TIDMCSSG
RNS Number : 6825E
Croma Security Solutions Group PLC
22 October 2018
22 October 2018
Croma Security Solutions Group Plc
("CSSG", the "Company" or the "Group")
Final Results for the Twelve Months to 30 June 2018
Increased investment in Security by government and private
enterprises
behind uplift in sales & profits
Croma Security Solutions Group plc, the AIM listed total
security services provider, announces its final results for the
twelve months to 30 June 2018.
Substantial uplift in sales and profits
-- 59% increase in revenues to GBP35.1m (2017: GBP22.1m)
-- Significant rise in EBITDA to GBP2.5m (2017: GBP0.80m)
-- Substantial increase in pre-tax profits to GBP1.98m (2017: 0.36m)
-- Substantial increase in earnings per share to 9.89p (2017: 2.13p)
-- Paid and proposed dividends up to 1.6p (2017: 0.5p)
Real and perceived increases in security concerns behind record
trading performance
-- Strong demand for total security solutions from private enterprises and government bodies
-- Organic growth across the main operating divisions
-- Croma Vigilant - sales increasing by 77%:
o over 1,000 security personnel;
o secured an increase in the number of long-term contracts; and
o now providing community policing support in London under the
Community Safety Accreditation Scheme.
-- Croma Systems and Locksmiths - sales increasing by 9.6%:
o a good performance with demand for products across the division;
o particularly strong performance from the Locksmiths retail chain; and
o new opportunities for the Group's FastVein (Biometrics) technology.
Outlook for FY 2019
-- Good to start to the financial year with an increase in contracted revenues
-- Look to maintain progressive dividend policy for FY 2019
Sebastian Morley, Chairman of CSSG, said:
"This has been an exceptional year for our business. Demand has
increased on the back of real and perceived security concerns and
critically for Croma we are benefitting from this but also
increasing our market share. Our offer has evolved to become a
total security solution which when delivered by our teams of
ex-military personnel is proving to be compelling. Our financial
results have been helped in this year by some large one-off
projects, even so, our ongoing trading performance backed by an
increase in the number of long-term contracts is more than double
two years ago which is reflected in the Board's confidence in
recommending a final dividend of 1p per share, bringing the total
for the year to 1.6p per share, which is a three-fold increase on
the prior year."
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
Novella
Tel: +44 (0)203 151 7008
Tim Robertson
Toby Andrews
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.
Chairman's Statement
This has been a highly successful year for the business and I am
delighted to report Croma Security Solutions Group Plc's ("Croma"
or the "Group") Final Results for the 12 months to 30 June 2018,
which show Group revenues increasing by 59.2% to GBP35.1m and Group
EBITDA increasing by more than three times to GBP2.5m, a very
strong financial performance driven by a number of factors which
bode well for our future.
Demand across the UK for security solutions from both the
private and public sector has grown significantly. Institutions
have responded to the perceived and real increases in crime and
terror occurrences and together with government bodies are choosing
to outsource security. Alongside this growth in demand, Croma is
winning an increasing share of the security market as institutions
opt for a premium service delivered by our team, run with a strong
ex-military ethos.
While FY 2018 has been flattered by unusually high levels of
project work, the overall trends are positive, and the current year
will benefit from an increase in levels of ongoing contracted
revenues together with a more normalised level of project work.
Premium Positioning
Our success in winning an increasing share of our market comes
from being able to provide total security solutions for large
corporations and institutions utilising some of the most advanced
and innovative security technology available to the commercial
market. Perhaps most importantly, and distinct from any other
competitor in our market place, Croma's premium service is
delivered under the control and direction of ex-military security
professionals. The contrast with providing capable, well trained
and highly motivated officers compared with the more traditional
model of the low paid and lowly motivated officer, is stark. Once
this is put into today's security context, it is understandable why
an increasing number of clients are opting for Croma's premium
service.
In addition, the Group's understanding and ability to
incorporate commercially available security technology (which tends
to lag behind military grade technology) is another key competitive
advantage.
Trading Performance
All main divisions have performed well in the year under review,
delivering significant increases in organic led growth. 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.
Delivering a significant 77% uplift in revenues, Croma Vigilant,
our manned guarding division has had a very good year. Our strategy
of providing ex-military professionals to protect the assets of our
customers has worked well and we are seeing the benefits of our
growing reputation for providing a reliable and a premium level of
service. Growing customer trust is enabling us to increasingly
position ourselves as a total security solutions provider so that
we can bring in expertise from other parts of the Group to existing
Croma Vigilant clients. In addition to providing manned guarding
solutions, Croma Vigilant also provides complementary police
services to local councils under the 'Community Safety
Accreditation Scheme', a growing incremental revenue stream.
A combined 9.6% increase in revenues for Croma Security Systems
and Locksmiths demonstrated the increasing demand for innovative
technical security solutions. During the year, this division
benefitted from a strong performance by Croma Locksmiths, a retail
chain acquired in 2015 together with winning a significant new
3-year contract with a major UK utility company. Croma Biometrics
remains a significant opportunity for the Group with FastVein(TM)
coming to the forefront as a potent biometric high-speed human
identifier.
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.
Dividend
Reflecting the excellent financial performance over the year the
Board is pleased to recommend a final dividend to shareholders of
1.0p per share (total 1.6p per share for the year) and subject to
approval at the Annual General Meeting to be held on 28 November,
the final dividend will be paid on 30 November 2018 to all
shareholders on the register at the close of business on 9 November
2018. The shares will be marked ex-dividend on 8 November 2018.
Outlook
Given the platform provided by the significant improvement in
the financial performance and trading position of the Group over
the last two years, the Directors believe the outlook Croma is
extremely positive.
In the current financial year, we can expect to replicate some
but not all of the project income we received in FY 2018 due to
some large exceptional projects that are unlikely to be repeated.
However, there has been a substantial increase in contracted income
and this together with the expectation of some further project work
make the Board confident of achieving a good result for the year,
consistent with the underlying growth in the business.
Finally, I would like to thank all employees of the Group for
their tremendously hard work over the last year and I look forward
to working together again this year to achieve another excellent
performance.
Sebastian Morley
Chairman
22 October 2018
Extract from the Strategic Report
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.
Each company has Key Performance Indicators which are monitored
and reported to the executive Directors on a monthly basis. These
are discussed below.
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 Group also continues to develop overseas opportunities in
particular in the Middle East. Whilst these require a high level of
input, Croma believes this market will be an important future
market.
The performance of each business segment is discussed below:
Croma Vigilant
Croma Vigilant, our largest division, saw a 77% top line growth,
with sales increasing to GBP29.0m (2017: GBP16.40m) and operating
profit increasing five-fold to GBP2.59m (2017: GBP0.47m).
Croma Vigilant provides manned guarding for assets and
individuals. The division now employs over 1,000 security personnel
throughout the UK.
A combination of increased public and private concerns over
security, lack of public resources and Croma Vigilant's
strengthening market reputation for providing a professional,
premium service has been behind this record performance. As ever,
our customers consistently refer to the reassurance that comes from
knowing that the execution of our services is performed
significantly by ex-military personnel.
Following previous patterns, the split between private and
public revenues remains an approximate two thirds/one third split.
During the year, Croma Vigilant division won six new contracts from
both public and private organisations of which two were one-off
projects and boosted financial performance, however, the balance of
contracts are long-term and one contract in particular with a major
UK local authority is the largest the Group has ever won. The
contract is for six years providing a range of security services
and is worth approximately GBP27m in total.
In March 2018 we were proud to publish our gender pay gap
reports for the first time. These indicate that there is no
significant pay gap between men and women in our organisation,
demonstrating our commitment to providing an environment in which
all employees have equal opportunities for development and
progression.
May 2018 saw the launch of a new service, PRO-ception, aimed at
providing front of house excellence for commercial buildings
whatever their use. PRO-ception is an innovative concept, making
the modern reception part of a building's security. Led by
ex-policewoman Ruth McGowan, PRO-ception provides security trained
receptionists to both manage the front desk and play an active role
in security. The response to what is a new concept has been very
encouraging.
In our half year results announcement, we confirmed Vigilant had
completed the Community Safety Accreditation Scheme so enabling the
division to provide private security within communities using
mobile and foot patrol officers. Reduced government budgets have
increased the focus on outsourcing and to meet the reduction in the
number of police officers patrolling the streets, our highly
disciplined force of security personnel is well placed to support
the regular police and local communities. In January 2018, Vigilant
won a long-term contract to support the police in one of London's
largest boroughs.
The current year has begun well with a good pipeline of new
business opportunities.
Croma Security Systems
Croma Security Systems grew sales by 13% to GBP2.67m (2017:
GBP2.36m) and operating profit by 2.6% to GBP0.48m (2017:
GBP0.47m). The division has completed a successful 12 months
expanding its presence in the leisure, education, utilities and
construction sectors. 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 from CCTV,
high security locks to FastVein biometrics technology for high
speed human identification.
Croma Locksmiths
Recovering from a challenging previous year, Croma Locksmiths,
which operates through 7 retail outlets on the South Coast of the
UK and centrally through the Group, delivered a strong performance
for the year and sales grew by 6.9% to GBP3.15m (2017:GBP2.95m).
With an excellent contribution from the Access Locksmiths retail
outlets acquired in 2015, this performance was further enhanced by
the securing of a 3-year contract with a major utility company to
supply security solutions for their multiple sites across the UK.
Looking ahead, investment is being made to enable the retail sites
to evolve into security centres so they can act as both showrooms
for the wider Groups' security capabilities and continue as retail
outlets.
Croma Biometrics
Croma Biometrics turnover fell slightly to GBP308k (2017:
GBP346k) with an operating loss of GBP267k (2017: 186k).
Our FastVein(TM) biometrics technology provides significant
future potential for the Group. Currently deployed across the
retail, education and construction sectors it provides customers
with quick, easy to use, accurate and cost-effective data.
FastVein(TM) has clear commercial advantages and we are continuing
to invest in further developing the technology and expanding the
marketing of this exciting product. Interest from future potential
customers in FastVein(TM) has been strong and we anticipate
increasing the number of FastVein(TM) contracts in the current
year.
Group Financials
2018 2017
The Group financials can be summarised as
follows: GBP000's GBP000's
Revenue 35,119 22,058
Gross profit 7,149 4,025
Gross margin % 20.4% 18.2%
EBITDA 2,500 799
Operating profit 2,013 431
Earnings per share 9.89p 2.13
Net assets 11,077 10,305
Cash generated from operations 2,689 1,233
Dividend paid per share 0.6p 0.5p
Cashflow has been exceptionally strong with cash generated from
operations at GBP2.69m (2017: GBP1.2m) and the Group has been able
to repay all medium-term borrowings and also to complete the
purchase of own shares from a former director. Although the
existing invoice discounting facility of up to GBP1m remains
available to fund short term requirements, this has hardly been
used in the second half of the year and as a result overall
borrowing costs have reduced by 49% to GBP38k.
The Board maintains the progressive dividend policy adopted in
previous periods and is pleased to recommend a final dividend to
shareholders of 1.0p per share. During the year an interim dividend
of 0.6p per share was paid at a cost of GBP89k.
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
FOR THE YEARED 30 JUNE 2018
Continuing operations:
2018 2017
GBP000's GBP000's GBP000's GBP000's
Revenue 35,119 22,058
Cost of sales (27,970) (18,033)
--------- ---------
Gross profit 7,149 4,025
Administrative expenses (5,136) (3,802)
Other operating income - 208
Operating profit 2,013 431
Analysed as:
Earnings before interest, tax, depreciation
amortisation 2,500 799
Depreciation (161) (126)
Amortisation of intangible assets (326) (242)
Operating profit 2,013 431
Finance expenses (38) (74)
Profit before tax 1,975 357
Tax (359) 3
Profit for the year from continuing operations 1,616 360
Total comprehensive income for the year
attributable to owners of the parent 1,616 360
========= =========
Earnings per share
Basic and diluted earnings per share (pence)
Earnings from continuing operations 9.89 2.13
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEARED 30 JUNE 2018
Assets 2018 2017
GBP000's GBP000's
Non-current assets
Goodwill 7,213 7,213
Other Intangible assets 835 1,161
Property, plant and equipment 476 420
8,524 8,794
Current assets
Inventories 668 710
Trade and other receivables 6,077 3,804
Cash and cash equivalents 2,154 770
8,899 5,284
Total assets 17,423 14,078
Liabilities
Non-current liabilities
Deferred tax (197) (238)
Trade and other payables (12) (89)
(209) (327)
Current liabilities
Trade and other payables (6,071) (3,251)
Borrowings (66) (195)
(6,137) (3,446)
Total liabilities (6,346) (3,773)
Net assets 11,077 10,305
========= =========
Issued capital and reserves attributable to owners of the
parent
Share capital 794 845
Treasury Shares (399) -
Share premium 6,133 6,133
Merger reserve 2,139 2,139
Capital redemption reserve 51 -
Retained earnings 2,347 1,176
Share options 12 12
Total equity 11,077 10,305
========= =========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2018
Capital
Share Redemption Treasury Share Merger Retained Share Total
Capital Reserve Shares Premium Reserve Earnings Options Equity
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
At 1 July
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
Shares
redeemed (51) 51 - - - (354) - (354)
Treasury
shares
acquired - - (406) - - - - (406)
Treasury
shares
issued - - 7 - - (2) - 5
Profit for
the
year - - - - - 1,616 - 1,616
Dividends
paid - - - - - (89) - (89)
At 30 June
2018 794 51 (399) 6,133 2,139 2,347 12 11,077
========= ============ ========= ========= ========= ========== ========= =========
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2018
2018 2017
GBP000's GBP000's
Cash flows from operating activities
Profit before taxation 1,975 357
Depreciation amortisation and impairment 487 368
Loss on sale of property, plant and equipment - 3
Net changes in working capital 263 443
Financial expenses 38 74
Corporation tax paid (74) (12)
Net cash generated from operations 2,689 1,233
Cash flows from investing activities
Purchase of business including acquisition costs
net of cash acquired - (100)
Purchase of property, plant and equipment (264) (114)
Proceeds on disposal of property, plant
and equipment 47 7
Net cash used in investing activities (217) (207)
Cash flows from financing activities
New share issue - 5
Purchase of treasury shares (406) -
Buy back and cancellation of shares (354) -
Sale of treasury shares 5 -
Decrease in Hire Purchase (52) (56)
Decrease in borrowings (154) (439)
Dividends paid (89) (84)
Interest paid (38) (74)
Net cash used in financing activities (1,088) (648)
Net increase in cash 1,384 378
Cash and cash equivalents at beginning
of period 770 392
Cash and cash equivalents at end of period 2,154 770
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 2018 or 30 June
2017.
The financial information has been extracted from the statutory
accounts of the Company for the year ended 30 June 2018. 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 2017 have been delivered
to the Registrar of Companies, whereas those for the year ended 30
June 2018 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 October 2018 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.
This information is provided by RNS, the news service of the
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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