CROMA SECURITY SOLUTIONS GROUP PLC — Interim / Quarterly Report 2016

Feb 25, 2016

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RNS Number : 0847Q

Croma Security Solutions Group PLC

25 February 2016

CROMA SECURITY SOLUTIONS GROUP PLC

(LON:CSSG)

INTERIM RESULTS FOR SIX MONTHS TO 31 DECEMBER 2015

Croma Security Solutions Group plc (the "Group") the AIM listed total security services provider announces its unaudited interim results for the six months to 31 December 2015.

HIGHLIGHTS

·     Revenue up 4%  to £8.6M (six months to 31 December 2014: £8.3M)

·     Acquisition of Access Locksmiths Limited on 8 December 2015.

·     £4m of new turnover from the acquisition and new contract wins.

·     Net Assets £10.3M  (31 December 2014: £9.1M)

·     Gross Profit:  £1.91M  (six months to 31 December 2014: £1.96M)

·     EBITDA* £0.32M (six months to 31 December 2014 £0.42M)

·     Dividend of 0.4p per share declared and paid in January 2016 (2104: 0.3p per share)

* Earnings before interest, tax, depreciation, and amortisation.

For further information visit www.cssgroupplc.com or contact:

Croma Security Solutions Group PLC

Sebastian Morley, Chairman                   Tel: +44(0)7768 006 909

WH Ireland Limited

Paul Shackleton / Nick Prowting            Tel: +44 (0)207 220 1666

Chairman's Statement

I am pleased to report the financial results for the six months to 31 December 2015 which demonstrate steady and consolidating performance for the Group, and a solid start to this financial year.  Against a background of a significant acquisition, development costs and expansion we have generated good profits and are well set to meet our full year forecast.

During the period turnover increased by 4% to £8.62M.  This is very pleasing as it is based on some very strong new client wins, and is measured against an exceptional first half of 2014 when we had £0.5M of revenue from the Commonwealth Games.  Operating profit margin has returned to expected levels at 2.1%, with EBITDA of £0.32M (2014 H1 £0.42M).  We have experienced additional costs in the creation of our branch in Abu Dhabi, and also in the roll-out of FastVein™ Time and Attendance.  We foresee an even stronger H2, based on the new contract wins that were announced in November.

These results do not however show our significant achievements this period; the £3M pa of new guarding contracts, £0.8M of new security installation contracts, and the £2M acquisition of Access  Key and Lock of Fareham.  This adds up to £4M to annual turnover and in excess of £0.5M of operating profit to our core business.  The Group is absolutely focussed on delivering growth both organically and by acquisition.  Our core activities are Premium ex-military manned guarding, CCTV, intruder systems, fire systems, biometric identification, access control and a now enlarged locksmiths operation.  The focus of the Group is to deliver sustainable growth, from clients who recognise the value of coordinated high quality security services with the opportunities presented by our market leading technologies Fastvein and Vehicle Impact Protection System (VIPS).  We have strengthened our sales team, enhanced our on-line presence, and are looking to promote Croma Security to a wider market at home and abroad.

Financial Review

Turnover increased to £8.62M against £8.31M in H1 2014.

The group has seen margins return to expected levels and has been able to hold its line on pricing in a very competitive market.  Overheads have been broadly steady at £1.75M (2014 £1.69M), with only a slight increase in salaries as the sales team has continued to be reinforced. Vigilant continues to find success in its pricing model, with turnover of £6.6M for the half year (2014: £6.4M). Systems has seen a return to growth after a slow summer, and Locksmiths has now joined with the Group's recent acquisition Access Key and Lock to form a new larger entity.

The principal movements on the balance sheet have been occasioned by the acquisition of Access Key and Lock Limited on 8th December. The purchase, for £1M in shares (2,027,027 shares at 49.3p) and £600,000 in cash, with up to £400,000 to follow, was for 100% of the share capital of the company and has resulted in Goodwill and Intangibles of £1.1M being recognised. The cash element of the consideration was funded from existing resources, and has led to a temporary erosion of the Group's cash position.

Outlook

This has been an excellent half year for the Group, delivering the acquisition of Access Key and Lock as the first stage in a vision to build a locksmith operation with genuine national coverage.  We have also seen the roll out of FastVein™ Time and Attendance, which is gathering momentum in the marketplace, as well as increasing take-up of our bespoke schools package of FastVein™ for registration and access control.

We have opened our branch office in Abu Dhabi as Phase I of a push into the Gulf region, and have secured valuable new contracts with the NHS worth over £1m per annum.

The Group is now very well placed to build on a solid operational base, and we have the key people and assets in place to deliver continuing growth.  Our dividend policy continues, and we remain committed to pursuing excellence in security provision in order to deliver value to shareholders.

Sebastian Morley

Chairman

24   February 2016

CROMA SECURITY SOLUTIONS GROUP PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR 6 MONTHS ENDED 31 DECEMBER 2015

			6 months ended		6 months ended		Year Ended
			31 December 2015		31 December 2014		30 June 2015
			unaudited		unaudited		audited
		Notes	£		£		£
Revenue		1	8,614,249		8,299,906		15,829,689
Cost of sales			(6,706,099)		(6,334,021)		(12,218,705)
Gross profit			1,908,150		1,965,885		3,609,984
			22.2%		23.7%		22.8%
Administrative expenses			(1,746,733)		(1,692,346)		(3,245,587)
Other operating income			12,140		10,200		26,578
Operating profit			173,557		283,739		390,975
	Analysed as:
	Earnings before interest, tax, depreciation, and amortisation		320,558		418,212		658,668
	Depreciation		(46,074)		(49,525)		(80,821)
	Amortisation		(100,927)		(84,948)		(184,872)
	Operating profit		173,557		283,739		390,975
Finance expense costs			(13,853)		(14,229)		(32,138)
Profit before tax			159,704		269,510		358,837
Tax			(31,941)		(53,902)		(845)
Profit for the year from continuing operations			127,763		215,608		357,992
Profit and total comprehensive profit for the year attributable to owners of the parent			127,763		215,608		357,992
Earnings per share		2
Basic earnings per share (pence)
- Earnings from continuing operations			0.85		1.45		2.40
- (Loss)/earnings from discontinued operations			0		0.00		0.00
- Total			0.85		1.45		2.40
Diluted earnings per share (pence)
- Earnings from continuing operations			0.85		1.44		2.40
- (Loss)/earnings from discontinued operations			0		0.00		0.00
- Total			0.85		1.44		2.40

CROMA SECURITY SOLUTIONS GROUP PLC

CONSOLIDATED  STATEMENT OF FINANCIAL POSITION

AT 31 DECEMBER 2015

	31 December 2015		31 December 2014		30 June 2015
	unaudited		unaudited		audited
Assets	£	£	£	£	£	£
Non-current assets
Goodwill		6,705,759		5,866,961		5,866,961
Other Intangible assets		1,862,419		1,056,342		1,041,323
Property, plant and equipment		372,245		400,702		331,718
		8,940,423		7,324,005		7,240,002
Current assets
Inventories	799,521		238,381		237,169
Trade and other receivables	3,240,447		2,850,751		2,420,729
Cash and cash equivalents	263,381		679,185		839,373
		4,303,349		3,768,317		3,497,271
Total assets		13,243,772		11,092,322		10,737,273
Liabilities
Non-current liabilities
Deferred tax	(244,033)		(299,474)		(244,033)
Trade and other payables	(106,267)		(29,025)		(39,956)
		(350,300)		(328,499)		(283,989)
Current liabilities
Trade and other payables	(737,773)		(535,098)		(330,904)
Other taxes & Social Security	(865,239)		(747,337)		(634,496)
Accruals and deferred income	(635,471)		(387,109)		(293,040)
Borrowings	(489,632)		-		-
		(2,728,115)		(1,669,544)		(1,258,440)
Total liabilities		(3,078,415)		(1,998,043)		(1,542,429)
Net assets		10,165,357		9,094,279		9,194,844
Issued capital and reserves attributable to owners of the parent
Share capital		844,658		743,307		743,307
Share premium		6,128,925		5,230,276		5,230,276
Merger reserve		2,139,454		2,139,454		2,139,454
Retained earnings		624,440		556,141		653,927
Undistributable Reserves		422,322		422,322		422,322
Other reserves		5,558		2,779		5,558
Total equity		10,165,357		9,094,279		9,194,844

CROMA SECURITY SOLUTIONS GROUP PLC

CONSOLIDATED STATEMENT OF CASHFLOWS

FOR 6 MONTHS ENDED 31 DECEMBER 2015

		6 months ended		6 months ended		Year ended
		31 December 2015		31 December 2014		30 June 2015
		unaudited		unaudited		audited
		£		£		£
Cash flows from operating activities
Profit/(loss) before taxation		159,704		269,510		358,837
Depreciation, and amortisation		147,001		134,473		265,693
(Profit)/loss on sale of plant and equipment		-		(194)		(2,119)
Net changes in working capital		(692,627)		(452,696)		(285,495)
Taxes paid						(83,460)
Financial expenses		13,853		14,229		32,138
Net cash generated/(used) from operations		(372,069)		(34,678)		285,594
Cash flows from Investing activities
Purchase of subsidiary net of cash acquired		(605,079)
Purchase of property, plant and equipment		(112,902)		(71,552)		(133,419)
Proceeds on disposal of property, plant and equipment		-		12,000		48,517
Net cash generated/(used) in investing activities		(717,981)		(59,552)		(84,902)
Cash flows from financing activities
Hire purchase payments		33,200		(4,294)		(34,645)
Advances/(repayments) on invoice discounting facility		489,632		(112,049)		(166,682)
Repayment of borrowings		-				(44,598)
Interest paid		(8,774)		(9,935)		(15,087)
Net cash (used) in financing activities		514,058		(126,278)		(261,012)
Net (decrease)/increase in cash and cash equivalents		(575,992)		(220,508)		(60,320)
Cash and cash equivalents at beginning of period		839,373		899,693		899,693
Cash and cash equivalents at end of the period		263,381		679,185		839,373

NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR 6 MONTHS TO 31 DECEMBER 2015

1.  Basis of preparation

The financial information in the half yearly report has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union ("IFRS").

The principal accounting policies in this half yearly report are unchanged from those applied in the 2015 financial statements. The financial information for the six months ended 31 December 2015 and the six months ended 31 December 2014 are unaudited and have not been reviewed by the Group's auditor.

The financial statements for the year ended 30 June 2015, which were prepared in accordance with IFRS, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, have been delivered to the Registrar of Companies. The auditors' report on these accounts was unqualified and did not contain a statement under sections 498(2) and 498(3) of the Companies Act 2003.

While the financial information in this half yearly report is consistent with the recognition and measurement principles of adopted IFRS, it does not comply with the requirements of IAS34 Interim Financial Reporting nor does it constitute statutory accounts within the meaning of the Companies Act 2006.

2.  Earnings per share

Earnings per share is based upon the profit/(loss) for the period and the weighted average number of shares in issue and ranking for dividend

The following reflects the profit and share data used in the basic and diluted EPS computations:

	6 months ended		6 months ended		Year ended
	31 December 2015		31 December 2014		30 June 2015
	unaudited		unaudited		Audited
	£		£		£
Numerator
Profit/(loss) for the year on continuing operations and  used in basic EPS	127,763		215,608		357,992
Profit for the period on discontinued operations and used in basic and diluted EPS	-		-		-
Denominator
Weighted average number of shares used in basic EPS	15,120,900		14,866,138		14,866,138
Effects of:
-   Company Share Option Scheme	43,000		64,000
Weighted average number of shares used in diluted EPS	15,163,900		14,930,138		14,866,138

NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR 6 MONTHS TO 31 DECEMBER 2015

(Continued)

3.  Taxation

Taxation has been provided for at 20.0%

4.  Dividends

The Board approved an interim dividend for the year of 0.4 pence per share (2014: 0.3p).

This dividend was paid after the date of these statements, on 8 January 2015.

5.  Financial Information

The Board of Directors approved this interim report on 24 February 2016.

A copy of this report can be obtained by writing to the Company Secretary at our registered office; Unit 6 Fulcrum 4, Solent Way, Whiteley, Hampshire PO15 7FT or from our website at www.cssgroupplc.com

This information is provided by RNS

The company news service from the London Stock Exchange

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