Croma Security Regulatory News (CSSG)

31 Mar 2006 07:00

Croma Group PLC31 March 2006 31 MARCH 2006 CROMA GROUP PLC ("Croma" or "the Group") INTERIM RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2005 The Board of Croma, the specialists in the design, development and production ofovert and covert surveillance, security and defence related products, announcesfinancial results for the six months to 31 December 2005. CORPORATE HIGHLIGHTS •Croma Vigilant Limited and Croma Photobase Limited established through successful acquisitions; •Croma Vigilant Limited already secures in excess of £1m of additional business on an annualised basis; •Sebastian Morley assumes role as Group Managing Director; •Shareholder base expanded through existing and new Institutional Holdings; •First wireless 'RVS' CCTV system sold to a Council based in the South of England; and •Operational benefits already stemming from recent relocation of Croma Defence Systems Limited. Commenting on today's announcement, John French, Executive Chairman of Croma,said: "The period gone has encompassed two successful acquisitions, one Boardappointment, the securing of £1m plus ongoing business and the sale of theGroup's first wireless Remote Video System CCTV. "The ongoing policy of the Group will be to continue to accelerate the growth ofthe current business and to seek compatible acquisitions to enable it to furtherconsolidate its position in the sector." Enquiries: Croma Group plc John French, Executive Chairman Mobile: 07836 722 482 Sebastian Morley, Group Managing Director Bishopsgate Communications Ltd. Tel: 020 7430 1600 Dominic Barretto Mobile: 07930 450 156 Scott Robertson CHAIRMAN'S STATEMENT I am pleased to report on another highly active period for your Group, which hasseen two successful acquisitions, one Board appointment, the securing of £1million plus ongoing business and the sale of the Group's first wireless RemoteVideo System CCTV. Please find below the financial results of the Group for the six months to 31December 2005. Financials Turnover for the six month period was £908,649 compared with £993,594 for thesame period last year. The loss before taxation is £298,306 compared with£396,351 for the same period to December 2004, a reduction of 25%. Strong operational progress The Group has continued to restructure and reorganise its trading activities.Following the 2004 acquisitions of R&D Design Services Limited, and the brandand products of Shawley, Shawley now operates as 'Croma Shawley', a division ofCroma Defence Systems Limited and shares in the benefits of a single locationfor both the CCTV and surveillance equipment divisions near Newport, SouthWales. As indicated in my previous statement, the operating base of CromaDefence Systems Limited in Hereford was relocated during this period of time.This will bring a number of operating benefits going forward during the courseof the second half of the year with the Group having disposed of the surpluspremises at the time of the relocation. Croma Shawley has been actively engaged during this period in developing andenhancing both its existing products and new products having overcome someinitial development issues at the prototype stage. The production andintroduction to the market of the resultant product, the King integrated pan &tilt CCTV unit is now taking place. The Company has sold their first wireless RVS (Remote Video System) CCTV systemto a Council based in the South of England who is moving from a conventionalsystem to a wireless system in order to reduce running costs and give greaterflexibility. This sale gives Croma Shawley a valuable reference site from whichthey can demonstrate the system to other Councils and start the move to morecost effective surveillance systems. Croma Shawley exports approximately 35% of sales with a substantial orderrecently being secured from Dubai. It is anticipated that the fulfilment of thisorder will lead to further substantial enquiries from this territory. R&D Design continues with a strong order book going forward, and has beensuccessful in establishing itself as a supplier of equipment to leading defencecontractors and manufacturers in addition to its traditional market of sellingdirect to end users. R&D equipment is now in use with fixed wing, helicopter anda range of surface vessel applications for both civil, government agency andmilitary use. Two successful acquisitions During this period of time the Group has been actively seeking to broaden itsproduct and customer base to achieve the objective of establishing its ongoingposition as an integrated supplier of surveillance, security and defence relatedproducts and services. The efforts to seek such opportunities during the firsthalf of the year enabled us complete two acquisitions during the early part ofthe second half of our financial year. The Group completed the acquisition of Photobase Limited, to trade as CromaPhotobase Limited, a UK based business which designs, installs, services andmaintains biometric identification and access-control solutions to meet thephysical security needs for a wide range of locations, budgets, securitypolicies and organisation types. The second acquisition was that of Vigilant Security (Scotland) Limited("Vigilant"), to trade going forward as Croma Vigilant Limited. Vigilantprovides a range of services related to asset protection, operating and sellingaggressively on the ex-military brief. Clients are primarily from theInternational and UK business community together with local authorities seekingpremium services and high standards in areas of security. Within the last twoweeks, Croma Vigilant has secured in excess of £1m of additional business on anannualised basis. Board re-organised Following the acquisition of Vigilant, the Board announced in February theappointment of Sebastian Morley to the Board as an Executive Director. With the satisfactory completion of the two recent acquisitions, and ambitiousplans for the future development of the Group as a whole, I believe the time isright for me to share some of the day-to-day Executive responsibilities of therunning of the Group. Having discussed the matter with my colleagues thedecision has been made to create the position of Group Managing Director, a rolewhich will be taken up by Sebastian Morley, currently a Main Board Director. The intention is for me to concentrate on the corporate and business developmentof the Group in terms of our expansion plans and future growth, with Sebastianassisting in the day-to-day operational matters of the Group's subsidiaries.This is an important step in creating a strong team for future development andoperational effectiveness. Mr Morley established Vigilant in 2001 and has been instrumental in thedevelopment of that company. Prior to this, he worked with organisations relatedto the surveillance and security sector, and from 1994 held the position ofOperations Director at Profile Security Services. Mr Morley was educated at Eton and attended the Royal Military Academy atSandhurst. He was subsequently commissioned in The Black Watch with the rank ofCaptain and undertook a period with the United Kingdom Special Forces where heheld the rank of Major. This hands-on experience gives him a unique insight intothe sector. Expansion of shareholder base As a result of the acquisitions, the Board has been able to expand andstrengthen the Group's shareholder base, with support from existing and newinstitutional investors. In February, the Group was advised that Framlington and Noble Fund Managersincreased their holdings to 11,956,522 ordinary shares, representing 10.30% ofthe issued share capital, and 10,478,261 ordinary shares representing 7.40% ofthe issued share capital, respectively. The Company also announced that two new institutional investors took part at thetime of the Placing; Artemis Investment Management Limited holding a notifiableinterest of 5,000,000 shares, representing 3.73% of the issued share capital ofthe Company, and Calculus Capital and the Neptune-Calculus Income and GrowthVCT. This support is encouraging as it will doubtless provide a strong base for thefurther development of the Group in terms of consolidating the sector. With theimpact from the acquisitions and the introduction of new products from CromaShawley, I would expect to see a more stable trading pattern during the nextfull financial year. Opportunities to benefit from cross referrals amongst the consolidated customerand product base are considerable and represent a significant opportunity tofurther the Group's intention to consolidate its position in the sector. Theacquisitions, together with the improving performance of the Group overall, asthe result of the changes introduced during the second half of last year, andthe early part of the current year, will reflect in an improving position forthe period to June 2006 and going forward in successive years. The broaderproducts and structure of the Group as now expressed provides a much improvedplatform for growth in all areas. Outlook The ongoing policy of the Group will be to continue to accelerate the growth ofthe current business and to seek compatible acquisitions to enable it to furtherconsolidate its position in the sector. A number of such opportunities have beenidentified and tentative discussions are expected to take place in the nearfuture. John French Executive Chairman 31 March 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED 31 DECEMBER 2005 Notes 6 Months ended 6 Months ended Year ended 31 December 31 December 30 June 2005 2004 2005 Unaudited Unaudited Audited £ £ £ Turnover 908,649 993,594 1,911,425 Cost of Sales (361,979) (505,081) (903,948) __________ __________ __________Gross Profit 546,670 488,513 1,007,477 Administrative Expenses (830,636) (883,933) (1,934,953) __________ __________ __________Operating loss 3 (283,966) (395,420) (927,476) Interest receivable 121 300 1,329Interest payable (14,461) (1,231) (46,431) __________ _________ _________Loss on ordinaryactivities beforetaxation (298,306) (396,351) (972,578)Taxation 2 - - 812 _________ _________ _________Loss after taxation andfor period (298,306) (396,351) (971,766) ========== ========== ==========Loss per share 4 (0.31)p (0.43)p (0.98)p ========== ========== ==========Fully diluted loss pershare 4 (0.31)p (0.43)p (0.98)p ========== ========== ========== CONSOLIDATED BALANCE SHEET FOR THE SIX MONTHS ENDED 31 DECEMBER 2005 6 Months ended 6 Months ended Year ended 31 December 31 December 30 June 2005 2004 2005 Unaudited Unaudited Audited £ £ £ Fixed assets Intangible assets 2,027,774 2,230,740 2,129,106Tangible assets 95753 102,447 98,814 _________ __________ _________ 2,123,527 2,333,187 2,227,920 _________ __________ _________Current assets Stock 572,283 556,473 531,150Debtors 459,365 573,297 706,846Cash - - 8,443 __________ _________ _________ 1,031,648 1,129,770 1,246,439Creditors: Amounts falling duewithin one year (952,456) (789,559) (1,173,133) ________ _________ ________Net current assets 79,192 340,211 73,306 ________ _________ _________Total assets less currentliabilities 2,202,719 2,673,398 2,301,226 Creditors: Amounts falling dueafter one year - (2,185) (1,373) ________ ________ ________ 2,202,719 2,671,213 2,299,853 ========== ========== ========== Share capital and reserve Called up share capital 5,323,791 4,890,341 5,073,591Share premium account 1,126,906 1,108,616 1,129,421Profit and loss account (4,247,978) (3,327,744) (3,903,159) ________ ________ ________Equity shareholders' funds 2,202,719 2,671,213 2,299,853 ========== ========== ========== This interim financial information was approved by the Board of Directors on 17March 2006 DJ Bretel Director CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 31 DECEMBER 2005 Notes 6 Months ended 6 Months ended Year ended 31 December 31 December 30 June 2005 2004 2005 Unaudited Unaudited Audited £ £ £ Net cash outflow from 5 (212,933) (412,311) (867,894)Operating activities __________ __________ __________Return on investmentsAnd servicing of financingInterest received 121 300 1,329Interest paid (14,161) (1,231) (7,005) __________ __________ __________ (14,040) (931) (5,676) __________ __________ __________Taxation recovered - - 36,669Capital expenditure andFinancial investmentPurchase of intangible fixed - - -assetsPurchase of tangiblefixed assets (9,950) (8,803) (20,882)Proceeds from sale of - - -tangible fixed assets __________ __________ __________ (9,950) (8,803) (20,882)Acquisitions and disposals __________ __________ __________Purchase of subsidiary - - -undertakingNet cash acquired with - - -subsidiary __________ __________ __________ - - - __________ __________ __________Cash outflow before use (236,923) (422,045) (857,783)of liquid resources andfinancing __________ __________ __________Financing Issue of equity sharecapital - - 210,400Costs of issue ofequity share capital - - (6,345)Repayment of other loans - - -Repayment of thecapital element of hirepurchase (1,630) (1,630) (3,260) __________ __________ __________ (1,630) (1,630) 200,795(Decrease)/increase in cash __________ __________ __________ (238,553) (423,675) (656,988) ========== ========== ========== NOTES TO THE INTERIM FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 31 DECEMBER 2005 1.Financial Information The financial information above does not constitute statutory accounts withinthe meaning of Section 240 of the Companies Act 1985. The interim financial information has not been audited. 2.Taxation No liability to taxation arises due to the loss incurred. 3.Operating loss 6 Months ended 6 Months ended Year ended 31 December 31 December 30 June 2005 2004 2005 Unaudited Unaudited Audited £ £ £This is stated after charging:Depreciation of tangible fixedassets 13,011 12,988 28,700Amortisation of intangiblefixed assets 101,031 101,031 202,665 ========== ========== ========== 4.Loss per share The loss per share is based on the loss for the period and the weighted averagenumber of ordinary shares in issue and ranking for dividend. 6 Months ended 6 Months ended Year ended 31 December 31 December 30 June 2005 2004 2005 Unaudited Unaudited Audited £ £ £Loss for the period (298,306) (396,451) (971,766) ========== ========== ==========Weighted average number ofshares 96,740,874 91,961,744 98,682,760 ========== ========== ==========Loss per share (0.31p) (0.43p) (0.98p) ========== ========== ==========Fully diluted loss per share (0.31p) (0.43p) (0.98p) ========== ========== ========== The directors do not consider the share options in issue to be dilutive. 5.Reconciliation of operating loss to net cash outflow from operating activities 6 Months ended 6 Months ended Year ended 31 December 31 December 30 June 2005 2004 2005 Unaudited Unaudited Audited £ £ £Operating loss (312,646) (395,420) (927,476)Depreciation of tangible fixedassets 13,011 12,988 28,700Amortisation of intangiblefixed assets 101,031 101,031 202,665(Increase) in stock (41,133) (93,509) (68,186)(Increase)/decrease in debtors 247,481 (170,216) (340,434)Increase in creditors (220,677) 132,815 236,837 __________ __________ __________Net cash outflow from operatingactivities (212,933) (412,311) (867,894) ========== ========== ========== This information is provided by RNS The company news service from the London Stock Exchange