I have updated the header with my latest projections and valuation, including broker comparatives. |
 Good solid H1 results whilst I was on hols. With H1 £0.46m PBT plus one acquisition already made in H2, CSSG are in a good position (even with NI and NMW rises) to at least meet Zeus's forecast of £0.92m PBT for the year.
Zeus have 100p fair value - which excludes further upside from the "strong" acquisition pipeline - and summarise as follows:
"Interims in line; healthy acquisition pipeline
Interims results from Croma this morning illustrate a solid period of trading, with 8% revenue growth driven both by organic and acquisition-led expansion, leading to 26% growth at the PBT level YoY. Following the company’s divestment of Vigilant in 2023, proceeds of ca. £4m received to date contributed to a strong net cash position of £4.2m at the period end, with £2.5m of deferred payments remaining due, supporting the company’s ongoing retail locksmiths rollup strategy.
On this score, we view reports of a “strong pipeline” of acquisitions as highly encouraging, with Management anticipating further completions within FY25 (y/e 30 June 2025). Our forecasts, which we leave unchanged this morning, are premised on organic growth only, with future acquisitions likely to contribute to further long term earnings growth in due course.
With solid underlying trading and a sizeable opportunity in the UK for further rollups, our fair value remains at 100p."
"Zeus view: Today’s results reflect a solid period for the group, with robust underlying performance against a challenging market, and the benefits of the Vigilant disposal reflected in a strong net cash balance. Long term growth in the business is well underpinned by a good pipeline of acquisitions and ample funding, with modest ratings (5.0x FY26 EV/EBITDA) undeserved given the potential for upside following further completions." |
Why the drop in sp? Yesterdays briefing seemed Ok and the company seems to be on the right track although I didn't hear any mention of dividend payment this year. |
Roberto & Teo of CSSG will be joining us for a presentation on our next Mello Monday show at 5pm 24th February
The full line up is as follows:
5:00pm Stephen Clapham, Behind the Balance Sheet
5:30pm Company Presentation from Croma Security Solutions
6:00pm Company Presentation from Seeen plc
6:30pm Company Presentation from Transense Technologies plc
7pm Trading Update from AdvancedAdvT
7:20pm BASH (Buy, Avoid, Sell, Hold) Panel
These are very popular shows with company presentations, fund manager and investor interviews, and panel sessions.
Tickets are still available; for half price tickets enter the code MMTADVFN50. |
The interims will be out next Monday 24th Feb. Good to see management presenting both at Mello and Investor Meet.
After the strong H1 trading statement - and positive start to H2 - presumably management believe there's a decent story to tell: |
A nice rise this morning after a couple of 10k buys. |
Extract from Zeus's update this morning FYI:
"we believe that the efficiencies that CSSG will generate mean that the full year benefit of the deal will significantly exceed the historic profit which the company has disclosed, leading to our upgrade to EBITDA numbers from £1.2m to £1.3m, with PBT upgraded commensurately.
Complementary: Meridian is a multi-faceted business with good momentum in electronic security based on a fully fledged security centre, plus the benefits of locksmiths’ activities. The business is geographically complementary to CSSG’s existing Bury plant, offering crossselling opportunities across the commercial, private and public sectors.
Synergistic: Today’s announcement alludes to some of the synergies which are expected to be achieved as Meridian is bolted on to CSSG’s strong existing platform, leading to savings in procurement, centralisation of services and marketing efficiencies.
Encouraging growth potential: CSSG’s recent H1 update reflected a good start to the second half and encouraging growth potential organically as well as through the active acquisition programme.
Meridian is a well-established business which has become well-embedded with a strong local client base over recent decades and can now contribute to a larger group in particular with opportunities previously denied to it on the basis of size. Speedy earnings enhancement is anticipated by the company in respect of this morning’s announced deal, and we expect further deal-flow in due course." |
Good to see another acquisition today - plus "a good pipeline of further transactions which we are looking forward to bringing to completion."
Prima facie today's news doesn't look particularly noteworthy given a historic PBT of £46k. But Zeus this morning note that with the usual synergies etc they are confident in increasing their forecasts to June '26 by £100k PBT.
Not a bad return on the £425k consideration - and that includes a £275k freehold property.
Zeus now forecast 5.9p EPS to June '26, with a £5.9m cash pile against the £11.7m m/cap. They retain their 100p target price for the moment. |
With £4.6m banked in H1, and the Fire & Security side of the business showing a consistent positive H2 bias, the FY broker forecast revenue of £9.1m looks distinctly undercooked, even without the anticipated acquisitions.
I am expected revenue to be in excess of £9.4m, and higher if more acquisitions are completed.
Also, simply by flexing inventories a little bit higher and payables a little bit lower, I get back to the £4.1m cash position, so that is nothing to be concerned about. |
I'm not doing very well here. The trading statement says "no debt and cash of", not "net cash"!
Looking at my projections, I had projected cash of £4.3m at H1, so they are actually not far short and the difference could be nothing more than working capital "noise". |
Further on cash, the full-year results showed "cash and cash equivalents" of £2.14m whereas the recent trading statement flagged "net cash" of £4.1m.
Since there is no debt to net off cash, I would guess that they have netted off lease liabilities. These were £0.6m at year-end.
This seems to be deemed the correct treatment from a purist accounting point of view, even though from an investor's perspective it is nonsense.
I'll contact the company to see if I can get confirmation. |
Yes, you're quite right and I'm quite wrong.
Part of the "missing" cash is the dividend (£0.3m). |
I don't think cash is that good IMHO. After 30/6/24 when cash was indeed £2.14m the RNS, below, stated that a further £1.76m and £450k was subsequently received. So that's £4.35m in total.
We've since received another £400k from Vigilant.
ON Nov 30th AGM statement said we had £4.1m and the same on 31/12.
So where has over £500k gone? I haven't seen any significant acquisitions announced.
"Strong balance sheet with cash and cash equivalents of £2.14 million (FY23: £2.14 million) and on 6 July 2024, a further £1.76 million including interest was received in relation to the sale of Vigilant and a further £0.45 million in September 2024." |
Encouraging announcement this morning.
They have received a further quarterly payment of £0.4m for Vigilant since the year-end results, so that risk continues to slowly run off.
Cash at year-end was £2.14m and is £4.1m in this statement. Adjusting for the Vigilant payment, that means that they have generated £1.5m from operations in H1, which is pretty impressive for a business valued at £12m.
Now we just need to see that cash being put to good use through bolt-on acquisitions. |
I agree with all the positive comments which have been made about Croma recently.
The one small concern I have is that Vigilant still owes Croma £2.9 million over the next 7 quarters (effectively 2 years).
Remembering that Sebastian Morley, the previous Croma chairman who in my opinion achieved nothing while running Croma for many years, bought Vigilant, we have to hope that he makes a sufficient success of Vigilant to repay the outstanding amounts still due.
Other than that it all seems generally good news. |
Cheers penpont. It's worked out rather well so far - hopefully it won't be long until we hear about more acquisitions from the cash pile. |
Hi rivaldo - maybe not so good as it was a top-up from me!
I still think it's well undervalued at that price, and btw thanks to you and others
for the thread info that helped lead me to this one. |
Good to see a 9,533 share buy at 91p just now - a full 1p above the 90p published offer price. |
well, recently it has risen 20p/share
beats the 2.3p/share divi, 'hands down'! |
Given it is a small AIM stock I am already holding too many of these for it to be a good idea to buy more, but 130p seems like a perfectly reasonable target for 2025. If they can carefully use the cash to buy assets yielding 20% plus then that likely increases. I just hope they don't go crazy with capex as that needs to be factored in to any purchase price on new locksmiths. |
A very confident AGM statement, particularly bearing in mind there was no trading statement at all from last year's AGM. Given today's positivity it would seem there's something to shout about....
Current trading is good:
"From the outset of the current financial year, trading has been positive and in line with market expectations with good levels of organic growth across our core markets in the education, utilities, health and leisure sectors. Customers are seeking both traditional security services and more complex, integrated solutions reflecting a general demand for greater security in today's risk-conscious environment."
Against an £11.4m m/cap, CSSG has "has a strong balance sheet with no debt and cash of £4.1 million as at 30 November 2024 with a further £2.9 million due from the disposal of Vigilant."
And an acceleration in growth is on the cards given (a) the introduction of Martyn's Law and (b) the "good pipeline of opportunities to acquire profitable locksmith stores some of which are close to completion. These stores will be transformed into modern security centres, boosting the Group's revenue and customer base, and adding to the overall network of centres". |
Happy with that AGM statement. Dividend of 2.3p too. |
Sorry, wrong thread! |
[Post from wrong thread] |
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