CSSG Croma Security Solutions Group Plc

Croma Security Solutions Group PLC

("CSSG", "Croma", the "Company", or the "Group")

Interim Results

'Investment in Security Network Delivering'

Croma (AIM:CSSG), the AIM listed innovation and service-focused security solutions provider, is pleased to announce its unaudited interim results for the six months to 31 December 2023 ("H1" or the "Period"). The Group's businesses have performed in line with management expectations in H1 delivering organic and acquisitive growth. In addition, the Company continues to successfully identify acquisition opportunities to enhance sales growth and profitability.

Financial Highlights

·      Group revenue of £4.26 million (2022: £3.77 million) up 13 %

·      Like for like growth of 7% within the Croma Locksmiths Security Centres

·      EBITDA of £0.509 million (2022: 0.455 million) up 11.9%

·      EBITDA margin maintained at 12.0% (2022: 12.1%)

·      Net profit of £0.246 million (2022: £0.209 million) up 17.7%

·      Strong balance sheet with net cash at end of Period of £1.73 million

·      400,000 shares bought back into treasury at 45p on 3 August 2023

Operational Highlights

·      The Group invested £80,000 to enhance its infrastructure and central services over the Period.

·      A number of new commercial orders were won in the Period including further sales of iLOQ

Outlook 

·      Promising start to H2 with solid pipeline.

·    The Group acquired two profitable locksmith businesses with a combined turnover of £0.5 million, operating from Peterborough and Worthing. This expands the network to a total of 16 security centres nationwide in H2, as announced on 8 January 2024.

·    Croma was re-awarded a three-year maintenance contract by an NHS Trust to cover the security needs of their hospitals, as announced on 29 January 2024. Strategy on track to enhance growth and profitability.

·     Group is scheduled contractually to receive £5.78 million from the sale of Vigilant due in stage payments starting in March 2024 with the final payment scheduled for June 2026.

·      The Group intends to declare a single final progressive dividend with the FY24 results.

Croma Chairman, Jo Haigh commented: "I am delighted by our resilient performance to date, achieved in spite of a difficult macro backdrop. Our growth in profits is all the more impressive given the investment that we have made in the business over the Period. This very much underlines that our decision to refocus the business is the right one. Our acquisition strategy aims to enhance sales growth as we expand our security centres nationwide and focus on innovation as well to deliver cost synergies through shared expertise and services. I am confident in our ability to continue to drive sustainable growth both organically and through expanding our network and would like to thank the team for their unwavering determination to deliver."

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

Croma Security Solutions Group Plc                                                   Tel: +44 (0)1489 566 166

Roberto Fiorentino, CEO

Teo Andreeva, CFO

WH Ireland Limited                                                                               Tel: +44 (0)207 220 1666

(Nominated Adviser and Broker)

Mike Coe

Sarah Mather

Novella                                                                                                    Tel: +44 (0)203 151 7008

Tim Robertson

Claire de Groot

Safia Colebrook

This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

CEO's Statement

This year marks a milestone for Croma as it will be the first full year of trading for the Group without Vigilant, the man guarding business sold in June 2023, and we are focused on delivering on the growth opportunities ahead.

With our reset and renewed focus, our H1 results are testament to our determination and strategy. I am therefore pleased to report sales growth of 13% for the Period with like-for-like growth within the security centres of 7%. A number of new commercial orders were won in the Period including further sales of iLOQ.

We have invested in improving our internal processes such that we have the right infrastructure in place as we scale. We have stepped up marketing spend, underlining our belief in the business and our commitment to long term growth. We have delivered solid growth in EBITDA and net profits.

At the end of 2022, we added three new security centres to our network as well as an online business with the acquisition of Safecell Security Group and Southern Stronghold Limited. These businesses delivered in line with management expectations last year and continue to perform well and we expect to see some acceleration in their contribution to growth and profitability this current financial year.  In January 2024, we announced two further acquisitions which generate annual revenue of £0.5 million. Located in Worthing and Peterborough, these businesses have a strong local customer base and will be able to benefit from the Croma model which merges traditional locksmith services with more comprehensive and innovative security solutions. Once fully integrated, these centres will cater to both their existing local customer base as well as a broader network of commercial clients currently served by Croma.  The Group's security centre network now comprises 16 sites.

The Group's strategy remains to roll out its security centre network nationwide and the management team is constantly on the look-out for further acquisitions. As we expand and acquire new sites, we are able to identify cross-selling opportunities as well as elevate the in-store product offering. We deliver synergies as we apply the Croma model and acquired businesses benefit from our expertise, central services and software. The pipeline is promising. In addition, the management team are open to acquiring businesses operating in complementary security areas where there is a strong commercial overlap.

Financial and Operational Review

Group revenue for the period was £4.26 million, up 13%. This reflects both solid underlying growth (like for like growth of our Croma Locksmiths Security Centres and Croma Fire and Security businesses was 7% and 3% respectively) as well as an acceleration in contribution from acquisitions that were made last year and which are performing in line with initial management expectations.

Gross margins for the period were down 160 basis points to 43.4% (H122: 45%) whilst EBITDA of £0.509 (H122: £0.455) was up 11.9%, maintaining EBITDA margin at 12%. The Group continues to invest in growth with investment in existing security centres and central services. As part of a phased investment plan, the Group spent £80,000 in modernising facilities and premises across the Group.

Group net profit of £0.246 million was up 17.7% on the previous period (H122: £0.209 million), a reflection of an improvement in profits at the operational level as well as net interest receivable contribution.

Net cash at the end of the Period was £1.73 million (Period ended June 30^th 2023: £2.14 million). 

With regard to the £5.78 million due from the sale of the Vigilant business, the first payment of £0.538 million is due to be received in March 2024 with further staged payments to follow and a final payment due in June 2026.

Outlook

We have had a promising start to H2. In January 2024 we acquired two profitable locksmith businesses with a combined turnover of £0.5 million, operating from Peterborough and Worthing. We have been successful

in delivering a number of new contracts including being re-awarded a three-year maintenance contract by an NHS Trust to cover their hospitals' security needs.  This success reflects the high levels of service that make us a preferred supplier in the health sector.  In addition, there are a number of contracts in the pipeline in the utilities and entertainment sector and we believe that these customers represent a material long term opportunity.  A solid underlying performance, coupled with the success of our ongoing strategy to identify acquisitions where there is a significant opportunity to enhance sales growth and profitability, leaves us well-placed to deliver year-on-year growth despite continuing difficult macro conditions.  

In line with last year, the Company is not proposing an interim dividend but intends to declare a single final progressive dividend with the FY24 results.

CROMA SECURITY SOLUTIONS GROUP PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR 6 MONTHS ENDED 31 DECEMBER 2023

CROMA SECURITY SOLUTIONS GROUP PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2023