9th Nov 2009 07:00
CROMA GROUP PLC
("Croma" or "the Group")
FINAL RESULTS
FOR THE YEAR TO 30TH JUNE 2009
The Board of Croma, the AIM listed avionics, access security and installation systems, and asset protection specialist, is pleased to announce its final results for the year to 30th June 2009 which reflect progress and report a maiden pre tax profit.
KEY POINTS
Maiden profits reported, both before and after tax, in spite of modest reduction in turnover.
EBIT improvement of approximately £500,000 in the year (profit before finance charges of £246,897 versus loss of £263,758 in 2008)
Long term contracted revenue base strengthened by new strategic supply arrangements, some of which roll out to 2013.
Operating businesses now cash positive with increasing order books.
Financing provided primarily through a combination of equity, and convertible loan stock and invoice discounting lines, with minimal reliance on bank overdraft.
Equity placing with Directors to raise £130,000 under active consideration.
Nick Hewson, Non-Executive Chairman of Croma, said "2009 represents another year of progress for the business, being the first year that the Group has reported a pre and post tax profit for the period, reflecting the continued trading profit from its continuing operations and no impairment charges or losses on discontinued activities as in 2008. Having reviewed the position at the half year the decision was taken by the Board to carry out a High Court sanctioned reduction in the nominal value of each ordinary share from 5 pence to 0.1 pence, in line with many other businesses. This, along with the ability now to pay dividends out of future retained earnings, gives the Board the opportunity to review all of its current financing arrangements. We are actively considering the possibility of a placing of further equity with Directors to raise £130,000."
Chief Executive Officer, Sebastian Morley, added; "The last financial year has been a milestone in the progress of Croma Group PLC.
Since selling my business, Vigilant Security, to Croma Group in 2006, the metamorphosis of the group has been startling. Loss making businesses have been closed or restructured and we have streamlined the Group into two distinct divisions: personnel and equipment. We have also focused ruthlessly on reducing costs and restructuring the board of directors to suit a group of our size.
As a result, we are able to report our maiden full year profit.
More importantly, I can report that trading in the early months of the current year has shown further improvement, despite the challenging climate.
The new board of directors have a large stake in the business and are aware that past performance has been disappointing. We aim to address that by aggressively driving margin and exploring value adding corporate activity."
An electronic copy of the annual report is available from the Group's website www.cromagroup.co.uk and copies have been sent to shareholders together with the Notice of AGM.
For further information, contact;
|
Sandy Fraser, Brewin Dolphin (NOMAD) |
Tel: 0845 213 2072 |
|
Sebastian Morley, CEO |
Tel: 07768 006909 |
CHAIRMAN'S STATEMENT
FOR THE YEAR ENDED 30 JUNE 2009
Financials
2009 represents another year of progress for the business, being the first year that the Group has reported a pre and post tax profit for the period, reflecting the continued trading profit from its continuing operations and no impairment charges or losses on discontinued activities as in 2008.
Whilst turnover fell slightly to £6.52m (2008 - £7.11m), and gross profit was £1.95m (2008 - £2.43m), profit from operations before finance charges was a healthy £246,897 as opposed to a loss, after an impairment charge of £445,486, in 2008 of £263,758. Our net finance costs were £235,186, roughly in line with the prior year net cost of £230,564, but the profit before tax was positive at £11,711 against a loss in 2008 of £494,322.
After a tax refund received in the year, the profit for the year was £52,902 against a prior year loss, including £174,767 on discontinued operations, of £669,089. The Board believes that the Group is now well placed to take advantage of the numerous opportunities available to it, having addressed the various problems in the subsidiary businesses over the last two years.
The Company announced in May of this year that it had been granted High Court Approval in respect of the reduction in share capital to 0.1pence per ordinary share and the cancellation of the deferred shares and the share premium account. This paves the way for the business to set about dealing with the structure of its capital in a more efficient manner, as well as in due course, the consideration by the Board of the payment of a dividend.
Business Review
The three key business areas of the Group, avionics (RDDS), access security and installation systems (Photobase), and asset protection including man guarding and key holding (Vigilant), all showed their strengths during the period.
Many of the valuable contracts in the RDDS business were not fully delivered until after the end of the year with a resultant deferral of some of the profit and all the associated cash inflows until the current period. The level of demand for the services of this proprietary software-based provider of solutions to the aerospace business remains strong, and the ability of the Group to retain this business which we have developed in-house allows us to invest in its future with confidence.
During the year, management responsibility for the Photobase software-based access security systems business was taken on by the RDDS subsidiary as the two businesses have considerable crossover target markets. Therefore, the coming year should benefit from the joint marketing of these product and services offerings to our current client base, the majority of which are major governmental organisations including the UK prisons service, the UK police services, the UK armed forces and businesses linked to the defence sector.
The Group has been able to strengthen its long term contracted revenue base over the period, announcing strategic supply arrangements with Agusta Helicopters and the Ministry of Defence (for defence establishment guarding), some of which roll out to 2013. Whilst some client attrition is inevitable in what has been a tough year for many businesses globally, recent contract wins suggest to us that security is a non-discretionary category of expenditure upon which most of our clients are prepared to maintain spend, if not increase it.
Financing arrangements
The period has been challenging, financially, in many respects, both for the Croma businesses and more generally. The banking market in the UK has gone through a change in nature and character the like of which many of us have not seen before, and this has had a marked effect on the ability of the Group to raise even ordinary working capital for its businesses. As a result, the Board took the view that quasi-bond style financing was more reliable, even if the convertible element of some of this form of borrowing may have proved expensive to equity holders.
Having reviewed the position at the half year the decision was taken by the Board to carry out a High Court sanctioned reduction in the nominal value of each ordinary share from 5 pence to 0.1 pence, in line with many other businesses. This, along with the ability now to pay a dividend out of future retained earnings, gives the Board the opportunity to review all of its current financing arrangements. We are actively considering the possibility of a placing of further equity with Directors to raise £130,000.
All that said, we are also in the comfortable position as a Group of having relationships with experienced and supportive banking and finance houses able to support our level of activity by traditional methods, given the quality of our client list.
Outlook
I anticipate that the Group, with increasing order books and strong working capital management, will be cash generative going forward. The Group now also has the potential to expand where the right opportunity comes along, and has restored flexibility to use equity to finance that expansion.
Nick Hewson
Non-executive Chairman
06 November 2009
CROMA GROUP PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2009
|
2009 |
2008 |
||
|
|
£ |
£ |
|
|
Revenue |
6,519,436 |
7,108,051 |
|
|
Cost of sales |
(4,566,041) |
(4,674,306) |
|
|
------------- |
------------- |
||
|
Gross profit |
1,953,395 |
2,433,745 |
|
|
Goodwill impairment |
- |
(445,486) |
|
|
Other administrative expenses |
(1,706,498) |
(2,252,017) |
|
|
Administrative expenses |
(1,706,498) |
(2,697,503) |
|
|
------------- |
-------------- |
||
|
Profit/(loss) from operations |
246,897 |
(263,758) |
|
|
Financial income |
2,231 |
4,635 |
|
|
Financial expenses |
(237,417) |
(235,199) |
|
|
----------- |
----------- |
||
|
Profit before taxation |
11,711 |
(494,322) |
|
|
Taxation credit |
41,191 |
- |
|
|
---------------- |
---------------- |
||
|
Profit/(loss) from continuing operations |
52,902 |
(494,322) |
|
|
Loss from discontinued operations net of tax |
- |
(174,767) |
|
|
---------------- |
---------------- |
||
|
Profit/(loss) for the year attributable to equity shareholders |
52,902 |
(669,089) |
|
|
------------------ |
---------------- |
||
|
Profit/(loss) per share for profit/(loss) attributable to equity shareholders |
|||
|
Continuing operations |
|||
|
Profit/(loss) per share - basic |
0.03p |
(0.29p) |
|
|
Profit/(loss) per share - diluted |
0.03p |
(0.29p) |
|
|
Discontinued operations |
|||
|
Profit/(loss) per share - basic |
- |
(0.10p) |
|
|
Profit/(loss) per share - diluted |
- |
(0.10p) |
|
|
Profit/(loss) per share - basic |
0.03p |
(0.39p) |
|
|
Profit/(loss) per share - diluted |
0.03p |
(0.39p) |
CROMA GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2009
|
|
2009 |
2009 |
2008 |
2008 |
||
|
£ |
£ |
£ |
£ |
|||
|
Assets |
||||||
|
Non-current assets |
||||||
|
Property, plant and equipment |
180,653 |
234,560 |
||||
|
Goodwill |
2,148,650 |
2,148,650 |
||||
|
Total non-current assets |
2,329,303 |
2,383,210 |
||||
|
Current assets |
||||||
|
Inventories |
282,035 |
299,319 |
||||
|
Trade and other receivables |
1,720,618 |
1,484,404 |
||||
|
Cash |
3,674 |
62,375 |
||||
|
Total current assets |
2,006,327 |
1,846,098 |
||||
|
Total assets |
4,335,630 |
4,229,308 |
||||
|
Liabilities |
||||||
|
Non-current liabilities |
||||||
|
Convertible loan notes |
(1,339,120) |
(1,395,848) |
||||
|
Provisions |
(15,000) |
- |
||||
|
Deferred tax |
(2,828) |
(2,828) |
||||
|
Total non current liabilities |
(1,356,948) |
(1,298,676) |
||||
|
Current Liabilities |
||||||
|
Trade and other payables |
(353,926) |
(212,281) |
||||
|
Tax |
(241,325) |
(446,556) |
||||
|
Accruals and deferred income |
(358,660) |
(498,850) |
||||
|
Bank overdrafts and loans |
(561,383) |
(309,007) |
||||
|
Total current liabilities |
(1,515,294) |
(1,466,694) |
||||
|
Total liabilities |
2,872,242 |
2,765,370 |
||||
|
Total net assets |
1,463,388 |
1,463,938 |
||||
|
Capital and reserves attributable to equity holders of the company |
||||||
|
Share capital |
177,384 |
9,161,453 |
||||
|
Share premium |
- |
1,388,522 |
||||
|
Retained earnings |
847,274 |
(9,578,219) |
||||
|
Other reserves |
438,730 |
492,182 |
||||
|
Total equity |
1,463,388 |
1,463,938 |
||||
These financial statements were approved and authorised for issue by the board of directors on 06 November 2009 and signed on their behalf by
G M McGill,
Director
CROMA GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 JUNE 2009
|
|
2009 |
2008 |
|
|
£ |
£ |
||
|
Cashflows from operating activities |
|
|
|
|
Profit/(loss) before taxation |
11,711 |
(669,089) |
|
|
Adjustments for: |
|||
|
Depreciation |
44,499 |
37,412 |
|
|
Impairment of Goodwill |
- |
445,486 |
|
|
Loss/(gain) on sale of property, plant and equipment |
8,077 |
(1,325) |
|
|
Add back of the share based payment expense |
(53,452) |
101,306 |
|
|
Onerous lease provision |
15,000 |
- |
|
|
Financial Income |
(2,231) |
(4,635) |
|
|
Financial Expenses |
237,417 |
235,199 |
|
|
Cashflows from operating activities before changes in |
|||
|
working capital and provisions; |
261,021 |
144,354 |
|
|
Decrease in inventories |
17,284 |
11,893 |
|
|
Increase in trade and other receivables |
(236,215) |
(57,076) |
|
|
Decrease in trade and other payables |
(191,187) |
(536,828) |
|
|
|
__________ |
__________ |
|
|
Cash generated from operations |
(149,097) |
(437,657) |
|
|
Interest received |
2,231 |
4,635 |
|
|
Interest paid |
(194,145) |
(137,441) |
|
|
Income taxes |
28,603 |
(20,721) |
|
|
|
__________ |
__________ |
|
|
Net cashflows used in operating activities |
(312,408) |
(591,184) |
|
|
Cash Flows from investing activities |
|||
|
Purchase of property, plant and equipment |
(52,817) |
(83,347) |
|
|
Proceeds on disposal of property, plant and equipment |
54,148 |
3,809 |
|
|
__________ |
__________ |
||
|
Net cash used in investing activities |
(311,077) |
(79,538) |
|
|
Cash flows from financing activities |
|||
|
Issue of Loan Notes |
150,000 |
420,000 |
|
|
Repayment of borrowings |
(40,722) |
(50,024) |
|
|
Issue of Share Capital - cash issue |
- |
400,000 |
|
|
__________ |
__________ |
||
|
Net cash from financing activities |
109,278 |
769,976 |
|
|
__________ |
__________ |
||
|
Net (decrease)/increase in cash and cash equivalents |
(201,799) |
99,254 |
|
|
__________ |
__________ |
||
|
Cash and cash equivalents at beginning of year |
(205,910) |
(305,164) |
|
|
__________ |
__________ |
||
|
Cash and cash equivalents at end of year |
(407,709) |
(205,910) |
|
|
========== |
========== |
The financial information set out above does not constitute the company's statutory accounts for 2008 or 2009. Statutory accounts for the year ended 30 June 2009 have been reported on by the Independent Auditors. The Independent Auditors' Report on the Annual Report and Financial Statements for 2008 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 237(2) or 237(3) of the Companies Act 1985. The Independent Auditors' Report on the Annual Report and Financial Statements for 2009 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
Related Shares:
Croma Security