TIDMCSSG
RNS Number : 7255P
Croma Security Solutions Group PLC
21 October 2021
21 October 2021
Croma Security Solutions Group Plc
("Croma", "CSSG", the "Company" or the "Group")
Final Results
Positive Trading Performance despite Pandemic
Croma Security Solutions Group plc, the AIM listed total
security services provider, announces its final results for the
year end ended 30 June 2021.
Financial Highlights
-- 13% uplift in EBITDA to GBP1.98m (2020: GBP1.75m)
-- Generated revenue of GBP32.5m (2020: GBP32.3m) slightly above the prior year
-- Furlough and grant income of GBP0.76m (2020: GBP0.62m)
-- Increase in profit before tax to GBP1.21 m (2020: GBP0.09m)
-- Strong cash position of GBP5.4m as at 30 June 2021 (2020: GBP4.1m)
-- 2.6% increase in total dividend for the year to 2.0p (2020:
1.95p) reflecting confidence in the outlook for all Group
businesses
Trading Highlights
-- Successfully navigated the challenges arising from the
pandemic balancing fulfilling contractual obligations whilst also
protecting staff and the general public
-- Consistent demand for the Group's security services from
existing customer base augmented by new client wins
-- PROception has developed into a natural extension of man guarding services
-- Signed UK partnership with iLOQ, leading Finnish security firm
-- All retail stores now fully open with trading improving month on month
Trading Outlook
-- Strategy remains focused on creating a national network of
Croma Security Centres alongside setting new standards in providing
premium guarding services.
-- Recorded positive trading period since year end, positioning
the business for a good first half performance in the Group's next
financial year.
Sebastian Morley, Chairman of CSSG, said,
"These results were ahead of internal expectations and reflect,
in our view, the Group's operational resilience to the challenges
generated by the pandemic. The business is well placed to deliver
an increasing dividend income to shareholders whilst retaining a
sufficiently strong balance sheet to support further investment.
The combination is intended to offer our shareholders a combination
of future income and capital growth."
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
Jessica Cave
Sarah Mather
Novella
Tel: +44 (0)203 151 7008
Tim Robertson
Fergus Young
This announcement contains inside information as defined in the
UK Market Abuse Regulations and is disclosed in accordance with the
Company's obligations under those Regulations.
Chairman's Statement
I am very happy to present the trading results for this
financial year.
The Group adapted quickly to the unique set of market conditions
created by the global pandemic and delivered a resilient trading
performance including an 13% increase in EBITDA to GBP1.98m
(2020:GBP1.75m), and operating profits up to GBP1.3m (2020:
GBP0.1m). While revenues increased slightly, the step up in
profitability came from a higher margin business mix and
operational efficiencies secured in response at the outset of the
pandemic which have since been maintained. The Group also benefited
from the UK Government's Job Support Scheme with income of GBP0.76m
(2020: GBP0.62m).
From a management perspective, we believe the business is well
placed with no long-term borrowings and GBP5.4m of cash to support
future investment. All business units are performing well and we
are seeing opportunities to expand organically and via
acquisition.
Focused on servicing the premium end of the security market,
Croma has a strong brand in a fragmented market with the objective
of becoming the British security brand in Britain. Demand for the
Group's premium security services remains high as individuals and
businesses seek to protect themselves and their assets from a range
of potential risks. To service this demand, we are creating a
national network of Croma Security Centres.
The centres have evolved from the Group's retail stores to
provide the full range of the Group's services from manned guarding
to CCTV, intruder alarm and advanced security systems as well as
high security locks. Currently there are 10 security centres and
while the pandemic has slowed the acquisition of new stores there
is a good pipeline of potential new sites to be pursued in the
coming months.
Innovation and in particular, innovation through technology is a
specific focus for the Group. We have a strong track record of
early adoption where we see opportunity to differentiate and
enhance our services. To this end, we recently signed an agreement
to become the UK partner for iLOQ. iLOQ is a leading Finnish
security business with sales in excess of GBP66 million and within
its portfolio of products is a potentially market changing lock
which is opened and powered by a mobile phone. An interesting
opportunity for the Group.
Reflecting strong cashflow over the year, the Board is pleased
to recommend a final dividend to shareholders of 2p per share and
subject to approval at the Annual General Meeting to be held on 24
November 2021, the final dividend will be paid on 26 November 2021
to all shareholders on the register at the close of business on 12
November 2021. The shares will be marked ex-dividend on 11 November
2021.
Like so many businesses we were tested in new ways by the
pandemic, and it is very pleasing to be able to say that the
business weathered it well. Our teams adapted quickly to the new
environment, we not only continued to service our client base but
were able to win and service new clients.
The next 12 months will bring new opportunities, as there are
many companies in our sector who have not fared so well and need to
find partners or acquirers to be able to continue to pursue their
commercial goals. We are in dialogue with a range of potential
partners and acquisition targets, but we are, as ever, cautious in
our approach and any decision will be preceded by detailed due
diligence.
Looking ahead, the Board is confident in the prospects of
business. This is confidence is reflected in the Board's decision
to approve a 2.6% increase in the total dividend for the year.
Sebastian Morley - Chairman
20 October 2021
Operational Review
The Directors present the Group Strategic Report for Croma
Security Solutions Group plc and its subsidiary companies for the
year ended 30 June 2021
The Group's strategic objectives are:
-- to deliver market leading full-service security offerings to
the upper quartile end of both large corporations and government.
Achieved by maintaining quality of service as a priority, focusing
on meeting the full range of our clients' security needs, and
leveraging our brand and client base;
-- to produce consistent growth in 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;
-- to develop and bring to market new technologies; and
-- to deliver attractive 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 expand the services to
long-term 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 performance of each business segment is discussed below:
Croma Vigilant
Croma Vigilant, our largest division, generated sales of
GBP27.4m (2020: GBP27.0m) and operating profit of GBP1.1m (2020:
GBP1.1m). This is a good result given the backdrop of the ongoing
pandemic reflecting consistent demand from existing customers and
new clients won over the year.
Croma Vigilant provides manned guarding for assets and
individuals and now employs over 900 security personnel throughout
the UK. Fundamental to the division's success is the military ethos
that pervades all aspects of the way the division is run, and all
contact with customers. Alongside this approach is a focus on
innovation. In 2019, the Company launched PROception, a new front
of house of concept, making the modern reception part of a
building's security strategy. An innovative proposition, PROception
was successful very quickly and is now a central component of
nearly all our new building security contracts where there is a
need for front of house services.
Following on from the previous year, our security teams
continued to work well together to adapt to the new environment
whilst implementing all safety precautions set out by the UK
government and operating with the necessary PPE workwear, at all
times.
Contracted revenues over a period exceeding one month
represented approximately 82% (2020: 84%) of income, ensuring that
the Company continues to have good visibility over the reliability
of future revenues. There was a similar split in income to previous
years between private and public, of approximately two thirds/one
third respectively.
Since the year-end, Croma Vigilant has continued to perform well
with demand consistent with internal forecasts.
Croma Security Systems
Croma Security Systems including Croma Biometrics recorded sales
of GBP2.45m (2020: GBP2.46m) and an operating profit before
impairment of GBP0.54m (2020: GBP0.28m).
In support of the Group's focus on providing total security
solutions, Croma Security Systems continues to provide a full range
of electronic security solutions including CCTV, high security
locks to FastVein(TM) biometrics technology for high-speed human
identification.
Due to the pandemic, the restrictions and closure of
entertainment venues impacted sales and orders from our cinema
customers, however maintenance and monitoring income from annual
contracts, mainly from Croma installed systems, improved to
GBP0.45m (2020: GBP0.33m).
Last year, the Company gained a licence from the Financial
Conduct Authority ("FCA") to enable the sale of product and
services on a deferred payment or credit basis. This has yet to be
fully exploited.
Croma Locksmiths
Croma Locksmiths, which operates through 10 security centres on
the south coast of the UK and centrally through the Group,
delivered a resilient performance with sales of GBP2.64m (2020:
GBP2.89m) and operating profit before impairment of GBP0.34m (2020:
GBP0.36m).
Due to the pandemic some centres were closed or operating at
reduced opening hours. Following the ending of government
restrictions on the retail sector in 2021, trading has been moving
back to normalised levels with pleasing levels of orders from our
cruise ship customers.
This year the Company agreed to become the UK partner for iLOQ.
Specialising in locks, iLOQ has developed a new battery less door
lock which can be opened by a smartphone. The lock is powered by
the mobile phone opening it, a feature clearly differentiating it
from many competing products. The potential applications for the
mobile iLOQ are significant across multiple industries given its'
advantages relating to security, data collection and central
control. Under the partnership, Croma will sell, install,
integrate, and maintain iLOQ products in the UK.
We remain focused on creating a national chain of modern
security centres. The pandemic has limited the ability of the Group
to add new stores, however, there is a good pipeline of potential
acquisitions which are typically independent security stores often
family run. Target stores are all located in affluent areas and are
large enough to be converted into security centres. To date, the
conversions have all successfully increased revenues and
profitability by offering a full range of products and services to
both private individuals and commercial customers.
Trading in the security centres is returning to normal following
re-opening and unless there is further disruption from Covid-19 the
division is well placed to continue to expand.
Group Financials
2021 2020
The Group financials can be summarised as follows: GBP000's GBP000's
Revenue 32,539 32,321
Gross profit 5,385 5,516
Gross margin % 16.5% 17.1%
Other operating income 764 615
EBITDA 1,982 1,754
Impairment of goodwill - 857
Operating profit 1,251 136
Earnings/(loss) per share 6.56p (0.90p)
Net assets 12,378 11,692
Cash generated from operations 2,155 3,044
Cash and cash equivalents 5,433 4,076
Dividend per share in relation to the year 2p 1.95p
The Group achieved 13% growth in EBITDA by a combination of a
savings in overheads and an increase in other operating income.
Operating profit was not impacted by an impairment charge enabling
us to deliver positive earnings per share of 6.56p.
Other operating income comprised mainly income from the UK
Government's Job Support Scheme. The scheme has served its purpose
and we do not anticipate any redundancies after the scheme closed
on 30 September 2021.
Cash generated from operations remained positive at GBP2.2m
(2020: GBP3.0m). The prior year benefited from an influx of cash
from the collection of overdue debts and deferment of HMRC
liabilities as we entered the first lockdown.
Outlook and future developments
With all operating divisions profitable, and central overheads
holding steady, the increase in cash reserves to GBP5.4m, and with
a GBP1m bank facility secured on the debtor book, the Board
believes the Group is a good position to pursue acquisition
opportunities, win new contracts and develop its iLOQ partnership,
whilst expanding and improving existing refurbishing infrastructure
as demand continues to return to pre-pandemic levels.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 JUNE 2021
Continuing operations:
2021 2020
GBP000's GBP000's GBP000's GBP000's
Revenue 32,539 32,321
Cost of sales (27,154) (26,805)
--------- ---------
Gross profit 5,385 5,516
Administrative expenses (4,898) (5,995)
Other operating income 764 615
Operating profit 1,251 136
Analysed as:
Earnings before interest, tax, depreciation
amortisation 1,982 1,754
Impairment - (857)
Depreciation (565) (570)
Amortisation of intangible assets (166) (191)
Operating profit 1,251 136
Finance expenses (40) (49)
Profit before tax 1,211 87
Tax (234) (221)
Profit/(loss) for the year from continuing
operations 977 (134)
Total comprehensive (loss)/ income for
the year attributable to owners of the
parent 977 (134)
========= =========
Earnings per share
Basic and diluted earnings/(loss) per
share (pence) 6.6 (0.90)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEARED 30 JUNE 2021
2021 2020
GBP000's GBP000's
Assets
Non-current assets
Goodwill 6,454 6,454
Other intangible assets 290 456
Property, plant and equipment 488 574
Right-of-use assets 997 1,120
8,229 8,604
Current assets
Inventories 681 764
Trade and other receivables 5,097 4,535
Cash and cash equivalents 5,433 4,076
11,211 9,375
Total assets 19,440 17,979
Liabilities
Non-current liabilities
Deferred Tax (91) (128)
Lease liabilities (764) (837)
(855) (965)
Current liabilities
Trade and other payables (5,924) (4,982)
Borrowings and lease liabilities (283) (340)
(6,207) (5,322)
Total liabilities (7,062) (6,287)
Net assets 12,378 11,692
========= =========
Issued capital and reserves attributable to owners
of the parent
Share capital 794 794
Treasury shares (399) (399)
Share premium 6,133 6,133
Merger reserve 2,139 2,139
Capital redemption reserve 51 51
Retained earnings 3,660 2,974
Total equity 12,378 11,692
========= =========
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2021
2021 2020
GBP000's GBP000's
Cash flows from operating activities
Profit before taxation 1,211 87
Depreciation amortisation and impairment 731 1,618
(Profit) on sale of property, plant and
equipment (19) (2)
Net changes in working capital 374 1,698
Financial expenses 40 49
Corporation tax paid (182) (406)
Net cash generated from operations 2,155 3,044
Cash flows from investing activities
Purchase of property, plant and equipment (138) (121)
Proceeds on disposal of property, plant
and equipment 28 11
Net cash used in investing activities (110) (110)
Cash flows from financing activities
Payments to reduce lease liabilities (408) (408)
Increase/(reduction) of borrowings 11 (15)
Dividends paid (291) (164)
Interest paid - -
Net cash used in financing activities (688) (587)
Net increase/(decrease) in cash 1,357 2,347
Cash and cash equivalents at beginning
of period 4,076 1,729
Cash and cash equivalents at end of period 5,433 4,076
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
Capital
Share Redemption Treasury Share Merger Retained Total
Capital Reserve Shares Premium Reserve Earnings Equity
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
At 1 July 2019 794 51 (399) 6,133 2,139 3,272 11,990
Loss for the
year - - - - - (134) (134)
Dividends paid - - - - - (164) (164)
At 30 June
2020 794 51 (399) 6,133 2,139 2,974 11,692
========= ============ ========= ========= ========= ========== =========
Profit for
the year - - - - - 977 977
Dividends paid - - - - - (291) (291)
At 30 June
2021 794 51 (399) 6,133 2,139 3,660 12,378
========= ============ ========= ========= ========= ========== =========
NOTES TO THE PRELIMINARY ANNOUCEMENT FOR THE YEAR ENDED 30 JUNE
2021
1. Basis of preparation
The Group financial statements have been prepared and approved
by the Directors in accordance with international accounting
standards in conformity with the requirements of the Companies Act
2006 ("Adopted IFRS").
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 2020 or 30 June
2021.
The financial information has been extracted from the statutory
accounts of the Company for the year ended 30 June 2021. The
auditors reported on those accounts; their reports were unqualified
and did not include references to any matters to which the auditors
drew attention by way of emphasis without qualifying their report
and did not contain a statement under either Section 498 (2) or
Section 498 (3) of the Companies Act 2006.
The accounts for the year ended 30 June 2020 have been delivered
to the Registrar of Companies, whereas those for the year ended 30
June 2021 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 20 October 2021 and will be available on
request from Unit 7 & 8 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.
2. Accounting policies
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
2021and the year ended 30 June 2020. The directors expect similar
accounting policies for the year ended 30 June 2022.
3. Segmental reporting
Croma Croma Croma Central Total
Vigilant Security Locksmiths
(Guarding) Systems (Locks)
(Electronic)
2021 Business Segments GBP000's GBP000's GBP000's GBP000's GBP000's
Segment revenues 27,454 2,447 2,638 - 32,539
Gross profit 3,473 982 934 (4) 5,385
Administrative expenses (2,389) (568) (505) (724) (4,186)
Amortisation - (47) (119) - (166)
Depreciation (252) (79) (234) - (565)
Profit/(loss) on disposal 2 11 6 - 19
Other operating income 258 243 263 - 764
Operating profit/(loss) 1,092 542 345 (728) 1,251
------------ -------------- ------------ --------- ---------
Segment assets 8,297 4,673 4,931 1,539 19,440
Segment (liabilities) (4,751) (956) (1,298) (57) (7,062)
Segment net assets 3,546 3,717 3,633 1,482 12,378
------------ -------------- ------------ --------- ---------
Additions to non-current
assets 235 35 28 - 298
------------ -------------- ------------ --------- ---------
2020 Business Segments GBP000's GBP000's GBP000's GBP000's GBP000's
Segment revenues 26,968 2,459 2,894 - 32,321
Gross profit 3,335 996 1,184 - 5,516
Administrative expenses (2,204) (688) (770) (716) (4,378)
Amortisation - (62) (129) - (191)
Depreciation (231) (88) (251) - (570)
(Loss)/profit on disposal 3 - (1) - 2
Other operating income 165 126 324 - 615
Operating profit/(loss)
before impairment 1,068 284 357 (716) 993
Impairment of goodwill - (433) (424) - (857)
Operating profit/(loss)
after impairment 1,068 (149) (67) (716) 136
------------ -------------- ------------ --------- ---------
Segment assets 7,201 4,892 5,374 512 17,979
Segment (liabilities) (3,919) (856) (1,357) (155) (6,287)
Segment net assets 3,282 4,036 4,017 357 11,692
------------ -------------- ------------ --------- ---------
Additions to non-current
assets 82 30 11 - 123
------------ -------------- ------------ --------- ---------
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