Croma Security Solutions Share Discussion Threads

[bookbroker] 02/8/2021 11:27

In my book this is way undervalued by the market, not the most inspirational management but very steady. A frustrating company, but more the fact that due to its size it is virtually unheard off, and the fact that they could do with a broker like Numis, a bigger hitter albeit but likely more expensive. Throws off consistent results, simply too small to be noticed.

[rivaldo] 02/8/2021 11:22

Quite busy today - 6 transactions already :o))

Good to see a 3p move up on only £8k or so of buys at around the prior full 75p offer.

[bookbroker] 30/7/2021 10:52

I suspect they will make some kind of announcement regarding the dividend, like last year, prior to results in August. Even maybe a return of capital via share buyback or special dividend. But I would rather they stop fannying around and think about expanding the security centre side of the business, there have to be numerous areas in the UK which could prove to be beneficial to the bottom line in our overpopulated and crime ridden country.

[bookbroker] 29/7/2021 15:07

Closing the gap from previous sharp rise, just can not get a handle!

[bookbroker] 29/7/2021 10:47

Surprising that this company cannot come up with ways to improve shareholder value, they are clearly cash generative and sooner or later someone will buy this up with a view to grow the security centre side of the business. I just hope management do not make any stupid misteps, they seem good to trundle along at their own speed but are they capable of growing this business, indicators do not look particularly promising. With the high cash balance and decent contracts in progress it must be a sitting duck.

[rivaldo] 01/7/2021 09:50

Nice 75,000 share buy at 80p just reported....

[rivaldo] 29/6/2021 12:48

Cheers EC. As you say, I think those forecasts are prudent. In particular I believe the cash pile will be much higher than £4.65m, unless of course there's an acquisition or two.

Good to see CSSG getting some attention on Stockopedia, with a new review by Jack Brumby in his market update yesterday. He concludes:

"Robust Trading

Both divisions have traded well since the start of the year and the impact of Covid-19 has been more than offset by strong performances elsewhere in the group. The board now anticipates a better result than previously expected, with FY EBITDA of at least £1.85m (2020: £1.75m). Taking the group’s net cash figure of £5.5m below and using that for the EV calculation, that looks like striking value on the face of it (EV/EBITDA of c3.85x).

Croma Systems (which includes the lockdown-affected locksmith stores) is expected to deliver an increases in sales and profits against the prior year.

Croma Vigilant, the largest division, is also expected to perform well against the prior year. This division has benefitted from the increased need for manned guarding and Proception services.

Balance sheet – no debt (excluding lease liabilities) with net cash of £5.5m. That’s highly significant given the market cap, as is the level of annual revenue.

Conclusion

Trading momentum is positive and if this is a viable business, then the shares are likely mispriced at current levels on account of the material net cash holding. Croma has struggled to increase net profits in line with revenue growth though.

Despite that, the group looks strongly cash generative so perhaps profits are understated.

With such a small market cap, corporate governance and depth of management are key considerations. Is there enough quality at the top to get Croma up to the next level in terms of scale? A quick look at indeed shows some mixed reviews from employees. By itself, not enough to come to any kind of conclusion, but it’s enough to suggest this is an area to investigate further. As noted above, it’s good to see some institutions present.

There’s probably potential here, but also clear risks primarily around liquidity – if there is ever a profit warning and you want to get out, it’s going to be tricky. This must partially explain the cheap valuation."

[effortless cool] 28/6/2021 19:39

Header updated with new projections and valuation based on today's trading statement.

[babbler] 28/6/2021 11:53

May reach out to them soon...

[rivaldo] 28/6/2021 10:52

I'd add that the directors own around a third of the company - including three director purchases in the last year - so their interests are aligned with the rest of us.

I assume after the upcoming results WH Ireland will reinstate forecasts.

Given that there's now something to shout about, perhaps the directors can begin to embrace newfangled methods of engagement like Investor Meet etc.

[effortless cool] 28/6/2021 10:05

I would say they are simply overlooked. There is no proper broker coverage (no forecasts), RNSs are infrequent, the management make no effort to engage with PIs and the business is too small for meaningful institutional interest. Liquidity is poor, too, so it is hard to build a meaningful stake.

[babbler] 28/6/2021 09:49

Why are they so cheap? No debt. Half mcap cash. Profits. £11m mcap?

[effortless cool] 28/6/2021 09:33

I was £44k down on these at the weekend, but I'm glad I stuck with them. Indeed, I've added a further 12,500 shares this morning, on the back of this update. If they can now start to grow top line at a decent rate, they really do have huge potential to multibag.

[rivaldo] 28/6/2021 08:43

WH Ireland have issued an update note as follows - no specific forecasts as yet, but hopefully a dividend of at least 2p per share coming soon.

It would be great to see that £5.5m cash pile utilised for one or more of those expected and transformational acquisitions.....

"Croma Security Solutions (CSSG) – Corporate –

Positive update; trading ahead of management expectations and last year Market Cap £10m Share Price 67.5p

A positive update from CSSG shows that both Vigilant and the Systems business are trading well, with overall EBITDA set to exceed management expectations in the year to 30 June 2021, coming in at >£1.85m. Notwithstanding one-off business, which was in run-off and which the company has exited since the prior year, and also the fact of FY2021 bearing a bigger burden of lockdown that the previous year, CSSG has still succeeded in lifting EBITDA by 6% YoY (FY2020: £1.75m). It has also succeeded in generating a higher level of profits in the second half (H1 / H2 split: 48% / 52%). Renewed lockdown impacted the company’s locksmiths and systems businesses in particular during its Q2 and Q3 trading quarters (i.e. from December to mid-April). Net cash at £5.5m is well up on the September 2021 number of £3.6m

In terms of the divisions, both sides of the business are progressing well. The Vigilant business, which is a market leader in its field, delivering services ranging from guarding by ex-military personnel to front of house in residential and other buildings, is benefiting from the increased need to guard empty premises. We expect this will continue post-pandemic. Its front of house service is continuing to achieve increased market share and is integrated with its security services offering. Beyond this, in the systems division, we also see growth, with entertainment centres increasingly open, and more expected in that realm post the planned 19 July opening of public facilities such as cinemas and theatres.

WHI view: It is pleasing to see balanced growth within CSSG, and the response to the pandemic was good, while the company is now responding to new post-pandemic requirements from its clients. The company should prove a beneficiary of increased economic activity and more opportunities both on the systems and the manned guarding fronts. The latter in particular has a strong overall offering to provide to local authority and other clients. We note that the dividend will be resumed and anticipate, without having formal forecasts for CSSG, that it will repeat levels paid in recent years, given the company’s statement that the final dividend will reflect the results it anticipates."

[effortless cool] 28/6/2021 06:27

Agreed, a great announcement this morning. EBITDA about £400k ahead of my forecast in the header and net cash £1.7m higher. These are big beats considering the tiny market cap of this business.

[bookbroker] 28/6/2021 06:25

It’s good to see a reassuring statement from CSSG., particularly in the cash pile. And hopefully the security centres will have an uninterrupted twelve months for the next financial year. This is the part of the business which could potentially show meaningful growth with regard to the top and bottom line. I hope the market will reflect that the valuation is too low with regard to the strength of the balance sheet.

[rivaldo] 28/6/2021 06:10

The year end trading statement is out - and it's excellent. Results are better than anticipated - and will be ahead of the prior year despite the pandemic.

There's a hint that the final dividend will be terrific, and there's confidence that the business will continue to grow..

The £10m m/cap is bonkers given £1.85m EBITDA - at minimum - and a £5.5m and fast rising net cash pile!

[masurenguy] 28/6/2021 06:08

Good update and dividend - let's see what the market makes of it !

Pre- Close Trading Update

Croma Security Solutions Group is pleased to announce the following pre-close trading update for the 12 months to 30 June 2021.

Robust Trading

Since the beginning of our financial year, both divisions have traded robustly and where Covid-19 has restrained the business, this has been more than offset by strong performances from other parts of the Group. As a consequence, the Board is anticipating reporting a better result than management had expected for the full-year with EBITDA of at least £1.85 million (2020: £1.75 million). The restrictions placed upon the business due to Covid-19 particularly on the retail side of the business were in place for the majority of the year whereas in the prior year they only took effect for 4 months. Despite this, Croma Systems which includes our locksmith stores is expected to deliver increases in sales and profits against the prior year. Croma Vigilant, our largest division is also expected to perform well against the prior year. The division has benefitted from the increased need for manned guarding services for empty premises and its PROception service which integrates the provision of front of house services with premium security services for individual buildings or larger complexes.

Strong balance sheet

The Company has no borrowings (excluding lease liabilities) and has maintained a strong balance sheet which has strengthened further over the past 12 months. As at today's date, the Company has net cash of £5.5 million. The cash position underpins the Board's confidence in the business and its ability to take advantage of any opportunities which may arise.

Dividend

At the half-year, the Board decided not to pay an interim dividend as a precaution given the general market uncertainties and instead wait until the year to pay to shareholders a final dividend which reflects the strength of the full year performance once it has been delivered. It is clear, the Company will achieve results ahead of the previous year and the final dividend is expected to reflect this.

Sebastian Morley Chairman of CSSG said: "Our teams adapted quickly and efficiently to implementing Covid-19 security safe protocols across the hundreds of buildings we protect 365 days a year. This adaptability has been key to maintaining and winning new accounts and our trading performance reflects this. Consequently, we are confident in our ability to continue to navigate through the current trading restrictions and at the same time continue to grow our business."

[bookbroker] 16/6/2021 13:32

Guess the continuation of restrictions has not helped the valuation here, and the St James Quarter contract maybe being delayed the issues concerning the full opening of the redevelopment.

[bookbroker] 16/6/2021 13:29

Deal is share price is usually ramped up prior to a placing, not tickling down! Off course, in PTRO’s case the broker has let them down, particularly in light of all the positive news.

[likitorma] 16/6/2021 13:20

Placing soon for acquisition? Maybe, around 58p.

[bookbroker] 16/6/2021 06:37

Would like other people’s perspective on this, no one, the directors, shareholders, not even myself seems to know what is happening within this company. Maybe no news is good news, but clearly a lack of it is weighing on the share price. Some sort of trading statement would be preferred once a quarter at least. But the management here seem to be disinterested in outside investors!

[masurenguy] 15/6/2021 13:38

For goodness sake bookbroker, all you seem to do is to attack the management here and also on another mutual stock, Pelatro. If you think that the management is so poor and/or underperforming why don't you just sell out and move on. That is what most investors would do, instead of just constantly carping about them !

[bookbroker] 15/6/2021 13:03

WTF! This is supposed to going up, not down, Morley really needs to pull his socks up, shocking returns for shareholders, I thought he sounded positive last time he repeated himself, clearly market thinks otherwise!