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] |
Yes good to see. AGM on Wednesday. |
Nice bit of Monday morning buying having a decent effect on the share price. |
Zeus forecast 5p EPS this year, up 28% from last year.
That's a PEG of only 0.59, which is bargain territory in itself.
The P/E of 16.6 might be considered ambitious if taken on its own - until you take into account the current £4m+ cash pile, which is forecast to rise to £5.1m, i.e 45% of the current £11.2m m/cap.
Of course (and hopefully) a decent proportion of that cash will likely be spent on earnings-enhancing acquisitions to convert into fully fledged security centres.
So imo there's still good upside from here. Zeus have a current fair value of 92p with upside to 119p, and as CSSG crystallise their promised pipeline of potential acquisitions that current fair value should increase. |
I've caught up on the investor presentation and updated my valuation model now. I reckon it's fairly valued around the current price (I get 79.4p) based on the existing business and the accumulating cash.
The key to unlocking further value is obviously converting that cash into locksmith/security centre assets purchased on low EBITDA multiples. It's disappointing that there has been no tangible progress here since the very start of 2024. They talked a good game on this at the investor presentation but really do have to start delivering. |
I echo Rivaldo and would add:
- some confusion re ROI on new sites whether including or excluding real estate. Without c. 40% and with 15% min. The site is an important part of local goodwill - if moved, sales reduce
- interesting discussion on Croma value add re increased sales, reduced direct and indirect costs
- bullish about M&A in next 12 months and beyond (current year bedding in, building pipeline and making sure have cash)
- positive about long term future (100 units?), v. clear not on AIM to be a lifestyle business
- also bullish about Ajax (Europe No 1 alarm)
Very small and niche, but I am more positive about growth prospects. |
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