TIDMCSSG
RNS Number : 7643P
Croma Security Solutions Group PLC
22 November 2016
CROMA SECURITY SOLUTIONS GROUP PLC
("CSSG", the "Company" or the "Group")
FINAL RESULTS
FOR THE YEAR TO 30 JUNE 2016
CROMA SECURITY SOLUTIONS GROUP PLC ("the Group"), the AIM listed
total security services provider, announces its results for the
year ended 30 June 2016.
This announcement contains inside information
Highlights
-- Revenue growth to GBP19.03M an increase of 20%
-- Gross Profit GBP3.89M an increase of 18.7%
-- EBITDA GBP0.6M
-- Balance sheet net assets GBP10.02M
-- Earnings per share 0.96p
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 plc
Sebastian Morley, Chairman Tel: +44 (0)7768 006 909
WH Ireland Limited (NOMAD and Broker)
Paul Shackleton / Nick Prowting Tel: +44 (0)207 220 1666
Chairman's Statement
I am pleased to report Croma Security Solutions Group's final
results for the year to 30 June 2016.
The year has delivered on our core strategy of strong organic
growth coupled with innovation and fiscal responsibility.
The Group has been enlarged with the acquisition of Access
Locksmiths and this business is now firmly embedded. Coupled with
the acquisition, the Group has continued to win business in all
sectors and across all divisions. Our market has also been extended
to the Middle East where we see strong growth potential after
winning our initial contracts in the region.
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 service where our clients
can have all of their security needs served by our Group. This is
combined with relentless innovation across all of our
divisions.
Croma Vigilant has enjoyed another record year with the addition
of contracts with the NHS where we have introduced an innovative
method of patient safety in one of the UK's largest NHS Trusts.
This, combined with contract wins with property management and
logistics firms, has seen a new record level of turnover and
operating profit. Croma Vigilant is setting itself apart from the
traditional guarding model by setting the standard of front end
delivery based on our ex-military ethos. This will result in
ongoing contract wins across all UK sectors both private and
public.
Croma Security has delivered a significant level of new works
for Odeon Cinemas and this has resulted in a contract win with
another cinema chain. 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 the
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 develops.
Croma Biometrics has been involved with a number of Government
initiatives in the UK and Middle East to bring Fastvein 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.
We have seen the successful installation of Fastvein into St Mary's
Ascot school and this has led to further installations in the
independent schools sector. We see the education sector as a key
area for identity management through Fastvein(TM). Fastvein has
seen considerable investment from the Group and although the
concept is in its early stages of development, we see it is a key
part of our unique offering to clients.
Croma Locksmiths has expanded to seven retail locations on the
south coast following the acquisition of Access Locksmiths Ltd. Our
Locksmiths division is now fully integrated with the new business
and we see considerable cross selling opportunities within the
Group for the corporate locks market.
The focus of the Group remains that of delivering sustained
growth by our unique offering to the security market. Our aim is to
be a group apart, a true one stop offering where clients can have
all of their security needs serviced by one vertically integrated
Group. The security market remains fragmented and flat footed and
we aim to capitalise on this by aggressive marketing and delivery
of our services.
During the year, our Finance Director, Alex Tetley, resigned to
take up a new position and we thank him for his efforts during his
time with the Group. We are delighted to welcome back Richard Juett
to the role of Finance Director of the Group, to replace Alex.
Once again, I would wish to extend our heartfelt thanks to all
the employees the Group, whose unstinting hard work has delivered
another good set of results, a growing reputation for excellence
and most importantly, a happy ship. The Board views the coming year
with considerable optimism. Forming a Group of diverse businesses
has taken time and effort from our valued team and this is now
taking hold and bearing reward for our shareholders. We maintain
our aim of providing outstanding security services to our clients
and value to our shareholders. We aim to grow and build on our
successes of this past year with stringency and financial
prudence.
Strategy and Objectives
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 clients who will 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.
2015/16 has seen the Group maintain its plans for growth. Last
year mention of future acquisitions was made and Croma is pleased
to have purchased "Access Locksmiths Ltd". This was completed half
way through the year and has taken the balance of the year to
integrate. A great deal of energy and cost has been expended to
rebrand Access as Croma Locksmiths and to merge the business into
the Croma Group along with other organisational changes.
Growth of the Group over the last three years had been purely
organic, and whilst not as fast as originally hoped it has resulted
in a solid platform upon which to build. The Board is therefore
pleased by the acquisition of Access Locksmiths Ltd and is ready to
consider and acquire further businesses which can add to the
Group's service offering, geographic footprint and
profitability.
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.
Performance of each business segment is discussed below:
Croma Vigilant
Croma Vigilant had another successful year. Turnover has grown
by more than 14% to GBP14.29M from GBP12.50M in 2015, and operating
profit for the company has increased to GBP0.69M (2015: restated
GBP0.46M). The focus on delivering a quality premium service is
being recognised by clients who place value on a reliable and
effective security provider who can act as a partner to them in all
aspects of physical security.
Croma Vigilant continues to operate in the upper echelon of the
manned guarding market with the delivery of its manned guarding,
key holding and commissionaire services and is the largest revenue
contributor to the Group.
Whilst the Company did not benefit from the provision of
services to the Commonwealth Games as it did with Glasgow 2014, it
was successful in securing NHS contracts which Croma Vigilant
continue to win. These contracts have not only replaced the
additional turnover that the Commonwealth Games provided but they
have led to growth in turnover that is sustainable in the longer
term.
The continued growing reputation for quality of service has led
to further client wins, and the Company's client base is growing as
quickly in London and the South East as it is in Scotland, The
Midlands and Northern England. The sales effort has been reinforced
to target large corporates and NHS Trust Hospitals as ideal
clients.
Quality of service is demonstrated by the high levels of client
retention, and whilst the Company, like all operators, has seen
margins continue to come under pressure it has held the line in
refusing to compromise on service delivery.
Croma Security
Croma Security has seen turnover improve with continued orders
in the leisure and education sectors. Although client budgets
remain tight there is a very promising pipeline. Turnover for the
year has risen 12% to GBP2.27M (2015: GBP2.0M), with operating
profit up to GBP0.41M (2015: GBP0.38M).
Croma Security has 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.
Croma Security continues to provide a full range of electronic
security solutions for a wide range of clients. The Odeon Cinema
contract has improved upon last year with more new works placed.
This year also saw the start of a further cinema chain placing
similar works with Croma Security for new works and on-going
maintenance. Solar farm security installations have continued
although at a lower level than expected.
Croma Biometric - FastVein(TM)
We continue to develop Croma Biometrics and turnover has
improved to GBP0.17M (2015: GBP0.13M). There has been continued
investment in developing new software, client applications and
marketing. Whilst development expenditure continues to outstrip
revenues, we remain highly confident that the current development
and future opportunities justify the on-going investment.
We plan to deliver further installations into the education
sector and propose marketing to the retail sector as we see an
opportunity to assist in the monitoring of staff attendance in
addition to controlling access to sensitive areas and offering
demonstrable savings to our clients.
Croma Locksmiths
Croma Locksmiths has seen the largest change this year with the
acquisition of a South Coast competitor bringing the total number
of retail outlets to seven between Brighton and Poole/Bournemouth.
Turnover has increased to GBP2.31M (2015: GBP1.18M) to give an
overall operating profit of GBP0.11M (2015: GBP0.09M).
The restructuring, rebranding and customer accreditations
associated with the acquisition has impacted profitability
negatively, but the ground has been laid to see a return to the
expected margins moving forwards and in the current period this
early effort is bearing fruit.
Outlook and Priorities
The Group remains focused on driving growth, both 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. As a highly respected specialist
Croma Security 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 Locksmiths will be pursuing a strategy of geographical
expansion this coming year, either by opening new stores or
acquiring more existing businesses. There is opportunity for
further consolidation in the sector.
Croma Biometrics will continue to develop FastVein(TM) in the
Education 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.
Group Financials
The financial results of the Group are broadly satisfactory.
Revenue has grown by 20% in the year. This improvement was
driven by Croma Vigilant, which has delivered new contracts at
steady margins, and by the acquisition of Access Locksmiths Ltd.
Although overall gross profit has increased the gross margin has
fallen to 20.4% (2015: 22.6%). Tighter margins have contributed to
the fall but the main reason is due to our mix of revenue and
particularly the impact of the increase in lower margin guarding
business.
Operating profit has remained steady with only a modest increase
in the year. This has been affected by continued costs relating to
the FastVein(TM) development together with increased amortisation
and depreciation charges arising from new investments during the
year.
2015 saw the first payment of the Group's dividend of 0.3p per
share which was followed by a further dividend of 0.4p per share
paid in January 2016. The Board is aiming to maintain this
progressive dividend policy.
S J F Morley
Executive Chairman
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 June 2016
----------------------------------------------------------------------------------------
As restated
--------------------------------------------------------------- --------- ------------
Continuing operations: 2016 2015
--------------------------------------------------------------- --------- ------------
GBP000s GBP000s
-------------------------------------------------------------- --------- ------------
Revenue 19,031 15,829
--------------------------------------------------------------- --------- ------------
Cost of sales (15,141) (12,553)
--------------------------------------------------------------- --------- ------------
Gross profit 3,890 3,276
--------------------------------------------------------------- --------- ------------
Administrative expenses (3,675) (3,081)
--------------------------------------------------------------- --------- ------------
Other operating income 23 27
--------------------------------------------------------------- --------- ------------
Operating profit 238 222
--------------------------------------------------------------- --------- ------------
Analysed as:
-------------------------------------------------------------- --------- ------------
Earnings before interest, tax, depreciation and amortisation 588 488
-------------------------------------------------------------- --------- ------------
Depreciation (109) (81)
-------------------------------------------------------------- --------- ------------
Amortisation of intangible assets (241) (185)
-------------------------------------------------------------- --------- ------------
Operating profit 238 222
-------------------------------------------------------------- --------- ------------
Finance expenses (61) (32)
--------------------------------------------------------------- --------- ------------
Profit before tax 177 190
--------------------------------------------------------------- --------- ------------
Tax (24) 33
--------------------------------------------------------------- --------- ------------
Profit for the year attributable to owners of the parent 153 223
--------------------------------------------------------------- --------- ------------
Earnings per share
--------------------------------------------------------------- --------- ------------
Basic and diluted earnings per share (pence)
--------------------------------------------------------------- --------- ------------
- Basic earnings per share 0.96 1.49
--------------------------------------------------------------- --------- ------------
- Diluted earnings per share 0.95 1.49
--------------------------------------------------------------- --------- ------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEARED 30 June 2016
------------------------------------------------------ ------------------
As restated
--------------------------------- ------------------ ------------------
Assets 2016 2016 2015 2015
---------------------------------- -------- -------- -------- --------
GBP000s GBP000s GBP000s GBP000s
---------------------------------- -------- -------- -------- --------
Non-current assets
---------------------------------- -------- -------- -------- --------
Goodwill 7,213 5,867
---------------------------------- -------- -------- -------- --------
Other Intangible assets 1,401 1,041
---------------------------------- -------- -------- -------- --------
Property, plant and equipment 442 332
---------------------------------- -------- -------- -------- --------
9,056 7,240
---------------------------------- -------- -------- -------- --------
Current assets
---------------------------------- -------- -------- -------- --------
Inventories 643 237
---------------------------------- -------- -------- -------- --------
Trade and other receivables 3,446 2,290
---------------------------------- -------- -------- -------- --------
Cash and cash equivalents 392 839
---------------------------------- -------- -------- -------- --------
4,481 3,366
---------------------------------- -------- -------- -------- --------
Total assets 13,537 10,606
---------------------------------- -------- -------- -------- --------
Liabilities
---------------------------------- -------- -------- -------- --------
Non-current liabilities
---------------------------------- -------- -------- -------- --------
Deferred tax (303) (244)
---------------------------------- -------- -------- -------- --------
Trade and other payables (140) (40)
---------------------------------- -------- -------- -------- --------
(443) (284)
---------------------------------- -------- -------- -------- --------
Current liabilities
---------------------------------- -------- -------- -------- --------
Trade and other payables (2,433) (1,371)
---------------------------------- -------- -------- -------- --------
Borrowings (640) (27)
---------------------------------- -------- -------- -------- --------
(3,073) (1,398)
---------------------------------- -------- -------- -------- --------
Total liabilities (3,516) (1,682)
---------------------------------- -------- -------- -------- --------
Net assets 10,021 8,924
---------------------------------- -------- -------- -------- --------
Issued capital and reserves
attributable to owners of the
parent
---------------------------------- -------- -------- -------- --------
Share capital 844 743
---------------------------------- -------- -------- -------- --------
Share premium 6,129 5,230
---------------------------------- -------- -------- -------- --------
Merger reserve 2,139 2,139
---------------------------------- -------- -------- -------- --------
Retained earnings 900 806
---------------------------------- -------- -------- -------- --------
Other reserves 9 6
---------------------------------- -------- -------- -------- --------
Total equity 10,021 8,924
---------------------------------- -------- -------- -------- --------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2016
--------------------------------------------------------------------------------------------------------
Share Share Merger Retained Undistrib- Share Total
Capital Premium Reserve Earnings utable Options Equity
Reserve
------------------------ --------- --------- --------- ---------- ----------- --------- --------
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
------------------------ --------- --------- --------- ---------- ----------- --------- --------
At 1 July 2014
as previously
stated 743 5,230 2,139 341 422 3 8,878
------------------------- --------- --------- --------- ---------- ----------- --------- --------
Prior year adjustments 287 (422) (135)
------------------------- --------- --------- --------- ---------- ----------- --------- --------
At 1 July 2014
as restated 743 5,230 2,139 628 - 3 8,743
------------------------- --------- --------- --------- ---------- ----------- --------- --------
Profit for the
year as restated 223 223
------------------------- --------- --------- --------- ---------- ----------- --------- --------
Dividends paid (45) (45)
------------------------- --------- --------- --------- ---------- ----------- --------- --------
Share option
scheme charge 3 3
------------------------- --------- --------- --------- ---------- ----------- --------- --------
At 30 June 2015
as restated 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
------------------------- --------- --------- --------- ---------- ----------- --------- --------
CONSOLIDATED STATEMENT OF CASH FLOWS
-----------------------------------------------------------------------
FOR THE YEARED 30 June 2016
-----------------------------------------------------------------------
As
restated
------------------------------------------------- -------- ----------
2016 2015
------------------------------------------------- -------- ----------
GBP000s GBP000s
------------------------------------------------- -------- ----------
Cash flows from operating activities
------------------------------------------------- -------- ----------
Profit before taxation 177 190
------------------------------------------------- -------- ----------
Depreciation, amortisation and impairment 350 266
------------------------------------------------- -------- ----------
Loss/(profit) on sale of plant and equipment 10 (2)
------------------------------------------------- -------- ----------
Net changes in working capital (672) (118)
------------------------------------------------- -------- ----------
Financial expenses 61 32
------------------------------------------------- -------- ----------
Corporation tax paid (36) (83)
------------------------------------------------- -------- ----------
Net cash (used) in/generated from operations (110) 285
------------------------------------------------- -------- ----------
Cash flows from Investing activities
------------------------------------------------- -------- ----------
Purchase of business including acquisition (712) -
costs net of cash acquired
------------------------------------------------- -------- ----------
Purchase of property, plant and equipment (73) (133)
------------------------------------------------- -------- ----------
Proceeds on disposal of property, plant
and equipment 67 49
------------------------------------------------- -------- ----------
Net cash used in investing activities (718) (84)
------------------------------------------------- -------- ----------
Cash flows from financing activities
------------------------------------------------- -------- ----------
Hire purchase loan repayments (38) (35)
------------------------------------------------- -------- ----------
Utilisation/(Repayments) of invoice discounting
facility 539 (167)
------------------------------------------------- -------- ----------
Dividends paid (59) (45)
------------------------------------------------- -------- ----------
Interest paid (61) (15)
------------------------------------------------- -------- ----------
Cash generated/(used) in financing activities 381 (262)
------------------------------------------------- -------- ----------
Net decrease in cash (447) (61)
------------------------------------------------- -------- ----------
Cash and cash equivalents at beginning
of period 839 900
------------------------------------------------- -------- ----------
Cash and cash equivalents at end of the
period 392 839
------------------------------------------------- -------- ----------
Prior year restatement
There has been a restatement of the prior year comparatives as
detailed below:
1. the Board has determined that a reserve of GBP422k previously
disclosed as undistributable is, upon consultation with the
Company's auditors, more correctly reclassified as distributable.
The GBP422k has been transferred to retained earnings and is
available for distribution by way of dividend in accordance with
the progressive dividend policy of the group;
2. a change in accounting standards has required the Company to
accrue for holiday pay at group and subsidiary level, and an
improvement in electronic processes to record employee's accrued
holiday entitlement has allowed the Board more accurately to
determine the correct level of accrual for holiday pay required.
This has resulted in the need to restate the prior year and
previous years by GBP27k and GBP169k respectively. The reduction in
the prior year reserves is therefore the addition of the two
amounts, GBP196k, less tax effects. Profit before tax and retained
earnings for the year ended 30 June 2015 is reduced by GBP27k and
the associated tax credit.
3. an intercompany re-charge processed in a subsidiary was not
correspondingly reflected in the parent with the result that profit
before tax for the year ending 30 June 2015 was overstated by
GBP142k. Procedures in place will now prevent a recurrence of this.
On 8 June 2016, the Company notified of this administrative error
in the published accounts for the year ended 30 June 2015, which
was intended to be corrected by adjustments in the current year.
Having consulted with the new auditor, however, the directors have
decided that adjustments should be made in the corresponding period
as a prior year restatement. Again, the quantum of retained
earnings brought forward at 1 July 2015 less tax effects has been
commensurately reduced.
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 2016 or 30 June
2015.
The financial information has been extracted from the statutory
accounts of the Group for the years ended 30 June 2016 and 30 June
2015. The auditors reported on those accounts; their reports were
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 2015 have been
delivered to the Registrar of Companies, whereas those for the year
ended 30 June 2016 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 22 November 2016 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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