Croma Security Regulatory News (CSSG)

Croma Group plc ("Croma" or "the Company")

31 March 2011

Disposal of RDDS Avionics

Croma, the AIM listed asset protection, manned guarding and access security specialist, is pleased to announce that it has today agreed the sale of the entire issued share capital of its wholly owned subsidiary RDDS Avionics Ltd ("the Avionics business" or "RDDS") to Oak Manor Investments Limited for an aggregate (gross) consideration of approximately £1.0 million in cash (the precise amount being contingent upon net assets of RDDS at completion) plus the potential for a further payment of up to £0.5 million from earn-out arrangements linked to the performance of RDDS during the twelve months following completion ("the Disposal").

In a statement released on 28 July 2010, the Company announced it was in discussions for the sale of its avionics subsidiary, RDDS. Today's completion of the sale allows the Board to focus on its existing strategy of targeting the facilities services sector as the engine for the Company's future growth, primarily based upon the continuing success of the Company's asset protection subsidiary, Vigilant Security, in expanding its spread of clients and contracts. The proceeds of the disposal will be used to repay outstanding loan stock obligations and to provide additional working capital for the Company.

RDDS provides airborne, maritime and ground based surveillance solutions for the Avionics and Defence industries.

At 30 June 2010, audited net assets of the Avionics business were £768,000 including fixed assets of £23,000 and stock of £189,000. In the 12 months ended 30 June 2010 the Avionics business made a profit before tax of £63,000 on turnover of £1.99 million.

Sebastian Morley, CEO of Croma, commented:

'The disposal of RDDS is a significant step in our strategy to re-focus Croma Group as a total security services business.

The future emphasis will be to consolidate our growth in turnover, enhance margin and identify partners in the sector who can extend our service offering to our fast growing and impressive client list.'

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