TIDMCSSG
RNS Number : 4565V
Croma Security Solutions Group PLC
03 November 2017
CROMA SECURITY SOLUTIONS GROUP PLC
("CSSG", the "Company" or the "Group")
FINAL RESULTS
FOR THE YEAR TO 30 JUNE 2017
CROMA SECURITY SOLUIONS GROUP PLC, the AIM quoted total security
services provider, announces its results for the year ended 30 June
2017.
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.
Highlights
-- Revenue growth to GBP22.06M an increase of 15.9%
-- Gross margin: GBP4.03M an increase of 3.5%
-- EBITDA GBP0.8M an increase of 35%
-- Balance sheet net assets GBP10.30M
-- Earnings per share 2.13p
-- Trading in the current financial year appreciably ahead of last year
An electronic copy of the annual report is available from the
Group's website www.cssgplc.com along with the Notice of AGM.
For further information contact:
Croma Security Solutions Group Tel: +44 (0)7768
plc 006 909
Sebastian Morley, Chairman
WH Ireland Limited (NOMAD Tel: +44 (0)207 220
and Broker) 1666
Mike Coe / Jessica Cave
Chairman's Statement
I am pleased to report Croma Security Solutions Group's final
results for the year to 30 June 2017.
The year has once again delivered on our core strategy of
organic growth, coupled with innovation and strictly targeted
acquisitions.
Financial prudence and responsibility are central to our ongoing
strategy in order to shape an outstanding security services group
that delivers for clients, staff and shareholders.
The growth in the Group has been driven in the Croma Vigilant
and Croma Security Divisions while Croma Locksmiths continues to
develop following our acquisition of Access Locksmiths in December
2015.
Our aim is to build a recognised brand that is synonymous with
the provision of the highest level of total security services. We
are stringently focused on quality and outstanding service delivery
for our clients. More clients are seeing the benefit of having all
of their security needs provided by one contractor and we are
delivering tangible benefits to them.
Croma Vigilant has seen 14% top line growth, winning contracts
in the private and public sectors with particularly strong growth
in the property management and infrastructure sectors. We have
invested heavily in our personnel this year in training standards
and capability.
The guarding industry is changing fast and we are leading the
charge. The traditional model of the low paid, lowly motivated
officer is over and the current security climate demands capable,
well trained and highly motivated officers. Croma Vigilant, where
we utilise ex-military security professionals, has created a niche
in a mediocre market place and our clients and potential clients
welcome it.
Croma Security continues to deliver a significant level of new
works for Odeon Cinemas and our second cinema chain continues to
develop. In addition to the leisure industry, Croma Security has
continued to win and compete for high end security solutions for
high net worth individuals and we are becoming a provider of choice
in this community. Croma Security has seen an increase in turnover
this year and we see this trend continuing as our strategy
evolves.
Croma Biometrics has been involved this year with a number of
larger opportunities to bring FastVein(TM) to the forefront as a
potent biometric high-speed human identifier. Identity management
is a highly topical area and with our unique FastVein(TM) system,
we are placed to benefit from this as a Group. Following the
successful installation of FastVein into St Mary's Ascot School
major systems have been installed at Cheltenham Ladies College,
West Hill Park School and further along the UK Coast in Brighton.
This year has also seen FastVein(TM) deployed in the construction
sector. FastVein(TM) has seen considerable investment from the
Group and although the concept is still in its early stages of
development, we see it is a key part of our offering to
clients.
Croma Locksmiths has been subject to a slowdown in general trade
and a delay to the anticipated start date for our major contract,
although this has now commenced. This impacted the numbers
significantly and has led to a further restructuring of the
business.
The focus of the Group remains that of delivering sustained
growth by our unique offering to the security market. We aim to be
a Group apart, a true one stop offering where clients can have all
of their security requirements serviced by one vertically
integrated Group. The security market remains fragmented and flat
footed and we aim to capitalise on this by outstanding service
delivery and aggressive marketing.
OUTLOOK
The Group has started the new financial year with trading
considerably ahead of the equivalent period last year and we look
forward to continuing this momentum and updating the market in due
course.
I would like to thank all employees of the Group for their hard
work over the last year. Putting a Group together by acquisition
has had its challenges but our staff and our clients are seeing
something luminous and refreshing, a Group that lives by
outstanding service delivery while stringently managing its
finances and delivering growth and return for its shareholders.
Sebastian Morley
Chairman
3 November 2017
Extract from the Strategic Report
The Group's strategic objectives are:
-- to deliver market leading full service security offerings to
the top end of the corporate and residential markets. This will be
achieved by maintaining quality of service as a priority, focusing
efforts on those clients who appreciate our differentiated
offering, and leveraging our brand and client base;
-- to produce consistent growth in clients and financial
performance, by maintaining our margins and managing our costs.
Acquisitions will be pursued only when they can be seen clearly to
add value to the Group without imposing excessive burdens of
operational consolidation;
-- to develop and bring to market new technologies where feasible; and
-- to deliver meaningful shareholder returns.
The Group's longer term objectives are to grow our core
offerings in the UK and abroad until we are the security provider
of choice to leading large corporates, to expand our service
offering to include e-security, and to develop specific high-end
national projects.
The maintenance and expansion of solutions to the present client
base is fundamental. The Group continues to develop historical
clients, some of whom currently use a diverse range of contractors,
in order to bring all their needs under one roof when this makes
good business sense for both parties.
The Group also continues developing overseas opportunities in
particular in the Middle East. Whilst these require a high level of
input, Croma see that this market will be a large contribution to
overall future expansion
The performance of each business segment is discussed below:
Croma Vigilant
Croma Vigilant saw 14% top line growth with sales increasing to
GBP16.40M (2016: GBP14.29M)
Operating profit decreased to GBP0.47M due to client driven
training requirements after the succession of terror attacks. This
level of training will not recur in the present year.
The year has seen the biggest change in the industry in our 20
years of trading. The reality of the terror threat in public places
has started something of a revolution in how security services are
seen and delivered. Most of our security officers operate in high
footfall areas and with strong encouragement from us, our clients
are buying into a more capable and well-trained security service
working with and alongside the police.
Croma Vigilant's ex-military high grade offering has always been
at the cutting edge of the U.K. guarding market and the general
lifting of the bar for the industry will be extremely beneficial to
us.
Our aim is to grow organically, gaining contracts from private
and public organisations who demand the best.
Croma Security Systems
Croma Security Systems has seen turnover improve with continued
orders in the leisure and education and construction sectors.
Although client budgets remain tight there is a very promising
pipeline. Turnover for the year has risen modestly by 4% to
GBP2.36M (2016: GBP2.27M), with operating profit up to GBP0.46M
(2016: GBP0.41M).
Last year Croma Security Systems adjusted the sales effort by
bringing on board an existing internal and highly experienced
engineer. This is allowing the current team to pass over smaller
items to a technically capable individual. This was a very
successful move and this year we have brought over another member
of staff to further grow our sales effort.
Croma Security Systems continues to provide a full range of
electronic security solutions for a wide range of clients. Both of
our Cinema client contracts have improved upon last year with more
new works placed. A number of new projects and refurbishment
contracts have materialised and our pipeline continues to look
positive. The increased level of works in this sector has brought
about an additional dedicated member of staff to support the client
account manager. The education sector has featured heavily in our
sales this year as Croma continues to offer expertise and
differentiation to these clients.
Croma Biometric - FastVein(TM)
As per our statement last year Croma Biometrics continues to
develop and turnover has improved to GBP0.35M (2016: GBP0.17M).
There has been continued investment in developing new software,
client applications and marketing. Whilst development expenditure
continues to outstrip revenues, again we remain highly confident
that the current development and future opportunities justify the
on-going investment.
We have delivered further projects in the education sector and
we continue our plan to deliver further installations into this
sector. We see the retail sector as an opportunity especially in
the monitoring of staff attendance in addition to controlling
access to sensitive areas thus offering demonstrable savings to our
clients. This year has also seen a major construction application
for FastVein(TM) and we plan to expand on this success in the near
future.
In addition to major enhancements to our software capabilities
and the availability of additional software engineers Croma
Biometrics delivered a high-end external housing that finally
places the FastVein(TM) device on the radar of our more discerning
clients.
Croma Locksmiths
Croma Locksmiths has again seen a large change this year
following the acquisition of a South Coast competitor which brought
the total number of retail outlets to seven between Brighton and
Poole/Bournemouth. Turnover increased to GBP2.95M (2016: GBP2.31M)
and operating profit improved to GBP0.2M (2016: GBP0.09M), however
this improvement was due mainly to the reversal of contingent
consideration arising on the acquisition of Access Locksmiths in
2015. Without this reversal operating profit would have been at
break even.
Sales have continued to be slow and a major contract that was
scheduled to commence during the year was delayed into the present
financial year, with many costs including additional staff hired in
anticipation of the contract commencement.
M Whettingsteel, the operations director of Croma Locksmiths,
resigned from the business in August 2017. His operational duties
will now be covered by existing management.
Croma Locksmiths will be concentrating on delivery of the major
contract whilst continuing with operational system changes.
Opportunity for consolidation in the sector still exists.
Outlook and priorities
The Group remains focused on driving growth, predominantly in
the UK and overseas.
An enhanced sales team straddling the entire Group is in place
and awareness of the Croma brand within the target market is
increasing.
Croma Group's web presence continues actively to promote
services along with email, social media, and exhibitions.
Croma Vigilant continues to see strong evidence that the high
quality of their service offering is being well received and that
intelligent and discerning companies will pay a premium for a
reliable and effective guarding service.
Croma Security Systems is predominantly focused on providing
integrated and reliable security systems. Corporate clients
represent the company's best opportunities and best returns in
terms of turnover and margin. In the year to 30 June 2018 the
merging of Croma Locksmiths and Croma Security Systems will offer
efficiencies to the business and increased benefits to our
clients.
As a highly respected specialist, Croma Security Systems is
directing some attention towards security systems design and
consultancy, an area of great strength which we hope to expand
especially with overseas clients where our depth of knowledge and
experience is not only welcomed but projects with the necessary
funding exist.
Croma Biometrics will continue to develop FastVein(TM) in the
Education, Construction and Retail Sector. In addition, overseas
resellers will be sought. Hardware is being redesigned on an
on-going basis to improve the external appearance and reduce
controller hardware size and improve efficiency and costs. Our
latest versions allow entry into the high end bespoke installations
sector whilst still being able to accommodate every day
solutions.
Group Financials
2017 2016
The Group financials can be summarised
as follows: GBP000's GBP000's
Revenue 22,058 19,031
Gross profit 4,025 3,890
Gross margin % 18.2% 20.4%
EBITDA 799 588
Operating profit 431 238
Earnings per share 2.13p 0.96p
Net Assets 10,305 10,021
Cash generated from/(used in) operations 1,233 (110)
Dividend paid per share (paid) 0.5p 0.4p
The financial results of the Group are broadly satisfactory but
improvements must be sought in the present year.
Revenues have grown by 16% in the year once again, led primarily
by growth in our manned guarding division, Croma Vigilant. There
was also growth in Croma Locksmiths because we are now reporting a
full year's results for five out of 7 of our retail outlets.
The results of our Locksmiths division were disappointing. In
particular, we have a seen a fall in retail sales of around 7% and
reduced spending from our business customers. To counter this fall,
we are seeking to improve sales processes at our tills to better
integrate with stock control systems. Together with our security
systems division, we have recently taken on a new staff member
focusing on sales and customer development. This is already bearing
fruit.
In Locksmiths, we saw a stock shrinkage adjustment of GBP83k but
with improved systems we are confident this will not recur in the
present year. Also we saw the provision against slow moving stock
increase to GBP122k. The Board feels that this is a sufficient
level to allow us to reduce our inventories, so benefiting cash
flow but without further impacts to the profit and loss
account.
Gross profit in Croma Vigilant was slightly down from GBP1,927k
to GBP1,861k. This was due to one-off costs of GBP50k, and also the
implementation of a client driven training programme after the
succession of terror attacks. These costs will not recur in the
present year.
During the year cashflow was much improved with cash generated
from operations at GBP1,233k and borrowing on our invoice
discounting facility down by GBP404k to GBP135k. The key driver
behind this change was moving the payment date for many of our
employees to after the month for which their earnings accrued.
Year-end cash balances and cash generated from operations were
improved by GBP862k because of this change which has also allowed
us to use our invoice discounting facilities more effectively and
free up cash for investment in the group.
Operating profit was up GBP193k during the year and we expect
more improvement in the present year. The Board has identified a
number of synergies within our Locksmiths and Security Systems
businesses which should see around GBP200k savings in
administrative costs as the two businesses become operationally
merged. The savings will be made in staff costs and in
software.
The Board is aiming to maintain the progressive dividend policy
adopted in previous periods. During the year an interim dividend of
0.5p per share was paid at a cost of GBP84k
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 JUNE 2017
Continuing operations:
2017 2016
GBP000's GBP000's
Revenue 22,058 19,031
Cost of sales (18,033) (15,141)
--------- ---------
Gross profit 4,025 3,890
Administrative expenses (3,802) (3,675)
Other operating income 208 23
Operating profit 431 238
Analysed as:
Earnings before interest, tax, depreciation
amortisation 799 588
Depreciation (126) (109)
Amortisation of intangible assets (242) (241)
Operating profit 431 238
----------------------------------------------- --------- ---------
Finance expenses (74) (61)
Profit before tax 357 177
Tax 3 (24)
Profit for the year from continuing
operations 360 153
Total comprehensive income for the
year attributable to owners of the
parent 360 153
========= =========
Earnings per share
Basic and diluted earnings per share
(pence) 2.13 0.96
Earnings from continuing operations
Diluted Earnings per share (pence) 2.13 0.95
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEARED 30 JUNE 2017
Assets 2017 2016
GBP000's GBP000's
Non-current assets
Goodwill 7,213 7,213
Other Intangible assets 1,161 1,401
Property, plant and equipment 420 442
8,794 9,056
Current assets
Inventories 710 643
Trade and other receivables 3,804 3,446
Cash and cash equivalents 770 392
5,284 4,481
Total assets 14,078 13,537
Liabilities
Non-current liabilities
Deferred tax (238) (303)
Trade and other payables (89) (140)
(327) (443)
Current liabilities
Trade and other payables (3,251) (2,433)
Borrowings (195) (640)
(3,446) (3,073)
Total liabilities (3,773) (3,516)
Net assets 10,305 10,021
========= =========
Issued capital and reserves attributable
to owners of the parent
Share capital 845 844
Share premium 6,133 6,129
Merger reserve 2,139 2,139
Retained earnings 1,176 900
Other reserves 12 9
Total equity 10,305 10,021
========= =========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
Share Share Merger Retained Share Total
Capital Premium Reserve Earnings Options Equity
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
At 1 July 2015 743 5,230 2,139 806 6 8,924
New share issue 101 899 - - - 1,000
Profit for the
year - - - 153 - 153
Dividends paid - - - (59) - (59)
Share option scheme
charge - - - - 3 3
At 30 June 2016 844 6,129 2,139 900 9 10,021
New share issue 1 4 - - - 5
Profit for the
year - - - 360 - 360
Dividends paid - - - (84) - (84)
Share option scheme
charge - - - - 3 3
At 30 June 2017 845 6,133 2,139 1,176 12 10,305
========= ========= ========= ========== ========= =========
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
2017 2016
GBP000's GBP000's
Cash flows from operating activates
Profit before taxation 357 177
Depreciation amortisation and impairment 368 350
Loss on sale of property, plant
and equipment 3 10
Net changes in working capital 443 (672)
Financial expenses 74 61
Corporation tax paid (12) (36)
Net cash generated from operations 1,233 (110)
Cash flows from investing activities
Purchase of business including acquisition
costs net of cash acquired (100) (712)
Purchase of property, plant and
equipment (114) (73)
Proceeds on disposal of property,
plant and equipment 7 67
Net cash used in investing activities (207) (718)
Cash flows from financing activities
New share issue 5 -
Decrease in Hire Purchase (56) (38)
(Decrease)/increase in borrowings (439) 539
Dividends paid (84) (59)
Interest paid (74) (61)
Net cash used in financing activities (648) 381
Net increase/(decrease) in cash 378 (447)
Cash and cash equivalents at beginning
of period 392 839
Cash and cash equivalents at end
of period 770 392
Basis of preparation
The Group financial statements have been prepared and approved
by the directors in accordance with International Financial
Reporting Standards (IFRSs), International Accounting Standards and
Interpretations (collectively "IFRS") issued by the International
Accounting Standards Board (IASB) as adopted by the European Union
("Adopted IFRS's").
While the financial information included in this preliminary
announcement has been computed in accordance with Adopted IFRSs,
this announcement does not itself contain sufficient information to
comply with Adopted IFRSs.
This preliminary announcement does not constitute statutory
accounts of the Group for the years ended 30 June 2017 or 30 June
2016.
The financial information for the year ended 30 June 2016 is
derived from the statutory accounts for that year which have been
delivered to the Registrar of Companies. The auditors reported on
those accounts; their report was unqualified and did not contain a
statement under either Section 498 (2) or Section 498 (3) of the
Companies Act 2006 and did not include references to any matters to
which the auditor drew attention by way of emphasis. The statutory
accounts for the year ended 30 June 2017 have not yet been
delivered to the Registrar of Companies, nor have the auditors yet
reported on them.
The accounts for the year ended 30 June 2017 will be delivered
to the Registrar of Companies following the Company's Annual
General Meeting. The Annual Report will be posted to all
shareholders who have requested a copy on 6 November 2017 and will
be available on request from Unit 6 Fulcrum 4, Solent Way,
Whiteley, Hampshire PO15 7FT and on the Company website at
http://www.cssgplc.com/investors/. The Annual Report contains full
details of the principal accounting policies adopted in the
preparation of these financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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