 8,626
Current assets
Inventories 865 753 825
Trade and other receivables 7,782 7,276 6,163
Cash and cash equivalents 2,308 1,712 1,729
10,955 9,741 8,717
Total assets 20,722 18,248 17,343
Liabilities
Non-current liabilities
Deferred tax (143) (182) (158)
Trade and other payables over 1
year (11) - (23)
Lease liabilities (919) - -
(1,073) (182) (181)
Current liabilities
Trade and other payables (6,853) (6,167) (5,126)
Lease liabilities (382) - -
Borrowings (23) (27) (46)
(7,257) (6,194) (5,172)
Total liabilities (8,330) (6,376) (5,353)
Net assets 12,393 11,872 11,990
========== ========== ==========
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 3,675 3,142 3,272
Share options - 12 -
Total equity 12,393 11,872 11,990
========== ========== ==========
CROMA SECURITY SOLUTIONS GROUP PLC
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR 6 MONTHSED 31 DECEMBER 2019
6 months 6 months Year
ended ended ended
31-Dec-19 31-Dec-18 30-Jun-19
unaudited unaudited audited
Notes GBP000s GBP000s GBP000s
Cash flows from operating activities
Profit before taxation 690 1,016 1,447
Depreciation, and amortisation 386 198 419
Loss on sale of plant and equipment - - 3
Net changes in working capital 4 (69) (1,289) (973)
Financial expenses 29 9 2
Corporation tax paid (17) - (436)
Net cash generated from/(used in) operations 1,019 (66) 462
Cash flows from investing activities
Purchase of business including acquisition
costs net of
cash acquired - (80) (245)
Purchase of property, plant and equipment (56) (107) (356)
Proceeds on disposal of property, plant and
equipment - - 12
Net cash used in investing activities (56) (187) (589)
Cash flows from financing activities
Payments to reduce borrowings (8) (6) (1)
Principal element of lease payments (183) (25) (42)
Dividends paid (164) (149) (253)
Interest paid (29) (9) (2)
Net cash used in financing activities (384) (189) (298)
Net increase/(decrease) in cash and cash equivalents 579 (442) (425)
Cash and cash equivalents at beginning of period 1,729 2,154 2,154
Cash and cash equivalents at end of the period 2,308 1,712 1,729
CROMA SECURITY SOLUTIONS GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Capital
Share Treasury Share Merger Redemption Retained Share Total
Capital Shares Premium Reserve Reserve Earnings Options Equity
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000's GBP000s
Balance At
1 July
2019 794 (399) 6,133 2,139 51 3,272 - 11,990
Profit for
the period - - - - - 567 - 567
Dividends
paid - - - - - (164) - (164)
At 31
December
2019 794 (399) 6,133 2,139 51 3,675 - 12,393
========= ========= ========= ========= =========== ========== ========= ========
Balance at
1 July
2018 794 (399) 6,133 2,139 51 2,463 12 11,193
Profit for
the period - - - - - 828 - 828
Dividends
paid - - - - - (149) - (149)
Balance at
31
December
2018 794 (399) 6,133 2,139 51 3,142 12 11,872
========= ========= ========= ========= =========== ========== ========= ========
Balance at
1 July
2018 794 (399) 6,133 2,139 51 2,347 12 11,077
Profit for
the year - - - - - 1,166 - 1,166
Dividends
paid - - - - - (253) - (253)
Transfer on
lapse of
options - - - - - 12 (12) -
Balance at
30 June
2019 794 (399) 6,133 2,139 51 3,272 - 11,990
========= ========= ========= ========= =========== ========== ========= ========
NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR 6 MONTHS TO 31
DECEMBER 2019
1. Basis of preparation
The interim financial information in this report has been
prepared using accounting policies consistent with IFRS as adopted
by the European Union. 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 European
Commission. The financial information has been prepared on the
basis of IFRS that the Directors expect to be adopted by the
European Union and applicable as at 30 June 2019. 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 2019 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
2019 and 31 December 2018 is unaudited.
2. Accounting policies
Except as described below, 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 2019.
The Group has initially adopted IFRS 16 Leases (see note 5) from
1 July 2019. Under the transition methods chosen, comparative
information is not restated.
The changes to the accounting policies for leases and the effect
of initially applying the new standards are explained in Note 5
below. In summary the effect can mainly be attributed to the
following:
-- Recognition of right of use assets and lease liabilities for former operating leases
-- Recognition of depreciation of the right of use asset and an
interest charge in place of operating lease charge in the income
statement
The changes in accounting policies are also expected to be
reflected in the Group's consolidated financial statements as at
and for the year ending 30 June 2020.
A number of other new and amended standards and interpretations
are effective from 1 January 2019 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 6 months Year
ended ended ended
31-Dec-19 31-Dec-18 30-Jun-19
Numerator
Profit for the year on continuing operations
and used in basic EPS (GBP000s) 567 828 * 1,166
Denominator
Number of shares (thousands)
Weighted average number of shares used in basic
EPS 14,902 14,902 * 14,902
Weighted average number of shares used in diluted
EPS 14,902 14,904 * 14,902
*Adjusted for the purchase and re-issue of treasury shares in the prior
year.
4. Note supporting the cash flow statement
6 months 6 months Year
ended ended ended
31-Dec-19 31-Dec-18 30-Jun-19
unaudited unaudited audited
GBP000s GBP000s GBP000s
Net changes in working capital
Increase in inventories (41) (45) (67)
Increase in trade and other receivables (1,613) (1,279) (49)
Increase/(decrease) in trade and other
payables 1,585 35 (857)
(69) (1,289) (973)
5. IFRS 16 Leases
IFRS 16 eliminates the classification for lessees of leases as
operating leases or finance leases and treats all in a similar way
to finance leases. It replaced IAS 17 Leases and related
interpretations.
i. Explanation of changes in accounting policies
The details of the new accounting policies and the nature of the
changes to previous accounting policies in relation to the Group's
goods and services are set out below:
Type of lease New accounting policy Nature of change in accounting
policy
Long term Liabilities for such leases are Under IAS 17, such lease
property and recognised and measured at the present payments were recognised
vehicle leases value of the remaining lease payments. on a straight-line basis
For new leases these are discounted over the lease term and the
using the rate implicit in the lease leases were effectively 'off
when readily determinable, for other balance sheet'.
leases, including those at transition,
these are discounted using the incremental
borrowing rate ("IBR") relevant
for the lease. The weighted average
IBR applied to leases at 1 July
2019 was 3.5%. A right of use asset
has been recognised at the carrying
value of lease liability at 1 July
2019.
---------------------------------------------- -----------------------------------
Short term A practical expedient offered by IFRS 16 did not have a significant
and low value IFRS 16 has been applied to not impact on the Group's accounting
leases recognise a lease liability and policies.
right of use asset for such leases
but to recognise payments on a straight-line
basis over the lease term. Such
leases are considered to either
have a lease term of no more than
12 months or an underlying asset
value of no more than GBP4,500.
---------------------------------------------- -----------------------------------
ii. Effect of adopting IFRS 16
The Group has adopted IFRS 16 using the modified retrospective
method (including appropriate practical expedients), with the
effect of initially applying this standard recognised at the date
of initial application (i.e. 1 July 2019). Accordingly, the
information presented for 2019 has not been restated - i.e. it is
presented, as previously reported, under IAS 17 and related
interpretations.
The difference between the operating commitments reported as at
30 June 2019 and the lease liability recognised at 1 July 2019 can
be explained as follows:
GBP000s
Operating lease commitments disclosed
at 30 June 2019 1,359
New arrangements entered into on 1 July 2019 247
Less: Low value leases recognised as an expense (3)
Discounted using the incremental borrowing rate
at 1 July 2019 (165)
Lease liability and right of use assets recognised
at 1 July 2019 1,438
6. Financial Information
The Board of Directors approved this interim report 28 February
2020.
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
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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