An encouraging year end update today - trading is nicely in line, and the cash pile is up to £4m against the £9.9m m/cap.
With a further almost £3.5m to come over the next 2 years! Which would represent a total £7.5m cash pile with no growth at all.
And there's a "good pipeline" of acquisition opportunities to expand. |
Excellent news - £1.76m cash received means CSSG now have £3m+ of net cash against the £9.8m m/cap, even after January's acquisition, plus a highly profitable core business.
Extremely undervalued imho. Time for a re-rating. |
Nice 30,000 share buy today - unusual so perhaps worth noting.
EDIT - and a 25,973 share buy at the full 77p offer too |
Good to see the share price rising on a single buy of just 1k shares! Which suggests stock is scarce. |
Cheers goliard, excellent news (bit belated I know, but it's such a quiet thread I don't check in too often!). |
Good to hear. Thanks, goliard. |
Just to say that I have received confirmation from CSSG that that the first payment of over £500k was received on 28 March. |
You may note that I did not use the term RNS and did not do so on purpose. They could easily arrange a NRNS that simply stated that payment was received and that they did not intend to comment on future payments unless they were missed. I believe this is extremely important to provide confidence. |
Based on a 30th percentile market PE ratio of x8.4, I value CSSG at 86.5p, assuming all Vigilant payments are made in full and on time.
Also, I agree with rivaldo; receiving a large payment due on schedule is not RNSable, whereas not receiving it would be. |
 I'm not definite there will be an RNS regarding any receipt of the first £450k due from Vigilant. One could argue that its receipt is due in the ordinary course and therefore if received not RNS-able, whereas if it were not received than that would be newsworthy? I certainly take the view that its receipt should be announced.
WH Ireland say in their update note that they'll resume forecasts/full coverage soon "given the additional focus and enhanced earnings visibility which are now features of the company. We note that the company is trading in line with management plans".
They also note:
"Net cash was also healthy at £2.1m, and we anticipate further substantial payments in respect of Vigilant, with an anticipated recent c.£0.5m cash payment in March ’24 to be followed by a further nine payments of c.£0.40.5m each, and the redemption of £1.3m of Vigilant shares anticipated for July 2024.
WHI view: This morning’s announcement highlights regular earnings streams such as maintenance as well as project work, which is pleasing to see. Beyond this, CSSG is very well positioned in our view to use a meaningful funding stream deriving from the disposal to consolidate its market, making more such wins probable as it increasingly becomes a national player and providing increased growth potential to the business"." |
Under the tersm of the Vigilant deal, the first payment on loan notes was to be 9 months after completion of the deal.
Today, 3 April, is exactly 9 months after the deal completed, so I would very much hope that Croma is waiting for the cash to appear in their account and then issue an announcement confirming that it has been received. It is an important announcement and whilst confrmation of payment may not move the share price too much upwards, any hint of a problem may see the share price get hit hard.
Vigilant deal terms were as follows;
the Loan Notes (being both capital amounts and accrued interest), shall be repaid as follows:
a) the first payment shall be nine months following Completion;
b) thereafter payments shall be made on each quarter date for a further nine payments;
Completion date was 3 July 2023, so approx £450,000 is due in today from Vigilant. |
Excellent news this morning of another NHS security systems contract win, not so much for the quantum at £0.4m but because it's a further example of CSSG spreading its wings through the NHS.
As the RNS says, "Croma now service several NHS Trust's and healthcare providers". Once a company establishes itself in the public sector it's usually the case that a series of regional organisations or Trusts follow each other once a reputation is established.
For the £9.4m m/cap CSSG this would be transformational alongside the expansion via acquisition propelled by the cash pile. |
Lovely small 1p spread at 72p-73p for a change. |
Nice upwards breakout on the chart this morning.
WH Ireland are still waiting to publish new forecasts. They don't add much to this morning's RNS, but conclude:
"WHI view:
Today’s update highlights a favourable start to the second half. The previously announced NHS trust maintenance renewal in respect of the security needs of a group of hospitals highlights CSSG’s strong, embedded relationships with its client-base and the fact that a noteworthy proportion of its business is longer term in nature.
Encouragingly, though the quantum is not specified, the company is highlighting a robust pipeline of potential contracts in the entertainment and utilities areas. CSSG has announced contracts with major cinema groups, and we believe there are potentially some further promising prospects for the company, particularly as it continues to roll out its product across new and extended geographies." |
A good, solid H1 performance reported today, with net profit up 18%. The acquisitions made will help H2 further.
There's £1.73m cash too, with the additional £5.78m due from Vigilant starting to be paid from next month against the £9.2m m/cap.
Above all, the outlook is very confident. The contract pipeline looks extremely promising:
"We have had a promising start to H2. In January 2024 we acquired two profitable locksmith businesses with a combined turnover of £0.5 million, operating from Peterborough and Worthing. We have been successful in delivering a number of new contracts including being re-awarded a three-year maintenance contract by an NHS Trust to cover their hospitals' security needs. This success reflects the high levels of service that make us a preferred supplier in the health sector.
In addition, there are a number of contracts in the pipeline in the utilities and entertainment sector and we believe that these customers represent a material long term opportunity. A solid underlying performance, coupled with the success of our ongoing strategy to identify acquisitions where there is a significant opportunity to enhance sales growth and profitability, leaves us well-placed to deliver year-on-year growth despite continuing difficult macro conditions." |
New buy recommendation for CSSG on HotStockRockets (subscription-only though): |
WH Ireland are still waiting to produce new forecasts, but make some useful points:
"Croma Security Solutions (CSSG) – Corporate – H1 update: rapid pace of growth;
contract streams underpin; M&A offers good opportunities"
"We are encouraged by the continuing positive pace of growth, which we view as both organic and acquisition based. On the score of organic growth, we note last week’s release by the Home Office of data relating to outcomes following a crime, which shows a further increase in the year to September 2023 in unsuccessful investigations (“completed without suspect”) to over 40% of total crimes, in addition to c.38% described as posing “evidential difficulties”, while criminals charged are under 6% (2014:17%). We anticipate that underlying demand for CSSG’s services will continue to grow."
"We believe that many more consolidation opportunities of this kind are available for CSSG. It is important to note the cash available to the company to generate earnings enhancing growth through market consolidation, given that in addition to the last announced year end net cash of £2.1m, further substantial payments are to be expected in respect of Vigilant (£0.5m cash payment in March ’24 to be followed by a further nine payments of c.£0.4-0.5m each, plus the redemption of £1.3m of Vigilant shares anticipated for July 2024)."
"WHI view: In addition to underlining the consolidation opportunity for CSSG, this
morning’s update provides further evidence of the very reasonable prices that
the company is paying for its acquisitions, with the most recent £0.4m
consideration paying for a profitable two-site business and additionally including
a site valued at £0.35m freehold. With sites typically turning over revenues in
the range of £300-350k (though these can be more sizeable or smaller), we believe that the resources available to CSSG make a meaningful site acquisition programme, further expanding the national geographical footprint and offering operational gearing opportunities, very much within the company’s grasp.
Also in this morning’s update, it is good to see the contract renewal with an NHS trust. Historically, CSSG has announced similar contracts, and combined with contracts with national cinema chains and other major clients, we believe that these renewals indicate a helpful strand of repeat earnings where the company is effectively well embedded with its clients." |
Today's 6-month trading statement looks good:
- revenues up 13.5% year on year
- major NHS contract renewal
- acquisitions trading well and looking like a bargain with the £0.35m freehold property included
- more acquisitions likely |
Nice 25k buy at 70p reported after the close. |
An announcement of acquisitions has been exxpected for some time now.
lack of news on actual/projected turnover and when they expect the acquisitions to be profitable etc. would have been useful for assuring shareholders.
Hopefully this and acquisitions in the pipeline will move the ccompany and share[price forward |
News of the acquisition of two new businesses for just over £0.5m - including a £0.35m freehold property, which surely makes this terrific value - to be converted into full-blown security centres:
And "There are further acquisition opportunities under consideration". |
does anyone know the progress if any for new acquisitions? |
New article noting CSSG has "significant upside potential" - subscription only unfortunately: |
Up 2p on only £10k traded, so perhaps not much stock around.
Good to see you here DrRadcliffe. |
Register to chat with like-minded investors on our interactive forums.
Hot Features
Premium
