Croma Security Regulatory News (CSSG)

31 Dec 2007 10:28

Croma Group PLC31 December 2007 RNS ANNOUNCEMENT CROMA GROUP PLC ("Croma" or "the Group") FINAL RESULTS FOR THE YEAR TO 30TH JUNE 2007 The Board of Croma, the AIM listed surveillance security and homeland defencespecialist, is pleased to announce its final results for the year to 30th June2007, which reflect an increase in turnover, new contracts won and repeatbusiness. KEY POINTS €100% increase in turnover for the year; •Unaudited turnover up 38% for the first 4 months of the current year and a move into profit; •New acquisitions fully embedded and trading well; •New contracts secured, together with strong repeat business; •Heightened awareness of surveillance and homeland security needs; •Closure of non-profitable subsidiary, Croma Shawley; •Board restructuring; •Issue of convertible loan stock. John French, Non-Executive Chairman of Croma, said: "The current year hasstarted well with turnover on continuing operations for the first 4 months toOctober up from £1,584,301 to £2,180,589, an increase of 38%. More significantlythe Group has moved into profitability. This improvement is due to contributionsfrom acquisitions, which are now fully integrated as well as new business fromboth new and existing clients throughout the Group. I expect to be able toindicate the progress made at the AGM scheduled for 1st February. The Boardbelieves the progress to date will continue and be reflected in the resultsgoing forward." Enquiries: Croma Group plcJohn French, Non-Executive Chairman Mobile: 07836 722 482 Seymour Pierce Ltd.Mark Percy / Jeremy Garrett-Cox 020 7107 8000 CHAIRMAN'S STATEMENTFOR THE YEAR ENDED 30 JUNE 2007 I have pleasure in announcing the results for the year ended 30 June 2007. Financials Turnover for the year was £5,644,382 compared with £2,817,875 for thecomparative period last year, an increase of 100%. Gross profit was £1,263,108(2006: £1,250,134), an increase of 1% but administrative costs at £2,891,076(2006: £2,106,361) resulted in an operating loss for the period before goodwillamortisation and impairment of £1,627,968 (2006: loss £856,227). Furthermore, after a fuller review of the Group's businesses, a decision wastaken to write down goodwill by £1,587,807, in addition to the annualamortisation charge of £507,660 (2006: £333,164) with the result that thepre-tax loss for the period was £3,819,594. As a result of this, the Group hastaken a decision to close all operating subsidiaries that do not make a profitand have no reasonable prospect of so doing, and also to pare head office coststo the basic minimum we can, consistent with remaining on the AIM market of TheLondon Stock Exchange. The Group's first six months of trading in the current financial year have shownprofit and positive cash flow in all continuing divisions and I expect to beable to make a more detailed and positive statement at the Annual GeneralMeeting. Business Review In June 2007, after a strategic review, the Board took the decision to closefurther non-profitable subsidiaries including Croma Defence Systems Limited,which incorporates the Shawley CCTV operation in the event that they remainedunprofitable. Despite the introduction of some new products and financialsupport from the parent company, the operation has not achieved the targets setand the decision to close the business was confirmed. The company was put intoliquidation on 10th December 2007 and the impairment of assets held at 30th June2007 has been recognised in the 2007 accounts. The Board felt that the resourcesavailable to the Group would be best applied to the other operations, allowingthem to be both profitable and to have the ability for sustained growth goingforward. The impact on the Group of the closure of Croma Defence Systems Limitedis a loss of £548,248. During the last three years the Group has acquired three new businesses and ithas been the success of these businesses which is now bringing the prospect ofcontinued growth to the group. The business of Vigilant Security (Scotland)Limited, acquired in 2006, has proven to have been a major contributor to theGroup. It has seen an increase in its turnover since joining the Group andcontinues to secure additional business from both existing and new customers. Inparticular it has established a very strong and developing relationship withgovernment agencies as a result of securing a number of contracts both in theperiod to June 2007 and during the early part of the current year. Photobase Limited was also acquired in the previous year and has undergone anumber of material changes in management and product. The benefits of thesechanges are beginning to show themselves in terms of business development andsecuring new contracts as well as cross selling within the Group.R&D Design Systems Ltd, one of the Group's earlier acquisitions, has seen asignificant and positive turn around in terms of business activity resulting ina strong performance over recent months and is now a major contributor to theGroup. With the closure of all of our defence systems operations in Hereford in theprior year, and the closure since the year end of the entire Shawley business inSouth Wales, and with the decreasing emphasis of the Group's activities in SouthWales and the increasing emphasis of the Group's activities elsewhere in the UKand overseas, it became apparent that the need to maintain even a reduced HeadOffice function in Hereford was no longer necessary, resulting in the closure ofall Head Office functions, and the necessary residual operations being relocatedto the Vigilant offices in Leuchars, Scotland. This substantial restructuring,together with a number of other operational changes, has had a materialbeneficial impact on the costs of operating the Group and this will show throughinto profits going forward. Board Changes A number of changes have taken place during the last few months. Keith Wheelerstepped down as a non-executive director in June 2007 and in August 2007 DavidBretel advised the Board of his wish to step down as Finance Director andCompany Secretary and of his intention to leave the Group at the expiry of hiscontract in May 2008. In October 2007, Gerald McGill was appointed to the boardas non-executive finance director and Company Secretary and operates fromScotland where he will work closely with the CEO at the new Leuchars based HeadOffice. I have in the past indicated my wish, at the appropriate time, to relinquish theduties of Chief Executive. As part of that process, Sebastian Morley, ManagingDirector of Vigilant, joined the Group board in 2006 and took on the role ofGroup Managing Director to assist in the development of operations. That hasproven to be a success, so much so that in June, the decision was taken to splitmy role so that Sebastian Morley could take on the role of Group Chief ExecutiveOfficer. For the last few months I have been acting as non-executive chairman workingwith my colleagues on overall planning and restructuring of the Group goingforward and I am delighted to say that it is in no small measure due to theefforts of Sebastian and his new management team that the Group has enjoyed sucha strong performance as is reflected in the early months of the year. I have every confidence in the future of the Croma Group and the management teamas it now stands, so much so that now is the right time for me to step down fromthe Group. Nick Hewson, non-executive director and chairman of the auditcommittee, has agreed to take on the role of non-executive Chairman, and will, Iknow, assist our CEO, Sebastian Morley, and Gerald McGill, with the benefit of his extensivebusiness experience. Gerry Thompson has been one of our long servingnon-executive directors and he too is also taking the opportunity to step downfrom the Board. I would like to take this opportunity to pay tribute to thecontribution both Nick and Gerry have made during the last few years in helpingto build the base upon which the Group can now expand confidently into thefuture. Gerry Thompson and I will be stepping down from the Board at theforthcoming AGM. Going forward the board will consist therefore of Nick Hewson as non-executiveChairman, Sebastian Morley as CEO and Gerald McGill as non-executive FinanceDirector and Company Secretary. Outlook The prospects for the Group are now encouraging. We have every reason to believethat the stronger start to the current year will continue. The turnover for thecurrent year to the end of November is up on the equivalent period, and the costbase has been substantially reduced and I hope to be able to report more andbetter news at the Annual General Meeting. At the same time the Group recentlyraised £220,000 of Convertible Loan Stock from existing institutional investorswith a coupon of 7% and a conversion price of 5p. In conclusion I would like to express my appreciation to all the management,staff and shareholders for their continued support during the year. John FrenchNon-executive ChairmanDecember 2007 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30 JUNE 2007 2007 (As Restated) 2006 £ £ Turnover 5,644,382 2,817,875 Cost of sales (4,381,274) (1,567,741) ------- -------------Gross profit 1,263,108 1,250,134 -------------------- --------- ---------Goodwill amortisation and impairment (2,095,467) (333,164)Other operatingexpenses (2,891,076) (2,106,361)-------------------- --------- ---------Administrative costs (4,985,543) (2,439,525) ------------- --------------Operating loss (3,723,435) (1,189,391) Interest receivable 1,655 920Interest payable andsimilar charges (97,815) (25,016) ----------- -----------Loss on ordinaryactivities beforetaxation (3,819,595) (1,213,487) Taxation - 45,312 ---------------- -----------------Loss on ordinaryactivities aftertaxation (3,819,595) (1,168,175) -------------- -----------------Loss per share (2.54)p (1.11)p -------------- ----------------- The Group had no recognised gains and losses other than the prior year effect ofadopting FRS 20, the cumulative effect of which is to reduce profit and lossreserves by £95,902 at 30 June 2006, and the loss for the financial year.The results relate to continuing activities. CONSOLIDATED BALANCE SHEETAS AT 30 JUNE 2007 (AsRestated) 2007 2007 2006 2006 £ £ £ £ Fixed assetsIntangible assets 2,594,136 4,949,606Tangible assets 191,109 237,855 -------- --------- 2,785,245 5,187,461 Current assetsStock 311,212 540,961Debtors 1,427,328 1,306,835Cash at bank 131,792 242,083 -------- -------- 1,870,332 2,089,879 Creditors: amountsfalling duewithin one year (2,232,513) (2,963,570) -------- -------- Net current (362,181) (873,691)liabilities -------- --------- Total assets less 2,423,064 4,313,770net currentliabilities Creditors: amountsfalling dueafter more than one (1,136,450) (268,544)year Provision for (2,828) (27,414)liabilities -------- --------- 1,283,786 4,017,812 ======== =========Share capital andreservesCalled up share 8,441,413 7,703,591capitalShare premium 1,388,522 1,272,554accountProfit and loss (8,909,130) (5,089,535)accountOther reserves 362,981 131,202 -------- --------- Shareholders' funds 1,283,786 4,017,812 ======== ========= CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 30 JUNE 2007 2007 2007 2006 2006 £ £ £ £ Net cash outflow fromoperating activities (489,810) (584,346) Return on investments andservicing of financing Interest paid (97,815) (25,016)Interest received 1,655 920 (96,160) (24,096) Taxation (paid)/received (222,021) (128,084) Capital expenditure andfinancial investmentPurchase of tangible assets (35,990) (15,654) --------- --------Receipts from sales of tangible 5,909 4,875assets --------- -------- (30,081) (10,779)Acquisitions and disposalsPurchase of subsidiary - (2,096,000)undertakings --------- --------Net cash acquired with - (151,844)subsidiaries --------- -------- (2,247,844)Cash outflow before use of (838,072) (2,995,149)liquid resources andfinancingFinancingIssue of equity share capital 100,000 2,815,133Issue of convertible loan notes 750,000 231,203Capital element of finance lease - (9,876) --------- -------- 850,000 3,036,460 --------- --------- 11,928 41,311 ========= ========= Financial information The financial information included in the above statement is extracted from theGroup's accounts for the period ended 30 June 2007, and does not constitutestatutory accounts within the meaning of Section 240 of the Companies Act 1985. This information is provided by RNS The company news service from the London Stock Exchange