Croma Security Regulatory News (CSSG)

1 Dec 2005 07:00

Croma Group PLC01 December 2005 1 DECEMBER 2005 CROMA GROUP PLC ("Croma" or "the Group") FINAL RESULTS FOR THE YEAR TO 30 JUNE 2005 AND CONTRACTS EXCHANGED FOR FIRST OF TWO ACQUISITIONS The Board of Croma, the specialists in the design, development and production ofovert and covert surveillance, security and defence related products, is pleasedto announce its Final Results for the year to 30 June 2005. HIGHLIGHTS €191% increase in turnover for the first quarter compared with the same period last year; •Losses were £971,766 compared with a loss of £457,559 for the previous year, after goodwill amortisation of £202,665 compared with £34,410 in the previous year; •Record order book; •Cost Savings coupled with increased efficiency from restructuring; £€250,000 raised through Placing during the year, and a further £250,000 since the year end; and •Contracts exchanged for the first of two acquisitions - with a specialist security company. John French, Chairman of Croma said: "This financial year has been one oftransition for the Group. It has secured a number of valuable contracts andsignificant orders continue to be won. Delivery delays have now been resolvedand following restructuring this is now a leaner more cost-effective business.The current year has started well and I look forward to continued improvement aswe grow both organically and via acquisition." Enquiries: Croma Group plcJohn French, Chairman & Chief Executive Mobile: 07836 722 482 Bishopsgate Communications Ltd. Tel: 020 7430 1600Dominic Barretto Mobile: 07930 450 156Maxine Barnes CHAIRMAN'S STATEMENT I have pleasure in announcing the results for the twelve-month period to June2005. FinancialsTurnover for the year was £1,911,425 compared with £695,320 for the comparativeperiod last year. Losses were £971,766 compared with a loss of £457,559 for theprevious year, after goodwill amortisation of £202,665 compared with £34,410 inthe previous year. The principle reasons for these losses were two-fold.Firstly, there were delays in receipt of expected orders for some of thedefence-related products. Added to this, there were also delays in deliveringproducts in connection with two significant contracts within the last quarter ofthe year. These were not the result of activities of the Group, but were due tothe fact that customers were unable to accept delivery in the agreed timescale. The delays in our being able to deliver in the final quarter of last year havebeen resolved and are reflected in a positive start to the current year,Turnover for the first quarter was up 191% compared with the same period lastyear. This included July and August, which are the two quietest trading periodsof our financial year. Added to this, the Group also strengthened its balancesheet recently by successfully raising £250,000 via a placing at 5p per sharewith an institutional shareholder at the same time as agreeing new bankingterms. Contract exchanged for the first of two acquisitionsIt has been the Group's strategy to develop a programme of combined core growthand acquisitions. In October, the Group confirmed that it was in advancednegotiations to acquire two separate private companies, which will providecomplementary products to Croma's existing portfolio. The Company has nowexchanged a conditional contract for the first of the two target companies,which allows Croma to conduct further due diligence on the target. The initial payment on completion will be a combination of cash and Croma sharesat 6.5p or the mid market quote at the time of completion, which ever is thehighest. Further payments will be by way of performance related earn-out with amixture of cash and shares. Completion of this acquisition is expected duringDecember, following the finalisation of due diligence. The target transaction, which cannot be formally named due to a confidentialityclause, is a specialist security company consisting mainly of ex-military andSpecial Forces personnel providing a range of security services to majorcompanies and local authorities, including those operating in the oil industryand major property based operations. Within the target transaction, there isalso a specialist consultancy, which can deal with the most esoteric ofrequests. The second acquisition under discussion is close to finalising an agreement andan announcement is expected within the next two weeks. Strong operational progressI am pleased to say that all other matters have progressed well and the Grouphas now achieved a situation where it has a fully established range of productsacross the broad spectrum of its operating subsidiaries. R & D Design SystemsLimited has continued to progress in a positive manner, and has secured valuablecontracts from various aspects of the defence industry with a number of majorcontractors. Equally so, Shawley - now a division of Croma Defence Systemsfollowing its acquisition in March 2004 - has re-established itself among itsmajor customers and is generating increased interest not only in its currentrange of products, but also in the development of the new technology products. I am pleased to say we are receiving significant orders from the defenceindustry in terms of R & D Design Systems Limited, and Croma Defence Systems isalso seeing a much strengthened order book from its various operations. TheGroup currently has the highest level of order book and prospects that it hasseen to date. During the latter part of the year to June 2005 we were able to restructureCroma Defence Systems Limited whereby it now has two distinct operatingdivisions - Croma Shawley CCTV products and the Croma Defence Police andMilitary products. During the first quarter of the year the Hereford-basedoperations of Croma Defence Systems were relocated to Risca, Newport. It nowshares premises, administration and product assembly with Croma Shawley. Thismove will have a beneficial impact on operating costs during the current yearand will enable enhanced efficiency in a wide area of their operations of CromaDefence Systems. Product portfolio overviewAs both governments and private bodies bear responsibility for the protection ofindividuals and the community as a whole, safety and security is increasinglytaking a high priority. Croma continues to provide innovative and qualitysolutions to meet this escalating demand with their existing surveillance &counter surveillance products, systems and services. The Group's current product portfolio includes: The King IPT 765; WASP; Long Range Surveillance Lenses; Zeus Tactical Light;Laserbased Sensors; Laser Marksman Training Systems; Computer Surveillance; LowLight Cameras; and Rapid Deployment Kit. OutlookProspects for the current year, particularly the second half, are encouraging aswe expect to see continued improvement in the trading performance of theexisting operations, as well as further improved performance as a result ofoperational reorganisation and emphasis on sales and marketing activities. Increasing awareness and concern over far-reaching areas of security and theneed for surveillance is of benefit to the products and services offered byCroma, and provides positive opportunities for the Group with its expandingrange of products and services to meet the increasing demands from the marketplace. I would like to take this opportunity to express my appreciation to allmanagement and staff for their efforts during the year John FrenchChairman30 November 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 30 JUNE 2005 2005 2005 2004 2004 £ £ £ £ Notes Unaudited Unaudited Audited Audited Turnover Continuing operations 1,911,425 156,259Acquisitions - 539,061 -------- -------- 1,911,425 695,320Cost of sales (903,948) (338,270) -------- -------- Gross profit 1,007,477 357,050Administrative expenses (1,934,953) (855,974) -------- -------- Operating loss (927,476) (498,924)Operating (loss)/profitContinuing operations (927,476) (657,844)Acquisitions - 158,920 -------- -------- Loss before interest (927,476) (498,924)Interest receivable 1,329 7,192Interest payable and similar (46,431) (5,917)charges -------- -------- Loss before taxation (972,578) (497,649)Taxation 812 40,090 -------- -------- Loss after taxation and (971,766) (457,559)retained ======== ======== Loss per share 3 (0.98p) (1.00p) ======== ======== Fully diluted loss per share 3 (0.98p) (1.00p) ======== ======== The Group had no recognised gains and losses other than the losses for the twofinancial years above. There is no difference between the historical cost losses and the losses for thetwo financial years above. CONSOLIDATED BALANCE SHEET30 JUNE 2005 2005 2004 £ £ £ £ Unaudited Unaudited Audited Audited Fixed assetsIntangible assets 2,129,106 2,331,771Tangible assets 98,814 106,632 -------- -------- 2,227,920 2,438,403 Current assetsStock 531,150 462,964Debtors 706,846 403,081Cash at bank 8,443 207,839 -------- -------- 1,246,439 1,073,884 Creditors: Amounts fallingduewithin one year (1,173,133) (442,538) -------- -------- Net current assets/ 73,306 631,346(liabilities) -------- -------- Total assets less current 2,301,226 3,069,749liabilitiesProvision for liabilities and (1,373) (2,185)charges -------- -------- 2,299,853 3,067,564 ======== ======== Share capital and reservesCalled up share capital 5,073,591 4,890,341Share premium account 1,129,421 1,108,616Profit and loss account (3,903,159) (2,931,393) -------- -------- Shareholders' funds 2,299,853 3,067,564 ======== ======== CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 30 JUNE 2005 Notes 2005 2004 £ £ £ £ Unaudited Unaudited Audited Audited Net cash outflow fromoperating activities 4 (867,894) (761,590) Return on investments andservicing of financing Interest paid (7,005) (5,917)Interest received 1,329 7,192 -------- -------- (5,676) 1,275 Taxation recovered 36,669 27,640 Capital expenditure andfinancialInvestmentPurchase of intangible fixed - (1,000)assetsPurchase of tangible assets (20,882) (23,434)Receipts from sales of - 3,148tangible assets -------- -------- (20,882) (21,286)Acquisitions and disposalsPurchase of subsidiary - (2,500,100)undertakingsNet cash acquired with - 21,529subsidiaries -------- -------- - (2,478,571) -------- ---------Cash outflow before use ofliquidresources and financing (857,783) (3,232,532) Financing Issue of equity share capital 210,400 4,221,467Cost of issue of shares (6,345) (502,089)(Decrease)/increase in other - (209,358)loansCapital element of finance (3,260) (815)lease -------- --------Net cash inflow from 200,795 3,509,205financing -------- ---------Increase/(decrease) in cash 5 (656,988) 276,673 ======== ========= NOTES TO THE PRELIMINARY ANNOUNCEMENTFOR THE YEAR ENDED 30 JUNE 2005 1 Financial information The financial information included in the above statement is an abridged versionof the Group's accounts for the period ended 30 June 2005, and does notconstitute statutory accounts within the meaning of Section 240 of the CompaniesAct 1985. The financial statements have not yet been approved by the Board and theAuditors' Report has yet to be signed. Therefore, these financial statementshave not yet been delivered to the Registrar of Companies. 2 Taxation There is no liability to taxation in the period due to losses incurred. The taxcredit represents research and development tax credits receivable and deferredtax adjustments. 3 Loss per share The calculation of the loss per share is based on the loss for the year and onthe weighted average number of ordinary shares in issue and ranking for dividendin the period. 2005 2004 Unaudited Audited OrdinaryLoss for the year £(971,766) £(457,559) ========= ========== Weighted average number of shares 98,682,760 45,323,440 ========= ========== Fully diluted Loss for the year £(971,766) £(457,559) ========= ========= Weighted average number of shares and potentialshares 98,682,760 45,323,440 ========= ========= The share options in issue are not considered dilutive. NOTES TO THE PRELIMINARY ANNOUNCEMENTFOR THE YEAR ENDED 30 JUNE 2005 4 Reconciliation of operating loss to net cash 2005 2004outflow from operating activities £ £ Unaudited Audited Operating loss (927,476) (498,924)Depreciation of tangible fixed assets 28,700 23,201Amortisation of intangible fixed assets 202,665 34,313(Increase) in stock (68,186) (63,819)(Increase)/decrease in debtors (340,434) (226,751)(Decrease)/increase in creditors 236,837 (29,610) -------- --------Net cash outflow from operating activities (867,894) (761,590) ======== ======== 5 Reconciliation of net cashflow to movement 2005 2004 in net debt £ £Unaudited Audited Increase/(decrease) in cash (656,988) 276,673Cash outflow/inflow from increase in debt 3,260 210,173 -------- --------Change in net funds resulting from cash flows (653,728) 486,846 Non cash movements - (4,890)Opening net (debt) 203,764 (278,192) -------- --------Closing net funds/(debt) (449,964) 203,764 ======== ======== Represented by: £ £ Cash at bank 8,443 207,839Bank overdraft (457,592) -Finance leases (815) (4,075) -------- -------- (449,964) 203,764 ======== ======== This information is provided by RNS The company news service from the London Stock Exchange