Croma Security Regulatory News (CSSG)

1 Mar 2005 07:00

Embargoed: 0700hrs 1 March 2005 Croma Group Plc Interim Results for the six months to 31 December 2004 Highlights: * Continued improvement in sales in the period * Turnover for the half year already approximately 42% higher than that of the last full financial year * Sales of approx. ‚£1m - an increase of over 1,600% on the corresponding period last year * New products in development have already secured orders from 3 UK police forces * Investment made in sales and marketing teams * New significant contracts, either won or pending, expected to impact on full year performance including ‚£500,000 order from the MOD John French, Chairman and Chief Executive, commented,"We have made some significant investment during this period in boostingCroma's sales and marketing force. This investment should position us well fora very positive outcome for the full year.In the first two months of the second half, performance is again improving anda number of potentially lucrative orders are expected to materialise in time toimpact on the June year end accounts. I am encouraged by the progressthroughout the Group, in each subsidiary, and am actively seeking to acquiremore businesses in our field to boost the performance further still."Contacts:John French, Chairman & Chief ExecutiveCroma Group Plc, Tel. 07836 722 482Chris Roberts / Ben SimonsHansard Communications, Tel. 020 7245 1100Chairman's StatementI am pleased to report the financial results of the Group for the six months to31 December 2004. The improving sales performance during the final quarter ofthe year ending June 2004 has continued during the first six months of thecurrent year. The turnover for the six-month period to 31 December 2004 was ‚£993,594 compared with ‚£61,136 for the same period last year. An increase ofapproximately 1,625 %.As a result of the investment in additional resources the loss before tax andamortisation of goodwill in the six months to 31 December 2004 is ‚£295,320compared to ‚£279,353 for the same period last year.In addition, the holding company costs in the period include a full six monthscosts of running as an AIM listed company.Trading in the first six months of this financial year is already 42% higherthan it was during the last full financial year.The improved sales performance is primarily a result of the acquisitions of R&DDesign Services Limited and of Shawley Products, the latter now operating as adivision of Croma Defence Systems Limited. Both acquisitions have settled inwell and are making a valuable contribution to the ongoing performance of theGroup.Croma Defence Systems has continued to complete the design of a number of newproducts of its own and has expanded its list of factored products. This isenabling us to present a broad-based range of products, systems and solutionsto various aspects of the overt, covert surveillance and defence relatedmarket. Three UK Police forces have already placed orders for a number of newproducts for trial purposes. Other new products in the course of introductioninclude a short-range covert monitoring system for use by surveillanceoperatives in the built environment, able to monitor up to eight personnel at atime. Another new product is a remote sensor, designed for a variety of fieldsurveillance applications. A number of other new products are expected to beannounced by Croma Defence Systems in the coming weeks. Shawley products arelooking to capitalise on its experience in wireless CCTV. Shaw-Tel is the nameof a new system being introduced by Shawley, which allows the transmission ofdigital video images, combined with digital video recordings and which is anintelligent video reception concept for CCTV surveillance.R&D Design Services continues to benefit from repeat business from existingcustomers whilst at the same time expanding its international distributornetwork, thereby strengthening relations with key customers. Agents have beenadded in Asia and South Africa to service key markets in these regions. Thesuccess being achieved by R&D is such that a number of significant appointmentshave been made during the last few months in terms of marketing and technicalmanagement teams to support the increased level of business and indeed theincrease in activity resulting from additional new enquiries for R&D'sproducts. This has obviously resulted in the short term in an increase inoverhead, but that is more than justified by the extensive order book andactivities.As such it is our intention to relocate R&D Design Services to new premisesless than three miles from our current location to facilitate the increase inactivity. It is hoped that the move will be carried out efficiently with littleor no effect on our ability to meet our customers needs and can be completed bythe end of April.In the first six months we have added additional software and mechanical designcapability with the employment of new engineers at R&D Design Services. Thebenefits of this investment will materialise in the second half of the currentfinancial year. Following the acquisition of Shawley Products in March 2004, wehave now identified cost savings within Croma Defence Systems Limited whichwill be implemented in the third quarter of this financial year, with fullbenefits in quarter four of this financial , and the new financial year. Thesechanges include a planned relocation of the development and assembly operationsof Croma Defence Systems products from Hereford to the Risca, Newport, theplant of Shawley products. The benefits of this will be seen going forward, andwill include lower labour costs and a reduction in other operating costs thatrelate to premises and establishment. A small unit at Hereford will still beretained as Group Headquarters.OutlookProspects going forward are encouraging and justify all the changes that arenow being introduced with the distinct change in emphasis from productdevelopment to sales and marketing as is beginning to be reflected. The secondhalf should see a continuation of the improvement in trading. We hope to seethe benefits of a number of outstanding potential orders impacting in thecoming months as well as the benefits from our new products being sold.Croma is breaking into new customers and new markets on a regular basis withits innovative products. Of course, the nature of our industry is that somemajor contracts have a significant lead time from the point of receiving anorder to actual delivery, when it can be taken into sales revenue. We haverecently secured a number of such contracts which will benefit the ongoingperformance partly in the current year and partly in the new financial year. Inrespect of new business, R&D recently entered into a contract with a major UKdefence electronics firm for the supply of 50 video monitors to the MoD. Thetotal contract value is over ‚£500,000 and is scheduled to be completed during2005 with most, if not all of the work impacting, on the second half of thecurrent financial year. A number of other long-term contracts have beenconcluded which will impact on following years. Having said that, products fromCroma Defence Systems do not all fall in this category and with some of the newproducts having shorter lead times we expect to see improvement in the salesperformance on a short term basis.The ongoing policy of the Group is to continue to seek compatible acquisitionsto consolidate the sector. As such we are actively exploring a number of suchopportunities at this moment in time.John FrenchChairman1 March 2005CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE SIX MONTHS ENDED 31 DECEMBER 2004 Notes 6 Months ended 6 Months ended Year ended 31 December 31 December 30 June 2004 2003 2004 Unaudited Unaudited Audited ‚£ ‚£ ‚£ Turnover 993,594 61,136 695,320 Cost of Sales (505,081) (38,134) (338,270) __________ __________ __________ Gross Profit 488,513 23,002 357,050 Administrative Expenses (883,933) (284,554) (855,974) __________ __________ __________ Operating loss 3 (395,420) (261,552) (498,924) Interest receivable 300 92 7,192 Interest payable (1,231) (17,893) (5,917) __________ _________ _________ Loss on ordinary activities (396,351) (279,353) (497,649)before taxation Taxation 2 - - 40,090 _________ _________ _________ Loss after taxation and for (396,351) (279,353) (457,559)period ========== ========== ========== Loss per share 4 (0.43)p (1.30)p (1.00)p ========== ========== ========== Fully diluted loss per share 4 (0.43)p (1.30)p (1.00)p ========== ========== ==========CONSOLIDATED BALANCE SHEETFOR THE SIX MONTHS ENDED 31 DECEMBER 2004 6 Months ended 6 Months ended Year ended 31 December 31 December 30 June 2004 2003 2004 Unaudited Unaudited Audited ‚£ ‚£ ‚£ Fixed assets Intangible assets 2,230,740 - 2,331,771 Tangible assets 102,447 51,423 106,632 _________ __________ _________ 2,333,187 51,423 2,438,403 _________ __________ _________ Current assets Stock 556,473 126,722 462,964 Debtors 573,297 237,199 403,081 Cash - 822,268 207,839 __________ _________ _________ 1,129,770 1,186,189 1,073,884 Creditors: Amounts falling due within (789,559) (83,024) (442,538)one year ________ _________ ________ Net current assets 340,211 1,103,165 631,346 ________ _________ _________ Total assets less current liabilities 2,673,398 1,154,588 3,069,749 Creditors: Amounts falling due after (2,185) (15,000) (2,185)one year ________ ________ ________ 2,671,213 1,139,588 3,067,564 ========== ========== ========== Share capital and reserve Called up share capital 4,890,341 2,872,160 4,890,341 Share premium account 1,108,616 1,057,959 1,108,616 Profit and loss account (3,327,744) (2,790,531) (2,931,393) ________ ________ ________ Equity shareholders' funds 2,671,213 1,139,588 3,067,564 ========== ========== ==========This interim financial information was approved by the Board of Directors on 28February 2005DJ BretelDirectorCONSOLIDATED CASH FLOW STATEMENTFOR THE SIX MONTHS ENDED 31 DECEMBER 2004 Notes 6 Months ended 6 Months ended Year ended 31 December 31 December 30 June 2004 2003 2004 Unaudited Unaudited Audited ‚£ ‚£ ‚£ Net cash outflow from 5 (412,311) (396,413) (761,590) operating activities __________ __________ __________ Return on investments and servicing of financing Interest received 300 92 7,192 Interest paid (1,231) (17,893) (5,917) __________ __________ __________ (931) (17,801) 1,275 __________ __________ __________ Taxation recovered - - 27,640 Capital expenditure and financial investment Purchase of intangible - - (1,000)fixed assets Purchase of tangible fixed (8,803) (7,348) (23,434)assets Proceeds from sale of - - 3,148tangible fixed assets __________ __________ __________ (8,803) (7,348) (21,286) Acquisitions and disposals __________ __________ __________ Purchase of subsidiary - - (2,500,100)undertaking Net cash acquired with - - 21,529subsidiary __________ __________ __________ - - (2,478,571) __________ __________ __________ Cash outflow before use (422,045) (421,562) (3,232,532) of liquid resources and financing __________ __________ __________ Financing Issue of equity share - 1,743,213 4,221,467capital Costs of issue of equity - (236,224) (502,089)share capital Repayment of other loans - (194,358) (209,358) Repayment of the capital (1,630) - (815)element of hire purchase __________ __________ __________ (1,630) 1,312,631 3,509,205 (Decrease)/increase in cash __________ __________ __________ (423,675) 891,069 276,673 ========== ========== ==========NOTES TO THE INTERIM FINANCIAL INFORMATIONFOR THE SIX MONTHS ENDED 31 DECEMBER 20041.Financial InformationThe financial information above does note constitute statutory accounts withinthe meaning of Section 240 of the Companies Act 1985.The interim financial information has not been audited but has been reviewed bythe Company's auditors.2.TaxationNo 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 2004 2003 2004 Unaudited Unaudited Audited ‚£ ‚£ ‚£ This is stated after charging: Depreciation of tangible 12,988 9,741 23,201fixed assets Amortisation of intangible 101,031 - 34,410fixed assets ========== ========== ==========4.Loss per shareThe 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 2004 2003 2004 Unaudited Unaudited Audited ‚£ ‚£ ‚£ Loss for the period (396,351) (279,353) (457,559) ========== ========== ========== Weighted average number of 91,961,744 21,426,363 45,323,440shares Fully diluted loss per share: ========== ========== ========== Loss for the period (396,351) (279,353) (457,559) ========== ========== ========== Weighted average number of 92,569,143 21,426,363 45,323,440shares ========== ========== ==========5.Reconciliation of operating loss to net cash outflow from operatingactivities 6 Months ended 6 Months ended Year ended 31 December 31 December 30 June 2004 2003 2004 Unaudited Unaudited Audited ‚£ ‚£ ‚£ Operating loss (395,420) (261,552) (498,924) Depreciation of tangible 12,988 9,741 23,201fixed assets Amortisation of intangible 101,031 - 34,410fixed assets (Increase) in stock (93,509) (18,723) (63,819) (Increase)/decrease in (170,216) 22,012 (226,751)debtors Increase in creditors 132,815 (147,891) (29,707) __________ __________ __________ Net cash outflow from (412,311) (396,413) (761,590)operating activities ========== ========== ==========END