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Croma Security Solutions Group PLC

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FY2020 Annual Report · Croma Security Solutions Group PLC
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CROMA SECURITY SOLUTIONS GROUP PLC 

REPORT AND FINANCIAL STATEMENTS 

30 June 2020 

 
 
 
 
 
 
 
 
 
 
CONTENTS 

Company information 

Chairman’s statement 

Strategic report 

Corporate Governance 

Board of Directors 

Directors’ report 

Statement of Directors’ responsibilities 

Independent auditor's report 

Consolidated statement of comprehensive income 

Consolidated statement of financial position  

Consolidated statement of cash flows 

Consolidated statement of changes in equity 

Notes to the financial statements 

Independent auditor’s report for the parent company 

Page 

2 

3 

4 

14 

22 

23 

26 

27 

31 

32 

33 

34 

35 

63 

Parent company financial statements 

66 - 74 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COMPANY INFORMATION 

Directors 

Registered office 

S J F Morley  
(Executive Chairman) 
R M Fiorentino   
(Group Chief Executive) 
R A Juett ACA   
(Finance Director) 
P Williamson 
(Executive Director) 
(Non-Executive) 
C N McMicking  
A N Hewson MA FCA  (Non-Executive) 

Unit 7 & 8 Fulcrum 4 
Solent Way 
Whiteley 
Fareham 
Hampshire 
PO15 7FT 

Registered number 

03184978 

Nominated advisers and brokers 

WH Ireland Limited 
24 Martin Lane 
London 
EC4R 0DR 

Registered independent  
statutory auditor 

Nexia Smith & Williamson  
Cumberland House, 15-17 Cumberland Place, Southampton, 
SO15 2BG 

Solicitors 

Registrars 

Principal bankers 

Shoosmiths 
Russell House, 
Solent Business Park 
Whiteley, Fareham 
Hampshire 
PO15 7AG 

Neville Registrars Limited 
Neville House 
Steelpark Road 
Halesowen B62 8HD 

Lloyds Banking Group plc 
PO Box 1000 
London BX1 1LT 

Svenska Handelsbanken AB 
3 Thomas More Square 
London E1W 1WY 

Website 

www.cssgplc.com 

1 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CHAIRMAN’S STATEMENT 
FOR THE YEAR ENDED 30 JUNE 2020 

Introduction 

I am pleased to be able to confirm a better than expected performance by the Group, with the results for the 
full year exceeding our earlier guidance.  Like many at the outset of the pandemic our reaction was one of 
caution, and we suspended our interim dividend payment, closed our retail stores and worked to conserve 
cash and protect the business. As events unfolded it became clear the business was going to be able to weather 
the crisis reasonably safely, and while some areas such as retail would naturally be affected, other areas would 
prosper.  Ultimately, Covid-19 did impact the results for the year, but our operations remain largely intact 
and the Board is confident in the Group’s ability to continue to trade successfully through this crisis which is 
reflected in our decision to re-instate the interim dividend and pay a final dividend of 1.2p representing an 
increase of 9% over the prior year. 

I  would  also  like  to  make  a  particular  mention  of  the  way  our  teams  have  pulled  together  during  a  very 
challenging period, which has been the key factor behind our ability to continue to operate so successfully.  
So, on behalf of the Board, I would like to thank all our employees for their commitment and flexibility during 
an extraordinary period. 

Strategy for Growth 

The strategic direction for Croma is unchanged. Our focus is on establishing Croma as the British security 
brand in Britain.  Two years ago, there was a marked shift in demand for the Group’s services, driven by an 
increased and perceived level of risk across society arising from a mix of terror incidences and rising crime 
levels.  The response from both the public and private sector was to increase the protection of their assets and 
themselves  by  opting  for  premium  security  services  as  offered  by  Croma.  This  created  an  opportunity to 
expand  the  Group’s  market  position  and  commence  establishing  a  national  network  of  Croma  Security 
Centres. 

The Centres have evolved from the Group’s retail stores to provide the full range of the Group’s services 
from manned guarding to CCTV, intruder alarm and advanced security systems as well as high security locks. 
Whereas  previously  stores  focused  on  the  consumer  market  only,  the  Croma  Security  Centres  now  sell 
successfully into both commercial and domestic markets.  Currently, the Group has 10 centres and is actively 
seeking to acquire independent locksmith stores or small chains in suitable locations to be integrated into the 
Croma  Security  centre  network.  During  2020  the  pandemic  has  slowed  the  Group’s  ability  to  complete 
transactions but also added to the pipeline of future opportunities. 

At the heart of the Group’s security activities is a strong ex-military ethos. It is this ethos that ensures Croma 
provides a premium level approach to every aspect of delivering security services and solutions. Perhaps the 
best example of the Company’s ethos is through the approach of the Group’s largest business, the manned 
guarding division, Croma Vigilant.  The industry as a whole has a poor reputation for providing low paid and 
lowly motivated security officers.  By contrast, Croma’s security officers are capable and highly trained with 
the skillsets to manage a range of scenarios. Providing a smart, premium service has enabled us to set new 
standards across the industry for the provision of manned guarding. 

The final element to our strategy for growth is the incorporation of technology and innovation into the security 
solutions we provide. From using the latest in biometrics recognition technology to introducing a new front 
of  house  security  service  called  PROception,  we  are  very  focused  on  leading  our  industry  in  developing 
modern security solutions. 

2 

 
 
CHAIRMAN’S STATEMENT (Continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

Trading Performance   

With the backdrop of operating alongside the pandemic, all three divisions performed resiliently in the year 
under review.  Trading levels were slightly lower than the prior year but the underlying performance of all 
the businesses is sound.  

Croma Vigilant, our manned guarding division performed well. While revenues contracted overall, this was 
partially offset by an increase in project work. Critically, the division secured two major contract wins and 
extensions in the year with Savills and a well-known London focused property company which together are 
worth £6.3 million annually. PROception is the emerging jewel in the crown, enabling the team to present 
existing and new clients with a new approach to safeguarding buildings that integrates security into front of 
house services.   

The trading performances of both Croma Security Systems and Locksmiths were naturally also affected by 
the pandemic but overall, given the store closures forced upon us during the period, they performed resiliently. 

Croma Biometrics remains a significant opportunity for the Group with FastVein™ coming to the forefront 
as a potent biometric high-speed human identifier.  

The impairment referred to in note 11 of these accounts was largely driven by an increase in our cost of capital 
to 12.7% (2019: 11.6%). Nevertheless our balance sheet remains strong with no significant borrowings (other 
than lease liabilities) and cash at the year-end of £4.1m (2019:1.7m). 

Dividend 

Reflecting strong cashflow over the year, the Board is pleased to recommend a final dividend to shareholders 
of 1.2p per share (total 1.95p per share for the year) and subject to approval at the Annual General Meeting 
to be held on 25 November 2020, the final dividend will be paid on 27 November 2020 to all shareholders on 
the register at the close of business on 13 November 2020. The shares will be marked ex-dividend on 12 
November 2020. 

Outlook 

An extraordinary year did not derail our business but instead the Group has adapted well to the new challenges 
enabling us to maintain our services fully. This is testimony to the strength in depth of the Group and to its 
contingency planning when client services were maintained despite significant numbers of staff in quarantine 
or furloughed.  This was a test for our Group as it was for all companies and I believe we passed.  This bodes 
well for the near future as we continue to operate under restrictions, and we are now confident in our ability 
to do so. 

Importantly, we have also shown our ability to win material new mandates during the period, and since the 
year  end  the  business  is  trading  well.    Taken  together,  we  believe  we  are  well  positioned  to  make  good 
progress for the year ahead.  

Sebastian Morley (Oct 20, 2020 15:38 GMT+1)

Sebastian Morley 
Chairman  20 October 2020 

3 

 
 
 
 
 
STRATEGIC REPORT 
FOR THE YEAR ENDED 30 JUNE 2020 

Operational Review 

The Group’s strategic objectives are:   

 

 

 
 

to  deliver  market  leading  full-service  security  offerings  to  some  of  the  largest  corporations  and 
government departments.  This is achieved by maintaining quality of service as a priority, focusing 
on meeting the full range of our clients’ security needs, and leveraging both our brand and our client 
base; 
to produce consistent growth in financial performance, by maintaining our margins and managing 
our costs.  Acquisitions will be pursued only when they can be seen clearly to add value to the Group; 
to develop and bring to market new technologies, and; 
to deliver attractive shareholder returns. 

Each company has Key Performance Indicators which are monitored and reported to the executive Directors 
on a monthly basis. These are discussed below. 

The Group’s longer-term objectives are: to grow our core offerings in the UK and abroad until we are the 
security provider of choice to leading large corporates; to expand our service offering to include e-security; 
and to develop specific high-end national projects. 

The maintenance and expansion of solutions to the present client base is fundamental.  The Group continues 
to expand the services to long-term clients, some of whom currently use a diverse range of contractors, in 
order to bring all their needs under one roof when this makes good business sense for both parties. 

The performance of each business segment is discussed below: 

Croma Vigilant 

Croma Vigilant, our largest division, generated sales of £27.0m (2019: £28.5m) and operating profit of £1.1m 
(2019:  £1.4m).    Covid-19  was  responsible  for  some  contraction  of  sales  which  were  partially  offset  by 
increased project work including keyholding and patrols in new areas due to the pandemic.  

A critical factor in achieving this result was the ability of the division to adapt to the new challenges arising 
from Covid-19 and one of the advantages of managing a business with a strong military ethos is that there is 
within the management team a familiarity with adapting to a crisis situation. The Company had in the ordinary 
course of managing the business run a series of business continuity scenarios in December 2019 which were 
directly applicable to providing the operational response in the last six months.  As a result, despite having 
over 100 security staff in self isolation at one time, the Company was still able to deliver its premium guarding 
services  to  all  existing  clients  and  critically  meet  the  increased  demand  created  by  Covid-19.  This  was 
achieved  whilst  implementing  all  safety  precautions  set  out  by  the  UK  government  and  providing  the 
necessary PPE workwear. 

Contracted revenues over a period exceeding one month represented approximately 84% of income, ensuring 
that the Company continues to have good visibility over the reliability of future revenues.  There was a similar 
split in income to previous years between private and public, remaining at approximately two thirds/one third 
respectively. Project work remains an important income stream and while it is often higher margin, it is less 
predictable.  Our focus is on securing longer-term contracts, which are a better basis upon which to build the 

4 

 
 
 
 
 
 
 
 
 
 
STRATEGIC REPORT (Continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

business for the future, good examples of which are the two larger contracts won during the year under review 
together worth £6.3 million annually.  

Croma Vigilant provides manned guarding for assets  and  individuals and now employs  over 850 security 
personnel throughout the UK. Fundamental to the division’s success is the military ethos that pervades all 
aspects of the way the division is run, and all contact with customers. Alongside this approach is a focus on 
innovation, and a fundamental change for the division and its future has been the creation of PROception. 

Led by ex-policewoman Ruth McGowan, PROception is the Group’s innovative new front of house concept, 
making the  modern reception  part  of  a  building’s  security  strategy.  PROception  provides  security  trained 
receptionists to both manage the front desk and play an active role in security and is transforming the way 
manned security services are delivered in offices, hotels and public institutions.  

There is no doubt that the response to PROception amongst our customers has been very positive and that we 
are behind a transformation in the way many ‘front-of-house’ services will be managed going forward.  This 
is translating into an expanded and often higher margin role for Croma Vigilant by incorporating PROception 
into a total manned guarding security solution.  

Croma  Vigilant  is  part  of  the  Community  Safety  Accreditation  Scheme  enabling  the  division  to  provide 
private security within communities using mobile and foot patrol officers.  This continues to be an area of 
growth as local councils and local communities take action to control their neighbourhoods. Croma Vigilant’s 
reputation is growing in this area though our ability to provide a highly disciplined force of security personnel 
able to support the local police. 

The first months of the new financial year have started positively and while Covid-19 restrictions do remain 
in place we are now confident in our ability to work within them. 

Croma Security Systems 

Croma Security Systems recorded sales of £2.46m (2019: £2.70m) and an operating profit before impairment 
of £0.28m (2019: £0.34m). 

In support of the Group’s focus on providing total security solutions, Croma Security Systems continues to 
provide  a  full  range  of  electronic  security  solutions  including  CCTV,  high  security  locks  to  FastVein™  
biometrics technology for high speed human identification.  

During the financial year Croma Security Systems successfully gained a licence from the Financial Conduct 
Authority  (“FCA”)  and  is  now  able  to  provide  product  and  services  to  certain  customers  on  a  deferred 
payment or credit basis. 

Croma Locksmiths 

Croma Locksmiths, which operates through 10 security centres on the South Coast of the UK and centrally 
through the  Group,  delivered  a resilient  performance with  sales  of  £2.89m  (2019:  £3.42m)  and  operating 
profit before impairment of £0.36m (2019: £0.48m).  As a result of Covid-19 all stores closed on 23 March 
2020 and reopened on a phased basis from May 20.  Since re-opening trading has been positive and retail 
sales and footfall are moving back towards pre-Covid-19 levels. 

5 

 
 
 
 
 
 
 
 
 
 
 
 
STRATEGIC REPORT (Continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

Under the Group’s strategy to become the British Homeland security brand through establishing a national 
chain of modern security centres, this division has evolved substantially over the past 18 months. All retail 
outlets have been converted into security centres and offer the full range of Croma’s security solutions from 
manned guarding, CCTV, intruder alarm and advanced security systems as well as high security locks.  

The focus is no longer to cater for the security needs of the individual consumer, but instead the security 
centres are able to provide sophisticated security solutions for both domestic and commercial customers, if 
needed, drawing upon all the resources and services of the larger Group. 

In the last 18 months, the Company has acquired three locksmith stores which have all been converted into 
security centres.  The opportunity to acquire further stores has been slowed by the pandemic but the market 
is highly fragmented  and there are  opportunities  coming available  as  independent store owners  choose to 
retire or the market environment makes a sale the preferred option.  The Group has a clear set of acquisition 
criteria which based on the progress of the first acquisitions are working well.  Currently, the store network 
is focused on affluent areas close to London and in the South of England. 

Trading  in  the  security  centres  is  returning  to  normal  following  re-opening  and  unless  there  is  further 
disruption from Covid-19 the division is well placed to continue to expand.  

Croma Biometrics 
Croma Biometrics trades as a division of Croma Security and recorded turnover of £121k (2019: £101k). Our 
FastVein™ biometrics technology provides significant  future potential for the Group. Currently deployed 
across the retail, education and construction sectors it provides customers with quick, easy to use, accurate 
and cost-effective data.  

Group Financials 

The Group financials can be summarised as follows: 

Revenue 
Gross profit 
Gross margin % 
EBITDA 
Other operating income 
Impairment of goodwill 
Operating profit 
(Loss)/earnings per share 
Net assets 
Cash generated from operations 
Cash and cash equivalents 
Dividend per share in relation to the year 

2020 
£000's 

32,321  
5,516  
17.1% 
1,754  
615  
(857) 
136  
(0.90p) 
11,692  
3,044  
4,076  
1.95p  

2019 
£000's 

34,599  
6,490  
18.8% 
1,871  
-  
-  
1,449  
7.82p 
11,990  
462  
1,729  
1.8p  

Due to a reduction in higher margin project work and also the impacts of the Covid-19 crisis (mainly to our 
Locksmith and Security divisions), gross profit reduced by 15% to £5.5m (2019: £6.5m). However, some 
divisions  of  the  Group  benefited  from  various  Government  support  initiatives  with  furlough  and  local 
authority grant income of £0.6m included in other operating income. 

6 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STRATEGIC REPORT (Continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

The reduction in trade debtors and other receivables by £1.7m was the main contributory factor to the increase 
in cash generated from operations and the boost in cash and equivalents to £4.1m. 

With  cashflow  remaining  robust,  the  Group  has  not  considered  it  necessary  to  avail  itself  of  the  various 
Coronavirus loan support initiatives available to it, including the Coronavirus Large Business Interruption 
Loan Scheme. 

Operating profits, earnings per share and net assets were all  impacted by  an impairment  charge  of  £0.9m 
against the goodwill of our Security and Locksmiths divisions.  This is discussed in more detail at note 11 to 
the accounts. Without this adjustment, which the Board  consider  to  be a one-off, the Group would report 
earnings per share of 4.8p. 

With all divisions continuing to trade profitably and showing positive cashflow, the Board is pleased to be 
able to maintain its progressive dividend policy and recommends a final dividend to shareholders of 1.2p per 
share (2019:1.1p). 

Risk management 

The Board has put in place a framework of identified risks and risk management processes.   

Regulatory environment 
The Group operates in  a highly  regulated sector and is  audited and accredited  by a  number of  regulatory 
bodies including the SIA, NSI, and CHAS.  An inability to respond and adapt to changes in the sector and 
comply with the regulatory requirements would adversely affect our business. 

Controls and mitigating strategies 
Our  regulatory  compliance  is  monitored by  key  members  of  staff  who  work  with  external  consultants to 
maintain our processes and procedures at the required standards. 

Liquidity and funding 
If needed, the group has appropriate borrowing facilities in place for its short-term liquidity and long-term 
funding. 

Controls and mitigating strategies 
The group finance director is responsible for reviewing our banking covenants and capital structure.  Robust 
budgets and cashflow forecasts are prepared and presented to the Board.  A good relationship is enjoyed with 
our banks. 

Health and safety environment 
Instances of non-compliance with Health & Safety and Environmental regulations could expose our people, 
the environment and our reputation. 

Controls and mitigating strategies 
Responsibility for health and safety compliance is delegated to experienced members of staff who work with 
external consultants.  Training is provided to all employees. 

7 

 
 
 
 
 
 
 
 
 
 
 
 
 
STRATEGIC REPORT (Continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

Risk management (continued) 

Fraud and uninsured losses 
A significant fraud or uninsured loss could damage the financial performance of our business. 

Controls and mitigating strategies 
Systems, policies and procedures are in place to segregate duties and minimise any opportunity for fraud.  
Timely management reporting of identified anomalies.  Where possible, our insurance strategy minimises 
other risks. 

Customer Service 
The failure of our customer services could undermine our business performance. 

Controls and mitigating strategies 
We  undertake  regular  customer  satisfaction  surveys with  unsatisfactory  comments being  addressed.    Any 
complaints received at Board level are dealt with on a timely basis by the affected operating division. 

Cyber Security  
Failure of the Group’s IT systems and the security of our internal systems, data and our websites can have 
significant impact to our business. 

Controls and mitigating strategies 
Responsibility for all our IT systems is delegated to our in-house IT department who implement and monitor 
cyber security across the Group. 

Credit Risk 
If our customers do not pay on time, our cashflow and liquidity may be compromised. 

Controls and mitigating strategies 
Responsibility for credit control is delegated to experienced staff in our operating divisions.  Through invoice 
discounting  (when  needed)  we  can  obtain  funding  of  up  to  90  days  on  our  sales  ledger  and  while  there 
continue  to  be  instances  where  customers  have  settled  beyond  these  terms,  this  has  not  caused  us  any 
difficultly.  

Covid-19 Pandemic 
The COVID-19 crisis, which affected the entire market, has tested the resilience preparedness of the Group.  

Controls and mitigating strategies 
Immediately following the announcement of lockdown in March 2020, the Board formed a crisis management 
team which now meets on a weekly basis to monitor business operations, weekly sales, cashflow and debt 
collection.  The Group rapidly provided the capacity and capability for more staff to work from home which 
has continued beyond full lockdown to the present day. 

8 

 
 
 
 
 
 
 
 
 
 
 
 
STRATEGIC REPORT (Continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

Executive Directors: 

S J F Morley – Executive Chairman 
Responsible for the overall direction of the Group, for ensuring the Board operates efficiently, for the 
strategic direction and forward order book of Croma Vigilant and for shareholder relations and for 
Corporate Governance.   

R M Fiorentino – Chief Executive 
Responsible  for  overseeing  the  implementation  of  the  Group’s  strategy,  and  for  delivering  the 
coordinated service approach. In addition, Mr Fiorentino oversees daily operations of Croma Security, 
Croma Locksmiths and Croma Biometrics. 

R A Juett – Finance Director 
Responsible  for  overall  financial  strategy  and  for  ensuring  timely  production  of  management  and 
statutory information.  

P Williamson 
Oversees daily operations and development of Croma Vigilant. 

Non-Executive Directors: 

A N Hewson 
Chairman of the Audit Committee and a member of the Remuneration Committee. 

C N McMicking 
Chairman of the Remuneration Committee and a member of the Audit Committee. 

Matters reserved for the Board 

The Board reserves formulation, dissemination and implementation of strategy to itself. It also handles 
stakeholder relations, dividend policy, and oversight of cash management. 

Other operational matters are devolved to Directors and managers, with the exception of investment-level 
decisions involving material balances which require Board consideration. 

Any Director needing independent professional advice in the furtherance of his duties may obtain this 
advice at the expense of the Group.

9 

 
 
 
 
 
 
 
 
 
 
 
 
STRATEGIC REPORT (Continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

Board meetings 

The Board normally meets formally on a monthly basis, usually in person but more recently by video 
conference to review and discuss strategy, financial results, business planning, sales, operations and HR 
matters. The Board has also been meeting weekly on a more informal basis and by video conference since 
the commencement of the lockdown in March 2020. 

Directors’ attendance at formal Board and Committee meetings during the year was as follows: 

Board  
Meetings 

Audit  
Committee 
Eligible  Attended  Eligible  Attended 

Remuneration 
Committee 

  Attended 

S J Morley 
R M Fiorentino 
A N Hewson 
R A Juett 
P Williamson 
C N McMicking 

10 
11 
11 
11 
10 
11 

11 
11 
11 
11 
11 
11 

 - 
 - 
2 
 - 
 - 
2 

 - 
 - 
2 
 - 
 - 
2 

 - 
 - 
2 
 - 
 - 
2 

Eligible 

 - 
 - 
2 
 - 
 - 
2 

Internal control and risk assessment 

The  Board  is  responsible  for  maintaining  an  appropriate  system  of  internal  controls  to  safeguard  the 
shareholders' investment and Group assets. 

The Directors continue to review the financial reporting procedures and internal controls of the Group 
companies to ensure they are robust enough to deliver timely, detailed reporting that will allow accurate 
monitoring of the Group’s performance. 

Internal financial control procedures undertaken by the Board include: 

 
 
 

review of monthly financial reports and monitoring performance  
approval of all significant expenditure including all major investment decisions review and  
approval of treasury policy. 

In the context of the Group’s overall strategy the Board undertakes risk assessment as well as the review 
of  internal  controls.    The  review covers  the  key  business,  operational, compliance  and  financial  risks 
facing the Group.  In arriving at its judgement of what risks the Group faces, the Board has considered 
the Group’s operations in the light of the following: 

 

 
 
 

the nature and extent of risks which it regards as acceptable for the Group to bear within its overall 
business objective 
the threat of such a risk becoming a reality  
the Group’s ability to reduce the incidence and impact of risk on its performance 
the cost and benefits to the Group of operating the relevant controls. 

10 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STRATEGIC REPORT (Continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

The Board has reviewed and is satisfied with the operation and effectiveness of the Group's system of 
internal control and risk assessment for the financial year and the period up to the date of approval of 
these financial statements. 

Relations with shareholders 

Communication with shareholders is given a high priority by the Board and the Directors are available to 
enter into dialogue with shareholders.  All shareholders are normally encouraged to attend and vote at our 
Annual  General  Meeting,  however  due  to  Covid-19  restrictions,  this  will  not  be  possible  for  the 
forthcoming AGM. 

Section 172 statement 

Section 172 of the UK Companies Act 2006 requires Directors to act in a way they consider, in good 
faith, would most likely promote the success of the Group for the benefit of its members as a whole. In 
doing this the Directors are required to have regard to the interest of the Group’s employees and other 
stakeholders,  including  the  impact  of  its  activities  on  the  community,  environment  and  the  Group’s 
reputation,  when  making  decisions.  Details  on  how  the  Board  operates  and  the  way  Directors  reach 
decisions, including some of the matters discussed during the year and the key stakeholder considerations 
that were central to those discussions, are included in the Corporate Governance Report on pages 14 to 
22. 

The Board considers that the impact of the Group’s operations on the community and environment are 
minimal. However, measures including the  regular replacement of company  vehicles so that  our  fleet 
meets the most up  to  date emission standards;  occupation  of  modern  energy  efficient  premises;  route 
planning to minimise company mileage; and encouraging employees to work from home where possible, 
so as to reduce their carbon footprint; are all matters which are given importance. 

Audit committee matters 

The terms of reference of the Audit Committee are to assist the Board in discharging its collective legal 
responsibility for ensuring that: 

 

 

 

the Group’s financial and accounting systems provide accurate and up-to-date information on its 
current financial position;  
the Group’s published financial statements represent a true and fair reflection of this position; 
and  
the external audit, which the law requires in order to provide independent confirmation that these 
legal responsibilities are being met, is conducted in a thorough, efficient and effective manner. 

The external auditor may attend Audit Committee meetings. 

11 

 
 
 
 
 
 
STRATEGIC REPORT (Continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

Key performance indicators 

Indicator 
Croma Vigilant 

Performance 

Sales 

Sales  were  £27.0m  for  the  year  which  although  down  on  the  prior  year, 
represents  a  good  performance  in  the  current  environment.    The  division 
continues to bid for and win new work on a regular basis and the continued 
promotion of  our  PROception  offering  has  yielded new  work  and  helped to 
retain  work  from  our  more  larger  customers,  who  increasingly  demand  this 
service.   
Performance 
is  monitored  by 
development manager reporting to the Chairman. 

the  Operations  director  and  business 

Gross margin 

Customer 
retention 

Largely  due  to  the expected  reduction  in  higher  margin  project  work,  gross 
margin was £3.3m which is down from the record £3.9m seen in the prior year.  
The industry remains highly competitive, and the gross margin performance of 
each contract is monitored closely to ensure cost savings are maximised using 
new technology and ways of working. 
Retention  of  customers  nearing  the  end  of  their  contract is  a  priority  of the 
operations  director  and  the  stability  in  turnover  is  testament  to  our  quality 
service offering.  The majority of revenue is from contracts with renewal dates 
of between 1 and 5 years (see note 3) 

Cash 

Croma Vigilant continues to be cash generative with borrowing facilities which 
remain unused along with positive cash resources at the year-end of £2.7m.   

Croma Security Systems (including Croma Biometrics) 

Sales 

Impacted by Covid-19 sales have seen 7% reduction to £2.5m, from £2.7m in 
the prior year.  Biometric sales are stable at £0.1m. 

Customer 
retention 

Engineers 

We  continue  to  invest  in  our  sales  team  and  actively  market  our  Systems 
business through our chain of security centres. 

Customer  retention  remains  good,  with  our  largest  customers,  two  national 
cinema chains, delivering contracted revenues of £0.8m. 

The  engineer  market  remains  very  active  and  engineer  retention  and 
remuneration is constantly monitored.  Croma Security has maintained its pool 
of engineers during the year, so this has not been a constraint to its business 
development. 

Cash 

Croma Security has remained cash generative and at the year-end cash balances 
are at £0.3m. 

12 

 
 
 
 
  
 
  
 
 
STRATEGIC REPORT (Continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

Croma Locksmiths 

Sales and retail 
performance 

Using in-house developed EPOS software, sales and footfall are monitored 
on a daily basis for retail, and monthly basis for commercial sales. 

Emphasis is placed on individual performance of the outlets with regular 
visits and meetings with branch managers.  In a difficult year, impacted by 
Covid-19, sales fell by 15% in the year to £2.9m. 

Our strategy, which has been put on hold while Covid-19 continues, is to 
develop  our  existing  geographic  coverage  by  expanding  our  branch 
network and to gain more profitable commercial contracts on the back of 
this. 

Cash 

Croma  Locksmiths  has  remained  cash  generative  and  at  the  year-end          
cash balances are at £1.0m. 

Roberto Fiorentino

Roberto Fiorentino (Oct 20, 2020 15:41 GMT+1)

Roberto Fiorentino 
Chief Executive 
20 October 2020 

13 

 
 
 
 
  
 
 
 
 
 
 
CORPORATE GOVERNANCE 
FOR THE YEAR ENDED 30 JUNE 2020 

Statement of Corporate Governance 

The Company (and thereby its group (the “Group”)) is ultimately managed by the Board of directors of 
the  Company  (the  “Directors”  or  “Board”),  who  (individually  and  as  a  group)  are  responsible  for 
running the Company for the benefit of its shareholders in accordance with their fiduciary and statutory 
duties. 

The  Board  comprises,  the  Executive  Chairman;  S  J  F  Morley,  the  Chief  Executive  Officer;  R  M 
Fiorentino, two Executive Directors and two Non-Executive Directors. 

The  Biographies  of  the  Directors  are  set  in  this  report  on  page  22  and  on  the  website  at 
www.cssgplc.com.  These show the range of business and financial experience upon which the Board 
can call.  The Board’s goal is to ensure that its membership should be balanced between Executives and 
Non-Executives  and have the  appropriate skills  and  experience  and knowledge of the  business.  The 
Board recognises the special position and role of the Chairman under the QCA (“Quoted Companies 
Alliance”)  Corporate  Governance  Code  and  has  approved  the  formal  division  of  responsibilities 
between the Chairman and Chief Executive. 

Chairman 
The  Chairman  is  responsible for the  leadership  of  the  Board  and  ensuring  its  effectiveness,  and  the 
Chief  Executive  manages  the  Group  and  has  the  prime  role,  with  the  assistance  of  the  Board,  of 
developing and implementing business strategy. 

Non-Executives 
One of the roles of the Non-Executive Directors under the leadership of the Chairman is to undertake 
detailed  examination  and  discussion  of  the  strategies  proposed  by  the  Executive  Directors,  so  as  to 
ensure that decisions are in the best long-term interests of shareholders and take proper account of the 
interests of the Group’s other stakeholders. 

The Chairman ensures that meetings of Non-Executive Directors without the Executive Directors are 
held. 

The QCA guidelines acknowledge for growing companies it may not be possible for boards to meet the 
definition of “independence” for Non-Executive Directors, however it sets out that it is important for 
the board to foster an attitude of independence of character and judgement. 

Based on the QCA guidelines the Board concludes that the Non-Executives are independent in terms 
of character and judgement in how they execute their role as Non-Executive Directors. 

The Board is mindful of the threat to independence and actively manages the potential risk to ensure 
that the Non-Executives provide the independent constructive challenge to help develop the Board’s 
proposals on strategy. 

14 

 
 
 
 
 
 
 
  
 
 
  
 
 
CORPORATE GOVERNANCE (continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

Board Committees 
The Board has three standing committees (the “Committees”): the Audit Committee, the Remuneration 
Committee  and  the  Executive  Committee.  The  Terms  of  Reference  for  each  of  the  Committees  are 
available on the Company’s website. 

The Board does not have a formally established nominations committee.  Any nominations are considered 
and recommended by the full Board (and are subject to a shareholder vote at the next Annual General 
Meeting). 

Rules concerning the appointment and replacement of Directors of the Group are contained in the Articles 
of  Association  (“Articles”).  Amendments  to  the  Articles  must  be  approved  by  a  special  resolution  of 
shareholders. Under the Articles, all Directors are subject to election by shareholders at the first Annual 
General Meeting following their appointment, and to re-election thereafter at intervals of no more than 
three years. 

Committees of the Board 

Executive Committee 
The Executive Committee consists of the Executive Directors under the chairmanship of Mr Morley and 
is  responsible  for  the  development  of  strategy,  annual  budgets  and  operating  plans  linked  to  the 
management and control of the day-to-day operations of the Group. 

The  Executive  Committee  is  also  responsible  for  monitoring  key  commercial  opportunities  and 
relationships, day to day stakeholder engagement and for ensuring that the Board policies are carried out 
on a Group-wide basis. 

Audit Committee 
The Audit Committee consists of the Non-Executive Directors; A N Hewson and C N McMicking.  The 
Committee meets at least twice a year under the Chairmanship of Mr Hewson who is a Fellow of the 
Institute of Chartered Accountants in England and Wales and has relevant financial experience. 

Whilst Mr  Hewson has been  a  member  of  the  Board  for more  than  ten  years,  the  Board  nevertheless 
considers that Mr Hewson fulfils the roles of Audit Chair and NED with independence of character and 
judgment and has concluded that it is appropriate to retain the financial experience, corporate memory 
and knowledge of the business possessed by Mr Hewson in his role as Chairman of the Audit Committee. 

The Audit Committee’s duties include monitoring internal controls throughout the Group, approving the 
Group’s accounting policies, and reviewing the Group’s interim results and full year financial statements 
before submission to  the  full  Board.  The Audit Committee also reviews and approves  the scope and 
content  of  the  Group’s  annual  risk  assessment  programme  and  the  annual  audit  and  monitors  the 
independence of the external Auditors. 

The Audit Committee acts to ensure that the financial performance of the Group is properly recorded and 
monitored, and in fulfilling its role it meets annually with the Auditors and reviews the reports from the 
Auditors relating to accounts and internal control systems. 

15 

 
 
 
 
 
 
 
 
 
 
 
CORPORATE GOVERNANCE (continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

The Group does not have an independent Internal Audit function, as it is not considered appropriate given 
the scale of the Group’s operations.  However, the Group operates internal peer reviews, with a scope of 
evaluating  and  testing  the  Group’s  financial  control  procedures,  to  standardise  processes  around  best 
practice. Any significant issues are reported to the Chairman of the Audit Committee and shared with the 
external Auditors as appropriate. 

The  Group  Finance  Director  and  the  external  Auditors  attend  meetings  of  the  Audit  Committee  by 
invitation.  The Committee may also hold separate meetings with the external Auditors, as appropriate. 

Remuneration Committee 
The Remuneration Committee consists of the Non-Executive Directors; Mr McMicking and Mr Hewson.  
The Committee meets at least twice a year under the Chairmanship of Mr McMicking. 

The purpose of the committee is to review the performance of the full time Executive Directors and to set 
the scale and structure of their remuneration and the basis of their service agreements with due regard to 
the  interests  of  the  shareholders.    In  fulfilling  this  responsibility,  the  Remuneration  Committee  is 
responsible  for  setting  salaries,  incentives  and  other  benefit  arrangements  of  Executive  Directors  and 
overseeing the Group’s employee share scheme.  The Remuneration Committee has engaged previously 
with external advisers to establish a remuneration plan going forward, based on budgets established by 
management and approved by the Committee, with a plan to remunerate management measured against 
targets in excess of the budgets.  Directors’ remuneration is disclosed at note 7. 

Members  of  the  Remuneration  Committee  do  not  participate  in  decisions  concerning  their  own 
remuneration. 

Frequency of meetings  
Where possible, the Board meets on a formal basis every month, and during the Covid-19 crisis every 
week on an informal basis.  Relevant information is distributed to Directors in advance of the meetings.  
The Board makes decisions on all material matters including long term and commercial strategy, annual 
operating and capital budgets, capital structure and financial and internal controls.  
The Group has a formal schedule of matters reserved to the Board which is periodically reviewed and 
approved by the Board.  

Evaluating board performance  
The Board has a number of sources of information from which it judges its own performance and that of 
the individual Directors, and these include but are not limited to:  

i. 

ii. 
iii. 
iv. 
v. 
vi. 

financial  performance  indicators  including,  revenue,  order  book  (including  contract  wins  and 
losses), gross margin, net margin, earnings per share and cash flow;  
the Company’s share price;  
reports from external auditors;  
shareholder feedback;  
customer feedback; and  
employee feedback.  

All these factors are considered, and action taken to improve performance as appropriate. 

16 

 
 
 
 
 
 
 
 
 
CORPORATE GOVERNANCE (continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

Communication with shareholders  
The Board attaches great importance to providing shareholders with clear and transparent information on 
the Group’s activities, strategies and financial position, in addition to having regard to its obligations as 
a quoted public company and the AIM Rules.  

The Group holds meetings with significant shareholders on a regular basis and regards the Annual General 
Meeting  as  a  good  opportunity  to  communicate  directly  with  shareholders  via  an  open  question  and 
answer session. 

The Group lists contact details on its website should shareholders wish to communicate with the Board.  
All announcements and results, including those released via RNS and RNS Reach, are available on the 
Group’s website. 

Risk management and internal controls 
The Board reviews and approves an Annual Budget and Business Plan prior to the start of each financial 
year.  This includes reviewing the key strategic, operational and financial objectives for the year, together 
with a detailed financial budget. 

The Executive Committee is accountable to the Board for delivery of the Annual Business Plan.  The 
Executives report performance against the plan on a monthly basis, which includes detailed analysis of 
budgetary variances and updated financial projections. 

Each Executive Director is responsible for identifying and managing the risks relating to their respective 
areas of responsibility, including the risks relating to strategy, the Annual Business Plan, and day-to-day 
business. 

To provide a framework for the delivery of the Group’s strategy and plans, the Executive Committee has 
developed an organisational structure with clear roles and responsibilities, and clear lines of reporting.  
In addition to day-to-day risk management, the Executive Directors formally assess the major business 
risks and evaluate their potential impact on the Group.  

These risks and the reporting of the risk assessment is included in the annual report and accounts within 
the Strategic Report. 

City code on takeovers and mergers  
The Company is subject to the City Code on Takeovers and Mergers 

17 

 
 
 
 
 
 
 
 
 
 
 
 
 
CORPORATE GOVERNANCE (continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

QCA Corporate governance code  
In accordance with AIM rule 26 the Company has adopted the QCA code and sets out below how it has 
adopted and complied with the QCA code.   

1. Establish a strategy and business model which promotes long-term value for shareholders 

The strategy and business model of the Group is expressed more clearly in the Chairman’s Statement and 
the Strategic Report. In summary, the Group seeks to build a recognised brand that is synonymous with 
the provision of the highest level of security services. The Group is stringently focused upon delivering 
outstanding service delivery for all our clients, and in such a way that in time our clients can have all their 
security needs met by one service provider, ourselves.  
The values we adopt are largely driven by our ex-military ethos, and we pride ourselves on endeavouring 
to engage employees that can deliver a capable, well trained highly motivated service, with as many as 
possible with a military background. We believe that this approach will deliver market leading full-service 
security offerings to the top end of the corporate and residential markets, as well as leading public service 
providers such as utilities, hospitals and schools.  
The business has a reasonable appetite for risk and we actively engage in developing new technologies 
to assist our service provisions even where such new technologies have a long development phase.  
Our markets are highly regulated, audited and accredited by a number of regulatory bodies, including the 
SIA,  NSI  and  CHAS,  all  of  which  require  our  Board  and  operational  employees  to  be  personally 
regulated, thus adding to the maintenance of the values and standards we operate to.  

2. Seek to understand shareholder needs and expectations 

The Board attaches great importance to providing shareholders with clear and transparent information on 
the  Group’s  activities,  strategy  and  financial  position.  Details  of  all  shareholder  communications  are 
provided  on  the  Group’s  website,  with  copies  of  the  accounts  of  the  Group  and  other  regulatory 
communications going back to the earliest days of the existence of the company on the AIM market.  
Additionally,  the  Board  holds  regular  one-to-one  meetings  with  larger  shareholders  and  regards  the 
Annual  General  Meeting  as  a  good  opportunity  to  understand  the  voting  decisions  and  debate  the 
expectations of shareholders via an open question and answer session.  
The Company lists contact details on its website and on all announcements  released  via  RNS, should 
shareholders wish to communicate directly with the Board or its advisers. 

3. Take into account wider stakeholder and social responsibilities and their implications for long-term 
success 

The Board endeavours to create a platform for delivering a high-quality service and this requires us to 
utilise best in class suppliers (such as Hitachi, Assa Abloy, and Bosch), for customers who appreciate and 
therefore pay for a higher level of service, and a workforce that is trained to the highest standards to give 
of its best at all times.  

During the year we successfully completed our contract with a major water utility busines which was run 
in collaboration with a major lock supplier.  This required continuous engagement between the supplier 
and our chief executive via face to face meetings, telephone and video conference. 

18 

 
 
 
 
 
 
 
 
CORPORATE GOVERNANCE (continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

We operate within the ‘high compliance’ segment of the SIA approved contractor scheme (ACS), which 
ensures that the regulatory standards we set ourselves are rigorous and necessary in a highly fragmented 
security market, where mistakes are invariably costly in every sense, to all our stakeholders. We expect 
to get it right first time, because getting it wrong in a security environment can have consequences that 
far outweigh the cost.  

We constantly solicit feedback, some of which is on the website of the Company in terms of customer 
experiences, and supplier  confidence in us and in our operations.  Our  feedback from  our staff  is best 
expressed by our staff turnover which for our industry is exceptionally low.  

Our customers are of course  pivotal  to  the  success  of our business.  Through  our  sales  and  operations 
teams, we endeavour to supply a knowledgeable and targeted service. Our security solutions are mainly 
tailored to exactly meet  our  client’s  requirements. We are  well placed to meet our customers  security 
needs by bringing all the skills across our divisions together to provide a one-stop solution. 

Where  possible  we  engage  with  our  customers  at  Board  level  and  this  is  certainly  the  case  with  our 
operations  director  and  chief  executive  who  regularly  monitor  and  attend  meetings  with  our  larger 
customers. Our significant contract wins of £6.3m during the current year can be directly attributed to 
this face to face approach. 

For  our  smaller  customers  we  continue  to  conduct  telephone  calls  following  the  completion  of  our 
services  and  the  results  of  these  are  monitored  closely  to  ensure  our  reputation  for  excellence  is 
maintained. 

Being primarily a service business, our people are our most valuable-asset and are critical to the delivery 
of our strategy of growth. We currently employ over 850 people and correct engagement with them is 
vital. We  are  fortunate  to have  a  great  team  of  talented  and  motivated  people  in  our  Group  and  it  is 
important to retain and develop them so that we can attract and inspire new people to join us as we grow 
our operations. 

We operate an open-door policy and employees can speak and engage with senior management or the 
Board about issues or ideas. 

We have a formal induction and appraisal processes for new and existing employees.  We have a web-
based employee portal primarily used by our guarding and PROception staff, for them to manage their 
work shifts, holidays, and personal information.   This  portal  undergoes continuous  development.  We 
also have a cross company integrated email system and utilise Microsoft Teams for collaboration between 
our people internally and between us and our customers and suppliers. 

When possible, we hold regular social events for our employees who are also encouraged to engage in 
charity events such as the three peaks challenge. We encourage our people to have a culture of respect 
and integrity and we reward long-service. 

19 

 
 
 
 
 
 
 
 
 
 
 
CORPORATE GOVERNANCE (continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

The  Board  recognises  that  the  COVID-19  crisis  has  caused  our  people  difficulties  and  hardship.    To 
address this, we have provided additional IT equipment to enable more employees to work from home 
where possible and although it has been necessary to furlough some employees, we have continued to top 
up their wages and salaries to full value.  We are delighted to report that so far, no significant redundancies 
have been necessary as a direct result of the COVID-19 crisis. 

The Directors’ Report reports further on the Company’s attitude to Employment for disabled persons, 
employee involvement in Group operations, Charitable donations where appropriate, and Group policies 
on the environment.  

4.  Embed  effective  risk  management,  considering  both  opportunities  and  threats,  throughout  the 
organisation 

The  Board  has  established  an  audit  committee  which  also  serves  as  a  risk  management  committee,  a 
summary of which is set out in the Strategic Report and in the Directors’ Report, and on the website.  
Additionally,  we  only  work  with  accredited  suppliers  able  to  satisfy  our  customer  requirements  for 
locking systems for instance that are best in class, and CCTV equipment that is the highest definition.  
Additionally,  we  can  only  employ  security  professional  who  have  passed  SIA  and  other  regulatory 
standards and had all the necessary prior history clearances before SIA accreditation for instance can be 
effective. Added to all this, we aim to employ primarily ex-military personnel and indeed two executive 
directors are themselves ex-military, trained in the appreciation of and the effective amelioration of risk. 
We  have  further  considered  areas  of  single  point  dependency  within  our  divisions,  examining  key 
management positions, infrastructure, political issues including Brexit, loss of major contracts, staffing 
and supplier failure, technology failure and cyber-attack, health and pandemic risk as well as fire, weather 
and reputation risk protection.  
We provide regular training programmes to support our business continuity plans so that our business is 
prepared for and resilient to emergency and crisis situations.   
Our Guarding division continues to work to achieve accreditation under ISO 27001. 

5. Maintain the Board as a well-functioning, balanced team led by the chair 

The Board, the identities and biographies, the Board committees and the timing of Board meetings and a 
detailed summary of attendances at those meetings is considered in the Strategic Report, the Directors’ 
Report and elsewhere in the Accounts 
The Board considers that both its non-executive directors are independent and that they have the time 
necessary to be able to provide rigorous challenge to the executive directors when necessary as well as 
support as needed.  Nevertheless, guidance on time served by a non-executive, changes to over-board 
criteria, and the recent substantial increase in volume of the turnover of the business means the Board 
will keep this under review as necessary. 

6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities 

The Board recognises that balance of capabilities and capacities within itself, as well as the necessity for 
all Board members to remain up to speed on relevant industry changes are vital to the proper functioning 
of a leadership team in any organisation. The Board are all regulated by the SIA and as such undergo a 

20 

 
 
 
 
 
 
 
 
CORPORATE GOVERNANCE (continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

timely recertification of their appropriateness for such an appointment. Additionally, certain members of 
the  Board  are  themselves  members  of  other  professional  bodies  which  require  certain  continuing 
professional development obligations to be complied with.  All members of the Board are encouraged to 
attend management development courses.  The Board is rigorous in reviewing the performance of each 
of its directors and where there are actions that need to be taken, the Board is proactive in carrying out 
what needs to be done.  

7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement 

The Board recognises the importance of considering succession planning, and each division has a leader 
and deputies, who are able, effectively, to step into the shoes of the leader.  The Company seeks external 
advice on specific remuneration matters, externally facilitating the process of managing the strategic goals 
of  the  business  by  division,  and  the  risks  and  rewards  attaching  thereto.  Discussions  between  Board 
members about key development needs of individual directors are encouraged and debated rigorously in 
a positive atmosphere.  The effectiveness review of the Board is considered above and in the Strategic 
Report. 

8. Promote a corporate culture that is based on ethical values and behaviours 

The Board wishes to promote a can-do culture across the Group, whereby a customer need can be fulfilled, 
no customer request is too much, and this is how the Group aims to deliver outstanding service. This is 
not  done at  any  cost,  and the  Group  is  strict  on maintaining margin  in  a low  margin  industry,  where 
differentiating the offer is key. Our marketing strategy is assertive and where necessary aggressive in a 
very fragmented industry yet with some entrenched relationships where our future customers have not 
yet come to appreciate our unique offering.  
The Group uses social media where necessary to promote the culture of ‘can-deliver’, both internally and 
externally, and monitors the culture and attitude of the staff with regular surveys and staff meetings.  

9.  Maintain  governance  structures  and  processes  that  are  fit  for  purpose  and  support  good  decision-
making by the Board 

The Board meets once a month, in person or where necessary by conference call, and considers monthly 
accounts and operational matters, and in addition the audit and remuneration committees of the Board 
meet when necessary to consider assurance and risk, and the adequacy of the reward structures of the 
Group.  With  a  Board  of  this  size,  separate  Nominations  and  other  committees  are  not  considered 
necessary, nor is the appointment of any one non-executive director as a Senior Independent Director.  

10.  Communicate  how  the  company  is  governed  and  is  performing  by  maintaining  a  dialogue  with 
shareholders and other relevant stakeholders 

The Board attaches great importance to providing shareholders with a clear and transparent information 
on any group activities, strategy, and financial position. Details of all shareholder communications are 
provided on the group website. The Board holds regular meetings with the larger shareholders and regards 
the annual general meeting as a good opportunity to communicate directly with shareholders via an open 
question and answer session. The company lists contact details on its website and on all announcements 
released via RNS, should shareholders wish to communicate with the Board. 

21 

 
 
 
 
 
 
 
 
 
BOARD OF DIRECTORS 
FOR THE YEAR ENDED 30 JUNE 2020 

Sebastian Morley - Executive Chairman 
Having enjoyed a successful military career, Sebastian worked with organisations in the surveillance 
and security sector before he joined Vigilant in 2001.  Sebastian joined the Board on the acquisition of 
Vigilant Security (Scotland) Limited in February 2006 and became Group Chairman in 2012. 

Roberto Fiorentino - Chief Executive Officer 
Roberto has been involved in the security industry for over 39 years and has been responsible for a 
number of ground-breaking technological advances within the electronic security sector, including the 
installation of High Security Master Key Locking systems, Vehicle Alarm Systems, Access Control, 
CCTV with transmission systems, Video Analytics and most recently FastVein™. As a result of this 
Croma is ideally placed to offer high level security design and consultancy services. 

Richard Juett - Finance Director 
Richard is a Chartered Accountant and has previously held finance roles in industry with B&Q Plc, Kia 
Motors and in practice with Ernst & Young and BDO.  Richard oversees the financial affairs of the 
Group and its operating subsidiaries. 

Paul Williamson – Executive Director 
Paul founded Vigilant Security in 1997 having served in the Army from 1987 to 1992 and worked in a 
number of commercial operations thereafter. 

Nick Hewson MA FCA - Non-Executive Director 
Nick is a Chartered Accountant and has been on the Board of a number of listed companies since 1986, 
more recently in a non-executive capacity. He has been an investor in Croma since the very early days 
of the Group’s corporate life.   Nick is also Senior Independent Director and Chairman of the Audit and 
Nominations Committees of Redrow plc, and Chairman of Supermarket Income REIT. 

Charles McMicking - Non-Executive Director 
Charles is Chairman of RailSimulator.com and director of Coburg Capital and F4G Software.  Charles 
has specialised in financing and developing dynamic fast-growth companies, and was previously Head 
of Private Equity at Noble Group. 

22 

 
 
 
 
 
 
 
DIRECTORS' REPORT 
FOR THE YEAR ENDED 30 JUNE 2020 

The  Directors  submit  their  report  and  the  audited  annual  financial  statements  of  Croma  Security 
Solutions Group PLC and its subsidiary undertakings for the year ended 30 June 2020. 

Principal activities 
The Group’s principal activities are the provision of manned guarding and asset protection services 
(Croma Vigilant); CCTV security, fire and alarm systems (Croma Security Systems); Locksmithing 
Keys, Locks and Safes (Croma Locksmiths). 

Result for the year 
The loss for the year after taxation, was £0.13m (2019: profit £1.17m) 

Directors 
The Directors who have held office since 1 July 2020 and up to the date of signing of these financial 
statements are as follows: 

Executive Directors: 

Non-executive Directors: 

S J F Morley 
R M Fiorentino 
R A Juett  
P Williamson 

A N Hewson 
C N McMicking 

The Non-Executive Directors sit on the Remuneration Committee and on the Audit Committee. 

Including immediate relatives, the Directors in office as at 30 June 2020 had the following beneficial 
interest in the ordinary shares of the Company 

S J F Morley 
R M Fiorentino 
R A Juett 
A N Hewson 
C N McMicking 
P Williamson 

2020 
575,000  
3,902,175  
12,500  
203,565  
65,000  
170,639  

2019 
575,000  
3,902,175  
12,500  
203,565  
50,000  
170,639  

23 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DIRECTORS' REPORT (Continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

Major shareholdings 
Apart from the interests of the Directors referred to above, the Company has received the following 
notifications of holdings of more than 3 per cent of the ordinary share capital of the Company as at 30 
June 2020: 

Canaccord Genuity Group Inc. 
Liontrust Investment Partners LLP 
Francis Erard 

11.60% 
5.20% 
5.00% 

There are no options currently in issue over the company’s shares. 

At 30 June 2020, 996,514 shares were held in treasury, being 6.3% of the issued share capital. 

Matters covered in the strategic report 
Statutory  disclosures  required  under  company  law  within  the  Directors  report  are  included  where 
relevant within the strategic report. 

Financial Risk Management 
Details of exposure to price, credit, liquidity and cash flow risk are included in notes 16 and 20. 

Research and development 
There was no significant Research and development expenditure during the year or the prior year. 

Employment of disabled persons 
The Group gives full consideration to applications for employment from disabled persons where the 
candidate’s particular aptitudes and abilities are consistent with adequately meeting the requirements of 
the job.  All necessary assistance with initial training courses is given. Once employed, a career plan is 
developed to ensure suitable opportunities for each disabled person. Arrangements are made, wherever 
possible, for retraining employees who become disabled, to enable them to perform work identified as 
appropriate to their aptitudes and abilities. 

24 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DIRECTORS' REPORT (Continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

Employee involvement 
The Group has considerably more than 250 UK based employees and its policy is to consult and discuss 
with employees, through staff councils and at meetings, matters likely to affect employees' interests. 
Information on matters of concern to employees, especially in the year under review, is given through 
information  bulletins  and  reports  which  seek  to  achieve  a  common  awareness  on  the  part  of  all 
employees of the financial and economic factors affecting the Group's performance, and particularly in 
regard to health and safety at work. 

Political and charitable donations 
Charitable donations were £4,407 (2019: £2,265). There were no political donations in the current or 
prior year. 

Environmental policy 
The Group recognises the importance of environmental responsibility.  The nature of its activities has a 
minimal effect on the environment but where it does the Group aims to act responsibly and is aware of 
its obligations at all times. 

Dividends 
An interim dividend of 0.75p per share was declared on 7 March 2020 and cancelled on 19 March 2020 
due to Covid-19 concerns. The interim dividend was subsequently reinstated and paid on 4 September 
2020 at a cost of £0.1m.  Subject to approval at the AGM, the Board recommends a final dividend of 
1.2p per share. 

Auditors 
A resolution proposing the reappointment of Nexia Smith & Williamson Audit Limited will be put to 
the shareholders at the forthcoming Annual General Meeting. 

Statement of disclosure to auditor 

Each of the persons who is a Director at the date of approval of this report confirms that: 

a)  so far as they are aware, there is no relevant audit information of which the company's auditors are 

unaware; and 

b)  they have taken all the steps that they ought to have taken as Directors in order to make themselves 
aware of any relevant audit information and to establish that the company's auditors are aware of 
that information. 

By order of the Board 

Richard Juett (Oct 20, 2020 15:45 GMT+1)

R A Juett - Finance Director 
20 October 2020 

25 

 
 
 
 
 
 
 
 
 
 
 
 
 
STATEMENT OF DIRECTORS’ RESPONSIBILITIES  
FOR THE YEAR ENDED 30 JUNE 2020 

Directors’ responsibilities 

The  Directors  are  responsible  for  preparing  the  Directors’  report  and  the  Group  and  Parent  company 
financial statements in accordance with applicable law and regulations. 

Company law requires the Directors to prepare financial statements for each financial year.  Under that law 
the  Directors  have  elected  to  prepare  the  Group  financial  statements  in  accordance  with  International 
Financial Reporting Standards (IFRSs) as adopted by the European Union and the parent company financial 
statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom 
Accounting Standards and applicable law including FRS 102, the Financial Reporting Standard applicable 
in the UK).   

Under company law the Directors must not approve the financial statements unless they are satisfied that 
they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of 
the Group for that period. 

In preparing these financial statements, the Directors are required to: 

select suitable accounting policies and then apply them consistently  

 
  make judgements and accounting estimates that are reasonable and prudent  
 

state whether applicable accounting standards have been followed subject to any material departures 
disclosed and explained in the financial statements  
prepare the financial statements on the going concern basis unless it is inappropriate to presume that 
the Company and the Group will continue in business. 

 

The  Directors  are  responsible  for  keeping  adequate  accounting  records  that  are  sufficient  to  show  and 
explain the Company’s transactions and which disclose with reasonable accuracy at any time the financial 
position of the Company, and Group, and enable them to ensure that the financial statements comply with 
the requirements of the Companies Act 2006.  They are also responsible for the Group’s system of internal 
financial  control,  safeguarding  the  assets  of  the  Group  and  hence  for  taking  reasonable  steps  for  the 
prevention and detection of fraud and other irregularities. 

Website publication 

The Directors are responsible for ensuring the annual report and the financial statements are made available 
on a website.  Financial statements are published on the Group's website in accordance with legislation in 
the United Kingdom governing the preparation and dissemination of financial statements, which may vary 
from  legislation  in  other  jurisdictions.    The  maintenance  and  integrity  of  the  Company's  website is  the 
responsibility of the Directors.  The Directors' responsibility also extends to the on-going integrity of the 
financial statements contained therein. 

Signed on behalf of the Board 

Richard Juett (Oct 20, 2020 15:45 GMT+1)

R A Juett - Finance Director 
20 October 2020

26 

 
 
 
 
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CROMA SECURITY 
SOLUTIONS GROUP PLC 
FOR THE YEAR ENDED 30 JUNE 2020 

Opinion 
We  have  audited  the  group  financial  statements  of  Croma  Security  Solutions  Group  plc  (the 
‘group’)  for  the  year  ended  30  June  2020  which  comprise  the  consolidated  statement  of 
comprehensive  income,  the  consolidated  statement  of  financial  position,  the  consolidated 
statement of cash flows, the consolidated statement of changes in equity, and the notes to the 
financial  statements,  including  a  summary  of  significant  accounting  policies.  The  financial 
reporting  framework  that  has  been  applied  in  their  preparation  is  applicable  law  and 
International Financial Reporting Standards (IFRSs) as adopted by the European Union. 

In our opinion the group financial statements: 

  give a true and fair view of the state of the group’s affairs as at 30 June 2020 and of its 

loss for the year then ended;   

  have been properly prepared in accordance with IFRSs as adopted by the European Union; 

and  

  have been prepared in accordance with the requirements of the Companies Act 2006. 

Basis for opinion 
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) 
and applicable law.  Our responsibilities under those standards are further described in the 
Auditor’s responsibilities for the audit of the group financial statements section of our report.  
We are independent of the group in accordance with the ethical requirements that are relevant 
to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, as 
applied to SME listed entities, and we have fulfilled our other ethical responsibilities in 
accordance with these requirements.  We believe that the audit evidence we have obtained is 
sufficient and appropriate to provide a basis for our opinion.  

Conclusions relating to going concern 
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) 
require us to report to you where: 

  the directors’ use of the going concern basis of accounting in the preparation of the group 

financial statements is not appropriate; or 

  the directors have not disclosed in the group financial statements any identified material 
uncertainties that may cast significant doubt about the group’s ability to continue to adopt 
the going concern basis of accounting for a period of at least twelve months from the date 
when the group financial statements are authorised for issue. 

Key audit matters 

We identified the key audit matters described below as those which were most significant in the 
audit  of  the  financial  statements  of  the  current  period.  Key  audit  matters  include  the  most 
significant assessed risks of material misstatement, including those risks that had the greatest 
effect on our overall audit strategy, the allocation of resources in the audit, and the direction 
of the efforts of the audit team.  

In addressing these matters, we have performed the procedures below which were designed to 
address the matters in the context of the financial statements as a whole and in forming our 
opinion thereon. Consequently, we do not provide a separate opinion on these individual matters.  

27 

 
 
 
 
 
 
 
 
 
 
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CROMA SECURITY 
SOLUTIONS GROUP PLC 
FOR THE YEAR ENDED 30 JUNE 2020 

Key audit matter 

Description of risk 

How the matter was addressed in the audit 

Recoverability of 
intangibles including 
goodwill in relation to 
the group and 
investment in 
subsidiaries in 
relation to the parent 
company 

We challenged the assumptions used in the 
impairment  model  for  goodwill,  other 
in 
intangible  assets  and 
subsidiaries described in notes 11 and 12. 

investments 

As part of our procedures we: 
  assessed actual trading performance in 
the  financial  year  against  budget  to 
determine the reasonableness of using 
budgets for the impairment model; 
  assessed budgets for the next financial 
year against actual current year trading 
performance,  and  then  reviewed  the 
appropriateness  of  the  assumptions 
concerning  growth  rates  and  inputs  to 
the discount rate against latest market 
expectations, and; 

  considered  sensitivity  analysis  of  key 
variables  included  within  the  value  in 
use calculations. 

In  performing  our  procedures,  we  used 
internal  valuation  specialists  to  assess  the 
suitability  of  the  model  and  discount  rate 
applied.  

The group has 
material goodwill 
and other intangible 
assets relating to 
three cash 
generating units. 
The Group’s 
assessment of 
carrying value 
requires significant 
judgement, 
regarding cash 
flows, growth rates, 
discount rates, and 
sensitivity 
assumptions 

The parent company 
has material 
investments in 
subsidiaries. The 
parent company’s 
assessment of 
carrying value 
requires significant 
judgement, 
regarding cash 
flows, growth rates, 
discount rates, and 
sensitivity 
assumptions 

Our application of materiality 

The materiality for the financial statements of the Group as a whole was set at £484,000. This 
has been determined with reference to the benchmark of the Group’s revenue, which we 
consider to be one of the principal considerations for members of the company in assessing the 
performance of the Group. Materiality represents 1.5% of turnover.  

The materiality for the financial statements of the Parent as a whole was set at £303,500. This 
has been determined with reference to the benchmark of the Parent’s total assets as the 
company carries on no trade in its own right. Materiality represents 3% of total assets as 
presented on the face of the Statement of Financial Position. 

An overview of the scope of the audit 

Of the Group’s eight reporting components, we subjected one to a full scope audit and the 
other seven reporting components to specific audit procedures where the extent of our audit 
work was based on our assessment of the risk of material misstatements and of the materiality 
of the component.  

28 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CROMA SECURITY 
SOLUTIONS GROUP PLC 
FOR THE YEAR ENDED 30 JUNE 2020 

The components within the scope of our work covered 100% of Group revenue, 100% of Group 
profit before tax, and 100% of Group net assets.  

Other information 
The other information comprises the information included in the Report and Financial 
Statements, other than the group and parent company financial statements and our auditor’s 
report thereon.  The directors are responsible for the other information.  Our opinion on the 
financial statements does not cover the other information and, except to the extent otherwise 
explicitly stated in our report, we do not express any form of assurance conclusion thereon.   

In connection with our audit of the group financial statements, our responsibility is to read the 
other information and, in doing so, consider whether the other information is materially 
inconsistent with the financial statements or our knowledge obtained in the audit or otherwise 
appears to be materially misstated.  If we identify such material inconsistencies or apparent 
material misstatements, we are required to determine whether there is a material 
misstatement in the financial statements or a material misstatement of the other information.  
If, based on the work we have performed, we conclude that there is a material misstatement 
of this other information, we are required to report that fact.  

We have nothing to report in this regard.  

Opinion on other matters prescribed by the Companies Act 2006 
In our opinion, based on the work undertaken in the course of the audit: 

 

 

the information given in the strategic report and the directors’ report for the financial 
year for which the group financial statements are prepared is consistent with the group 
financial statements; and 
the strategic report and the directors’ report have been prepared in accordance with 
applicable legal requirements. 

Matters on which we are required to report by exception 
In the light of the knowledge and understanding of the group and its environment obtained in 
the course of the audit, we have not identified material misstatements in the strategic report 
or the directors’ report. 

We have nothing to report in respect of the following matters where the Companies Act 2006 
requires us to report to you if, in our opinion: 

  certain disclosures of directors’ remuneration specified by law are not made; or 
  we have not received all the information and explanations we require for our audit. 

Responsibilities of directors 
As  explained  more  fully  in  the  directors’  responsibilities  statement  set  out  on  page  27,  the 
directors  are  responsible  for  the  preparation  of  the  group  financial  statements  and  for  being 
satisfied  that  they  give  a  true  and  fair  view,  and  for  such  internal  control  as  the  directors 
determine  is  necessary  to  enable  the  preparation  of  financial  statements  that  are  free  from 
material misstatement, whether due to fraud or error. 

In preparing the group financial statements, the directors are responsible for assessing the 
group’s ability to continue as a going concern, disclosing, as applicable, matters related to 
going concern and using the going concern basis of accounting unless the directors either 
intend to liquidate the group or to cease operations, or have no realistic alternative but to do 
so.  

29 

 
 
 
 
 
 
 
 
 
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CROMA SECURITY 
SOLUTIONS GROUP PLC 
FOR THE YEAR ENDED 30 JUNE 2020 

Auditor’s responsibilities for the audit of the financial statements 
Our objectives are to obtain reasonable assurance about whether the financial statements as a 
whole are free from material misstatement, whether due to fraud or error, and to issue an 
auditor’s report that includes our opinion.  Reasonable assurance is a high level of assurance, 
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect 
a material misstatement when it exists.  Misstatements can arise from fraud or error and are 
considered material if, individually or in the aggregate, they could reasonably be expected to 
influence the economic decisions of users taken on the basis of these financial statements.  

A further description of our responsibilities for the audit of the financial statements is located 
on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities.  This 
description forms part of our auditor’s report. 

Other matter 
We have reported separately on the parent company’s financial statements of Croma Security 
Solutions Group Plc for the year ended 30 June 2020.  

Use of our report  
This  report  is  made  solely  to  the  parent  company’s  members,  as  a  body,  in  accordance  with 
Chapter 3 of Part 16 of the Companies Act 2006.  Our audit work has been undertaken so that 
we might state to the parent company’s members those matters we are required to state to them 
in an auditor’s report and for no other purpose.  To the fullest extent permitted by law, we do 
not accept or assume responsibility to anyone other than the parent company and the parent 
company’s members as a body, for our audit work, for this report, or for the opinions we have 
formed. 

Nexia Smith & Williamson

Nexia Smith & Williamson (Oct 20, 2020 16:17 GMT+1)

Julie Mutton                                                                          
Senior Statutory Auditor, for and on behalf of 
Nexia Smith & Williamson 
Statutory Auditor 
Chartered Accountants 

Cumberland House 
15-17 Cumberland Place 
Southampton 
Hampshire 
SO15 2BG 

Date: 

30 

20/10/2020 
 
 
 
 
 
 
 
 
 
   
 
  
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 
FOR THE YEAR ENDED 30 JUNE 2020 

Continuing operations: 

Revenue 

Cost of sales 

Gross profit 

Administrative expenses 
Other operating income 
Operating profit 

2020 

2019 

Notes 

£000's 

£000's 

  £000's 

£000's 

3 

32,321  

34,599  

(26,805) 

(28,109) 

5,516  

(5,995) 
615  
136  

(49) 

87  
(221) 
(134) 

6,490  

(5,041) 
-  
1,449  

(2) 

1,447  
(281) 
1,166  

1,871  

-    

(190) 
(232) 
1,449  

Analysed as: 

Earnings before interest, tax, depreciation 

amortisation 

Impairment 
Amortisation of intangible assets 
Depreciation 

Financial expenses 

Profit before tax 
Tax 
(Loss)/profit for the year from continuing operations 

1,754  
(857) 
(191) 
(570) 
136  

11 
12 
13 

5 

8 

Total comprehensive (loss)/income attributable to owners of the 
parent 

(134) 

1,166  

Earnings per share 

9 

Basic and diluted (loss)/earnings per share (pence) 
from continuing operations 

(0.90) 

7.82 

31 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 
FOR THE YEAR ENDED 30 JUNE 2020 

Assets 

Non-current assets 

Goodwill 
Other intangible assets 
Property, plant and equipment 
Right-of-use assets 

Current assets 
Inventories 
Trade and other receivables 
Cash and cash equivalents 

Total assets 
Liabilities 
Non-current liabilities 

Deferred Tax 
Lease liabilities 

Current liabilities 

Trade and other payables 
Borrowings and lease liabilities 

Total liabilities 

Net assets 

Issued capital and reserves attributable to owners of the parent  

Share capital 
Treasury shares 
Share premium 
Merger reserve 
Capital redemption reserve 
Retained earnings 

Total equity 

Notes 

2020 
£000's 

2019 
£000's 

11 
12 
13 
14 

15 
16 
26 

21 
18 

18 
18 

22 
23 
23 
23 
23 
23 

6,454  
456  
574  
1,120  
8,604  

764  
4,535  
4,076  
9,375  

7,311  
647  
668  
-  
8,626  

825  
6,163  
1,729  
8,717  

17,979  

17,343  

(128) 
(837) 
(965) 

(4,982) 
(340) 
(5,322) 
(6,287) 

(158) 
(23) 
(181) 

(5,126) 
(46) 
(5,172) 
(5,353) 

11,692  

11,990  

794  
(399) 
6,133  
2,139  
51  
2,974  
11,692  

794  
(399) 
6,133  
2,139  
51  
3,272  
11,990  

These financial statements were approved and authorised for issue by the Board of Directors on 20 
October 2020 and signed on their behalf by 

Sebastian Morley (Oct 20, 2020 15:38 GMT+1)
S J F Morley- Director 
Croma Security Solutions Group plc - Company Number: 03184978 

32 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED STATEMENT OF CASH FLOWS 
FOR THE YEAR ENDED 30 JUNE 2020 

  Notes 

2020 
£000's 

2019 
£000's 

25 

Cash flows from operating activities 

Profit before taxation 
Depreciation amortisation and impairment losses 
(Profit) on sale of property, plant and equipment 
Net changes in working capital 
Financial expenses 
Corporation tax paid 
Net cash generated from operations 

Cash flows from investing activities 

Purchase of business costs net of cash acquired 
Purchase of property, plant and equipment 
Proceeds on disposal of property, plant and equipment 
Net cash used in investing activities 

Cash flows from financing activities 
Payments to reduce lease liabilities 
Payments to reduce borrowings 
Dividends paid 
Interest paid 
Net cash used in financing activities 

Net increase/(decrease) in cash 
Cash and cash equivalents at beginning of period 
Cash and cash equivalents at end of period 

26 

87  
1,618  
(2) 
1,698  
49  
(406) 
3,044  

-  
(121) 
11  
(110) 

(408) 
(15) 
(164) 
-  
(587) 

2,347  
1,729  
4,076  

1,447  
422  
-  
(973) 
2  
(436) 
462  

(245) 
(356) 
12  
(589) 

(42) 
(1) 
(253) 
(2) 
(298) 

(425) 
2,154  
1,729  

33 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
FOR THE YEAR ENDED 30 JUNE 2020 

Attributable to owners of parent 

At 1 July 2018 
Profit for the year 
Dividends paid 
Transfer on lapse of options 
At 30 June 2019 
Loss for the year 
Dividends paid 
At 30 June 2020 

Share 
Capita
l 

Capital 
Redemption 
Reserve 

Treasury 
Shares 

Share 
Premium 

Merger 
Reserve 

Retained 
Earnings 

Share 
Options 

Total 
Equity 

£000's 

£000's 

£000's 

£000's 

£000's 

£000's 

£000's 

£000's 

794  
-  
-  
-  
794  
-  
-  
794  

51  
-  
-  
-  
51  
-  
-  
51  

(399) 
-  
-  

(399) 
-  
-  
(399) 

6,133  
-  
-  
-  
6,133  
-  
-  
6,133  

2,139  
-  
-  
-  
2,139  
-  
-  
2,139  

2,347  
1,166  
(253) 
12  
3,272  
(134) 
(164) 
2,974  

12  
-  
-  
(12) 
-  
-  
-  
-  

11,077  
1,166  
(253) 
-  
11,990  
(134) 
(164) 
11,692  

        The following notes form part of the primary financial statements 

34 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

1. Accounting policies 

The  Group  financial  statements  have  been  prepared  and  approved  by  the  Directors  in  accordance  with 
International Financial Reporting Standards (IFRS’s), International Accounting Standards and Interpretations 
(collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European 
Union (“adopted IFRS’s”).  

Going concern  

The Group financial statements have been prepared on a going concern basis. 

The Group’s activities are funded by long-term equity capital and by cash generated from trading. 

In considering the ability of the Group to meet its obligations as they fall due, the Board has considered the 
expected trading and cash requirements of the Group until the end of October 2021.   

Despite the impacts of Covid-19 the Board continues to be positive about the retention of customers and the 
outlook of its trading operations.  Profit and cash flow projections support the Board’s view that the Group will 
meet its obligations as they fall due with the use of cash surpluses from trading.  

Basis of consolidation 
Where the Company has the power, either directly or indirectly, to govern the financial and operating policies 
of another entity or business  so  as to  obtain  benefits from  its  activities,  it  is  classified  as  a  subsidiary.  The 
consolidated financial statements present the results of the Company and its subsidiaries (“the Group”) as if they 
formed  a  single  entity.    Inter-company  transactions  and  balances  between  Group  companies  are  therefore 
eliminated in full. 

Segment reporting  
The  Directors  consider  there  to  be  three  operating  segments  namely  ‘Croma  Vigilant’  which  comprises  the 
business of Vigilant Security (Scotland) Limited; ‘Croma Security Systems’ which includes Croma Biometrics 
and  comprises  the  business  of  CSS  Total  Security  Limited;  and  ‘Croma  Locksmiths’,  which  comprises  the 
business of Croma Locksmiths & Security Solutions Limited and of Basingstoke Locksmiths Limited.   

The operating segments identified above are reported in a manner consistent with the internal reporting provided 
to the chief operating decision maker.  The chief operating decision maker, who is responsible for allocating 
resources and assessing performance of the operating segments, has been identified as the executive Directors 
collectively. 

Revenue recognition 
Revenue is measured at the transaction price of the consideration received or receivable, and represents amounts 
receivable for goods supplied, stated net of discounts, returns and value added taxes.  The Group recognises 
revenue when the amount of revenue can be reliably measured, when it is probable that future economic benefits 
will flow to the entity, and when specific criteria have been met for each of the Group's performance obligations, 
as described below.   

35 

 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

1.   Accounting policies (continued) 

-  Revenue in respect of security personnel services is recognised over the term of the contract or, where 
sales contracts are on a “cost plus” basis, at the point at which manpower services have been provided. 
-  Sale of goods is recognised at the point that the goods are delivered to a client on signature of a goods 
received note or to a customer in one of our retail outlets which is the point that control of over the asset 
is transferred. 
Installation income is recognised straight line over the period of the installation. 

- 
-  Maintenance and service fees are recognised when the service has been provided, which is typically a 
period  of  three  to  four  months  from  invoice  date, leading  to  contract  liabilities  which  is  held  under 
‘Accruals and contract liabilities’ in the statement of financial position. 

-  Monitoring income is recognised over the term of the contract, leading to contract liabilities which is 

also held under ‘Accruals and contract liabilities’ in the statement of financial position. 

Cost of sales 
Cost of sales are the direct costs relating to customer generated revenue and comprise direct labour payroll costs, 
other costs associated with direct labour, stock  purchases, installation  and subcontracted  costs  all  sold on to 
customers. 

Intangible assets 
(a)     Goodwill 
Goodwill  represents  the  excess  of  the  cost  of  a  business  combination  over  the  interest  in  the  fair  value  of 
identifiable assets, liabilities and contingent liabilities acquired.  Cost comprises the fair value of assets given, 
liabilities assumed, and equity instruments issued. 

Goodwill  is  capitalised  as  an  intangible  asset  with  any  impairment  in  carrying  value  being  charged  to  the 
consolidated statement  of comprehensive  income.   Where the fair  value of  identifiable  assets, liabilities and 
contingent liabilities exceed the fair value of consideration paid, the excess is credited in full to the consolidated 
statement of comprehensive income on the acquisition date. 

(b)     Other intangible assets 
Intangible  assets  acquired  separately  are  carried  initially  at  cost.    An  intangible  asset  acquired  as  part  of  a 
business combination is recognised separately from goodwill if the asset is separable or arises from contractual 
or other legal rights and its fair value can be measured reliably. 

Intangible assets with a finite life are amortised on a straight-line basis over their expected useful life as follows 

 
 
 

Customer relationships     
Brand royalties     
Research & development 

– 
–   
–   

10 years  
4 years 
3 years 

36 

 
 
 
 
 
 
 
 
 
  
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

1. Accounting policies (continued) 

(c)  Internally-generated intangible assets - research and development expenditure 

Expenditure on research activities is recognised as an expense in the period in which it is incurred.  An internally-
generated  intangible  asset  arising  from  the  Group's  development  activity  is  recognised  only  if  all  of  the 
conditions of IAS 38 are met. 

Internally-generated intangible assets are amortised on a straight-line basis over their useful lives.  Where no 
internally-generated intangible asset can be recognised, development expenditure is recognised as an expense 
in the period in which it is incurred. 

Impairment testing 
Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken 
annually at the financial year end.  Other non-financial assets are subject to impairment tests whenever events 
or changes in circumstances indicate that their carrying amount may not be recoverable.  Where the carrying 
value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), 
the asset is written down accordingly. 

Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried 
out on the asset’s cash-generating unit (i.e. the lowest group of assets in which the asset belongs for which there 
are separately identifiable cash flows).  Goodwill is allocated on initial recognition to each of the Group’s cash-
generating units that are expected to benefit from the synergies of the combination giving rise to the goodwill. 

Impairment  charges  are  included  separately  in  the  consolidated  statement  of  comprehensive  income.    An 
impairment loss recognised for goodwill is not reversed. 

Business combinations 
The  consolidated  financial  statements  incorporate  the  results  of  business  combinations  using  the  acquisition 
method.  In the consolidated statement of financial  position,  the acquiree’s identifiable  assets, liabilities and 
contingent liabilities are initially recognised at their fair values at the acquisition date.  The results of acquired 
operations are included in the consolidated statement of comprehensive income from the date on which control 
is obtained. 

Government grants 
Grants are accounted for under the accruals model under IAS20.  Grants of a revenue nature are recognised in 
the Consolidated Statement of Comprehensive Income in the same period as the related expenditure. 

Grants  awarded  to  provide  financial  support  or  assistance  rather  than  relating  to  specific  expenditure  are 
recognised  in  the  Consolidated  Statement  of  Comprehensive  Income  in  the  period  which  they  become 
receivable. 

Grant income has been recognised as other operating income in the Consolidated Statement of Comprehensive 
Income. 

37 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

1. Accounting policies (continued) 

Property, plant and equipment 
Property, plant and equipment are stated at costs less depreciation.  Depreciation is provided on all property, 
plant and equipment at rates calculated to write off the cost of each asset less its estimated residual value evenly 
over its estimated useful life, as follows; 

Freehold property 
Leasehold property 
Plant, computer and office equipment 
Motor vehicles   

- 
- 
- 
- 

4% on cost 
Over the term of the lease 
Between 10% and 35% on cost 
25% on cost 

Inventories 
Inventories are valued at the lower of cost and net realisable value.  Cost is based on the cost of purchase on a 
first in first out basis together with costs in bringing it to its present condition and location.  Work in progress 
and finished goods include attributable overheads.  Net realisable value is based on estimated selling price less 
additional costs to completion and disposal. 

Dividends 
Dividends  are  recognised  when  they  become  legally  payable.    In  the  case  of  interim  dividends  to  equity 
shareholders, this is when interim dividends are paid.  In the case of final dividends, this is when approved by 
the shareholders at the AGM. 

Taxes 
Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in 
other comprehensive income or directly in equity. Current income tax assets and/or liabilities comprise those 
obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid 
at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial 
statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively 
enacted by the end of the reporting period. 

Deferred  tax  assets  and  liabilities  are  recognised  where  the  carrying  amount  of  an  asset  or  liability  in  the 
statement of financial position differs from its tax base, except for differences arising on: 

 
 

 

the initial recognition of goodwill  
the initial recognition of an asset or liability in a transaction which is not a business combination and 
at the time of the transaction affects neither accounting or taxable profit 
investments in subsidiaries and jointly controlled entities where the Group is able to control the timing 
of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable 
future.  

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be 
available against which the difference can be utilised. The amount of the asset or liability is determined using 
tax rates that have  been  enacted or substantively  enacted  by the  statement  of financial  position date and are 
expected to apply when the deferred tax liabilities/ (assets) are settled/(recovered). 

38 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

1. Accounting policies (continued) 

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax 
assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on 
either: 
 
  different group entities which intend either to settle current tax assets and liabilities on a net basis, or to 
realise  the  assets  and  settle  the  liabilities  simultaneously,  in  each  future  period  in  which  significant 
amounts of deferred tax assets or liabilities are expected to be settled or recovered. 

the same taxable Group company; or  

Leased assets 
The Group has applied IFRS 16 Leases using the modified retrospective approach and therefore the comparative 
information has not been restated and continues to be reported under IAS17.  The details of accounting policies 
under IAS17 are disclosed separately if they are different from those under IFRS 16 and the impact of changes 
is disclosed in Note 19. 

Accounting policy applicable before 1 July 2019 

Finance leases 
The economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks 
and rewards of ownership of the leased  asset.   Where  the Group  is  a  lessee in this type of  arrangement, the 
related asset is recognised at the inception of the lease at the fair value of the leased asset or, if lower, the present 
value of the lease payments plus incidental payments, if any. A corresponding amount is recognised as a finance 
lease liability.  See property, plant and equipment accounting policy for the depreciation methods and useful 
lives for assets held under finance lease.  The corresponding finance lease liability is reduced by lease payments 
net  of  finance  charges.    The  interest  element  of  lease  payments  represents  a  constant  proportion  of  the 
outstanding capital balance and is charged to profit or loss, as finance costs over the period of the lease. 

Operating leases 
All  other  leases  are  treated  as  operating  leases.    Where  the  Group  is  a  lessee,  payments  on  operating  lease 
agreements are recognised as an expense on a straight-line basis over the lease term. Associated costs, such as 
maintenance and insurance, are expensed as incurred. 

Accounting policy applicable after 30 June 2019 
IFRS 16 was adopted as of 1 July 2019 without restatement of comparative figures. 

A right of use asset and a lease liability has been recognised for all leases except leases of low value assets, 
which are considered to be those with a fair value below £4,500, and those with a duration of 12 months or less. 
The  right-of-use  asset  has been  measured  at  cost,  which  is  made  up  of  the  initial  measurement  of  the  lease 
liability, any initial direct costs incurred by the group, an estimate of any costs to dismantle and remove the asset 
at the end of the lease, and any lease payments made in advance of the lease commencement date. 

The Group will depreciate the right-of-use assets on a straight-line basis from the lease commencement date to 
the earlier end of the useful life of the right-of-use asset or the end of the lease term. Where impairment indicators 
exist, the right of use asset will be assessed for impairment. 

The lease liabilities are measured at the present value of the lease payments due to the lessor over the lease term, 
discounted using the interest rate implicit in the lease if that rate is readily available or the Group's incremental 
borrowing rate. 

39 

 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

1. Accounting policies (continued) 

After initial measurement, any payments made will reduce the liability and the interest accrued will increase it. 
Any reassessment or modification will lead to a remeasurement of the liability. In such case, the corresponding 
adjustment will be reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced 
to zero. 

On the statement of financial position, right-of-use assets have been disclosed separately from property, plant 
and equipment. 

Share capital 
Financial instruments issued by the Group are treated as  equity  only  to the extent that they do not meet the 
definition of a financial liability.  The Group’s ordinary shares are classified as equity instruments. 

Finance cost 
Finance costs of debt are recognised in the profit or loss over the term of such instruments at a constant periodic 
rate on the carrying amount. 

Share-based payments 
The Group measures the cost of equity-settled transactions by reference to the fair value of the equity instruments 
at the date at which they were granted.  Judgement is required in determining the most appropriate valuation 
model for a grant of equity instruments depending on the terms and conditions of the grant.  Management are 
also  required  to  use  certain  assumptions  in  determining  the  most  appropriate  inputs  to  the  valuation  model 
including expected life of the option, volatility, risk free rate and dividend yield.  The assumptions and models 
used are fully disclosed in note 22. 

All share-based remuneration plans are ultimately recognised as an expense in the statement of comprehensive 
income with a corresponding credit to the “Share Options” reserve. 

Financial assets 
Financial assets are trade receivables and other receivables. 

Trade  receivables  are  held  in  order  to  collect  the  contractual  cash  flows  and  are  initially  measured  at  the 
transaction  price  as  defined  in  IFRS  15,  as  the  contracts  of  the  Group  do  not  contain  significant  financing 
components. Impairment losses are recognised based on lifetime expected credit losses in profit or loss. 

Other receivables are held in order to collect the contractual cash flows and accordingly are measured at initial 
recognition at fair value, which ordinarily equates to cost and are subsequently measured at cost less impairment 
due to their short term nature.  A provision for impairment is established based on 12-month expected credit 
losses  unless  there  has  been  a  significant  increase  in  credit  risk  when  lifetime  expected  credit  losses  are 
recognised.  The amount of any provision is recognised in profit or loss. 

The Group de-recognises  a financial asset  only  when the contractual  rights  to the  cash flows from  the asset 
expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the 
asset  to  another  entity.  Where  the  Group  has  transferred  trade  receivables  under  invoice  discounting 
arrangements  and  it  retains  substantially  all  the  risks  and  rewards  of  ownership  of  the  transferred  trade 
receivables,  the  Group  continues  to  recognise  the  trade  receivables  and  also  recognises  a  liability  for  the 
proceeds received. 

40 

 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

1. Accounting policies (continued) 

Financial liabilities 
(a)   Bank borrowings are initially recognised at fair value net of any transaction costs directly attributable to the 
issue of the instrument.   Such interest-bearing liabilities are subsequently measured at amortised cost using the 
effective  interest  rate  method,  which  ensures  that  any  interest  expense  over  the  period  to  repayment  is  at  a 
constant rate on the balance of the liability carried in the statement of financial position.  Interest expense in this 
context includes initial transaction costs and premiums payable on redemptions, as well as any interest or coupon 
payable while the liability is outstanding. 
(b)    Trade  payables  and  other  short-term  monetary  liabilities  are  initially  recognised  at  their  fair  value  and 
subsequently at their amortised cost. 

Capital management 
The Group manages capital to safeguard its ability to continue as a going concern with the aim of strengthening 
its capital base to provide returns to shareholders.  Excluding credit card and lease liabilities the Group has no 
short or long-term debt.   

The  Group  considers  its  capital  to  comprise  its  ordinary  share  capital,  share  premium,  merger  reserve,  and 
accumulated retained earnings. 

Cash and cash equivalents  
In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand and deposits held 
at call with banks. 

New and amended standards adopted by the group and company 
The Group has adopted for the first time IFRS 16 "Leases".  The Company has elected to adopt the modified 
retrospective method (including practical expedients of C10 of IFRS16) with the cumulative effect of initially 
applying  the  new  standard recognised  on  1  July  2019.    These new  standards required additional  disclosures 
which have been provided in notes 4 and 19.  The adoption of these new standards has had a material impact on 
the consolidated financial statements of the group. 

There are no other new standards or amendments to standards which are mandatory for the first time for the 
financial year ended 30 June 2020. 

Standards, interpretations, and amendments to published standards that are not yet effective 
Certain  new  standards,  amendments  and  interpretations  to  existing  standards  have  been  published  that  are 
mandatory for the Group’s accounting periods beginning on or after 1 July 2020 or later periods and have not 
been early adopted.  The effect on the consolidated financial statements of the Group for these new standards, 
interpretations and amendments has not yet been assessed. 

41 

 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

2. Critical Accounting Estimates and Judgements 
The  Group  makes  certain  estimates  and  judgements  regarding  the  future.    Estimates  and  judgements  are 
continually evaluated based on historical experience and other factors, including expectations of future events 
that are believed to be reasonable under the circumstances.  In the future, actual experience may differ from 
these estimates and assumptions.  The estimates and assumptions that have a significant risk of causing a material 
adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: 

Estimates and assumptions:  
Impairment of goodwill.  Determining whether goodwill is impaired requires an estimation of the value in use 
of the cash generating units to which the goodwill has been allocated.  The value in use calculation requires the 
entity to estimate the future cashflows expected to arise from the cash generating unit.  In order to derive the 
present value, the discount rate that has been calculated is 12.7% (2019: 11.6%).   

The carrying amount of goodwill at the statement of financial position date was £6,454k.  Details relating to the 
allocation of goodwill to cash generating units are given in note 11. 

The directors do not consider there to be any key areas of judgement. 

42 

 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

3. Segmental reporting ` 

Croma 
Vigilant 
(Guarding) 

Croma 
Security 
Systems 
(Electronic) 

Croma  
Locksmiths 
(Locks) 

Central 

Total 

2020 Business Segments 
Segment revenues 

£000's 
26,968     

£000's 
2,459     

   £000's 

£000's 
2,894     

Gross profit 

3,335     

996     

1,184     

-     

-     

(716) 

-     
-     
-     
-     

£000's 
32,321  

5,515  

(4,378) 
(191) 
(570) 
2  
615  

993  
(857) 

(688) 
(62) 
(88) 

-     
126     

(770) 
(129) 
(251) 
(1) 
324     

284     

357     

(716) 

(433) 

(424) 

-     

(2,204) 

-     

(231) 

3     
165     

1,068     
-     

1,068     

(149) 

(67) 

(716) 

136  

Administrative expenses 
Amortisation 
Depreciation 
Profit/(loss) on disposal 
Other operating income 
Operating profit/(loss) before 
impairment 
Impairment of goodwill 
Operating profit/(loss) after 
impairment 

Segment assets 
Segment (liabilities) 

7,201     

(3,919) 

4,459     
(856) 

4,950     

(1,357) 

1,369     
(155) 

17,979  
(6,287) 

Segment net assets  

3,282     

3,603     

3,593     

1,214     

11,692  

Additions to non-current assets 

82     

30     

11     

-     

123  

2019 Business Segments 

£000's 

£000's 

£000's 

   £000's 

£000's 

Segment revenues 

28,477     

2,702     

3,420     

-     

34,599  

Gross profit 

3,873     

1,113     

1,511     

(7) 

6,490  

Administrative expenses 
Amortisation 
Depreciation 
(Loss)/profit on disposal 

(2,392) 

-     

(71) 
(4) 

(629) 
(61) 
(80) 

(827) 
(129) 
(81) 

-     

4     

(771) 

-     
-     
-     

(4,619) 
(190) 
(232) 
-  

Segment operating profit/(loss) 

1,406     

343     

478     

(778) 

1,449  

Segment assets 
Segment (liabilities) 

8,259     

(4,168) 

4,600     
(802) 

5,113     

(629) 

(1,126) 

743     

17,343  
(5,353) 

Segment net assets  

4,091     

3,798     

3,987     

114     

11,990  

Additions to non-current assets 

112     

-     

424     

-     

536  

43 

 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

3. Segmental reporting (continued) 

An analysis of revenue by type is shown below: 

Revenues from UK sources 

Security Personnel Services 
Sale of Goods & Installation Services 
Monitoring Maintenance and Service fees 
Biometric Installation and Maintenances fees 
Keyholding income 

2020 
£000's 

26,682  
4,712  
527  
121  
279  

2019 
£000's 

28,300  
5,513  
499  
101  
186  

32,321  

34,599  

The following is an estimate of future revenues arising from unsatisfied performance obligations based on 
contract renewal dates and projected monthly billing: 

To be satisfied in the next financial year 
To be satisfied in subsequent financial years 

2020 
£000's 

2019 
£000's 

20,521  
17,200  

19,887  
17,614  

37,721  

37,501  

There were three customers where revenue was greater than 10% of the total (2019: three).  Revenue from 
these customers was derived from Security Personnel Services. 

Significant customer analysis: 

Customer 1 
Customer 2 
Customer 3 

Total revenue 

2020 
£000's 

5,391  
4,504  
4,097  

2020 
% 

17% 
14% 
13% 

  Total revenue 
2019 
£000's 

  2019 
  % 

6,610  
4,490  
3,742  

  19% 
  13% 
  11% 

44 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

4. Expenses 

Amount of inventory expensed as cost of sales 
Write down of inventories 
Operating lease expense 
Lease rentals - low value assets 
Impairment loss 
Depreciation - owned assets 
Depreciation - right of use assets 
Amortisation 

Auditors’ remuneration: 

Audit of parent company and consolidated financial information payable to  
Nexia Smith & Williamson 
Fees paid to the auditor in respect of tax compliance services 

5. Financial expenses 

Interest on hire purchase agreements 
Interest on other lease liabilities 

6. Staff and staff costs 

The average monthly number of persons (including Directors) employed by 
the Group during the period was: 

Management and administration 
Service and product provision 

Staff cost (for the above persons): 

Wages and salaries 
Pension 
Social security costs 

45 

2020 
£000's 

2019 
£000's 

2,081  
7  
-  
5  
857  
208  
362  
191  

2,262  
22  
391  
-  
-  
232  

190  

44  
5  

38  
5  

2020 
£000's 

2019 
£000's 

-  
49  
49  

2020 

No. 

30 
874 
904 

2  
-  
2  

2019 

No. 

30 
925 
955 

£000's 

£000's 

23,957  
456  
2,230  
26,643  

24,965  
445  
2,351  
27,761  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

7. Directors' and key management personnel remuneration 

2020 

S J F Morley 
R M Fiorentino 
P Williamson 
R A Juett 
A N Hewson 
C McMicking 

Salary 
 and 
 bonus 
£000's 

Estimated 
value of 
benefits 
£000's 

  Pension 
£000's 

Total 
£000's 

173  
236  
172  
68  
25  
25  

699  

5  
4  
12  
2  
2  
-  

25  

4  
-  
1  
14  
-  
-  

19  

182  
240  
185  
84  
27  
25  

743  

There were no share-based payments during the year or the prior year 

2019 

S J F Morley 
R M Fiorentino 
P Williamson 
R A Juett 
A N Hewson 
C McMicking 

Salary 
 and 
 bonus 
£000's 

Estimated 
value of 
benefits 
£000's 

  Pension 
£000's 

Total 
£000's 

171  
236  
140  
69  
25  
25  

666  

4  
3  
25  
1  
1  
-  

34  

5  
-  
1  
13  
-  
-  

19  

180  
239  
166  
83  
26  
25  

719  

Key management personnel compensation 

Key management personnel compensation comprises short-term employee benefits which total £796k (2019: 
£789k) and long-term employee benefits which total £19k (2019: 19k) 

46 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

8. Taxation 

Analysis of the tax charge in the year 

Current year tax charge 
UK corporation tax charge on profit for the year 

Adjustments for prior periods 

Total current tax 

Deferred tax (note 21) 

Current year 

Adjustments for prior periods 

Tax on profit on ordinary activities 

Factors which may affect future tax charges 

2020 
£000's 

2019 
£000's 

239  

14  

253  

(51) 

19  

221  

313  

7  

320  

(28) 

(11) 

281  

The tax assessed for the year is higher than the standard rate of corporation tax in the UK of 19% (2019 - 
19%).  The differences are explained below: 

Factors affecting the tax charge for the year 

Profit before taxation 

Profit multiplied by the standard rate of taxation of 19% (2019: 19%) 

Effects of: 

Expenses not deductible for tax purposes 
Adjustment to tax charge for previous periods 

Total tax charge for the year 

2020 
£000's 

87  

18  

170  
33  

221  

2019 
£000's 

1,447  

275  

10  
(4) 

281  

47 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

9. Earnings per share 

The calculation of basic earnings per share is based on the profit attributable to ordinary shareholders, from 
continuing operations, divided by the weighted average number of shares in issue during the year, calculated 
on a daily basis.  

The calculation of diluted earnings per share is based on the basic earnings per share adjusted to allow for the 
issue of shares and the post-tax effect of dividends and interest on the assumed conversion of all other dilutive 
options and other potential ordinary shares. 

Numerator 
(Loss)/Earnings for the year on continuing operations and used in basic and 
diluted EPS 

Denominator 
Weighted average number of shares used in basic and diluted EPS (000’s) 

Basic and diluted (loss)/earnings per share 

10. Dividends 

2020 
£000's 

2019 
£000's 

(134) 

1,166  

14,902  

14,902  

Pence 

Pence 

(0.90) 

7.82 

A final dividend of 1.1p per share for the year ended 30 June 2019 was paid on 29 November 2019 at a cost of 
£164k.  An interim dividend for the year ended 30 June 2020 of 0.75p per share was declared, cancelled, re-
declared and finally paid on 4 September 2020. 

Subject to approval at the AGM, the directors recommend a final dividend of 1.2p per share for the year. 

48 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

11. Goodwill 

Cost 

At 1 July 2019 & 30 June 2020 

Accumulated impairment losses 

At 1 July 2019 

Arising in the year 

At 30 June 2020 

Net book value 

At 1 July 2019 

At 30 June 2020 

Impairment testing 

£000's 

7,311  

-  

857  

857  

7,311  

6,454  

During the year, goodwill was reviewed for impairment in accordance with IAS 36 "Impairment of Assets".  
An impairment charge of £857k (2019: £Nil) occurred as a result of this review.   For this review goodwill 
was allocated to individual cash generating units (CGU) on the basis of the group's operations. 

The carrying value of goodwill by each CGU is as follows: 

Croma Security Systems 
Croma Locksmiths 
Croma Vigilant 

2020 
£000's 

2,906  
2,152  
1,396  
6,454  

2019 
£000's 

3,339  
2,576  
1,396  
7,311  

49 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

11.  Goodwill (continued) 

Forecasts, growth and discount rates 
The  recoverable  amount  relating  to  Croma  Vigilant,  Croma  Security  Systems  and  Croma  Locksmiths  was 
determined based on value-in-use calculations, covering a detailed forecast for the five-year period to 30 June 
2025, followed by extrapolation of expected cashflows for the remaining useful lives using a 2% growth rate.  
The present value for the expected cashflows was determined using a pre-tax discount rate of 12.7% which is 
based  on  a  number  of  factors  including  the  risk-free  rates  in  the  UK  (using  the  yield  from  20  year  British 
Government Securities, with a nominal zero coupon, as at 30 June 2020), the Group’s estimated market risk 
premium, the anticipated future rates of corporation tax and a premium to reflect size of the Group and current 
economic environment associated with the COVID-19 pandemic.  

Cashflow assumptions 

Croma Vigilant 
The effect of the COVID-19 pandemic on the business of Croma Vigilant is considered minimal and for the year 
to 30 June 2021 turnover is forecast to increase by 13% through the growth of the existing customer portfolio.  
Direct costs are forecast to increase proportionately and overheads by approximately 4%. 

For the period from 2021 to 2024 the same assumptions have been made as for the prior year, namely: 

 
 
 
 

Revenue to grow by 3% per annum (2019: 3%) 
Direct wages to rise in proportion to revenue 
Other direct costs to increase at 2.5% per annum (2019: 2.5%) 
Indirect costs to increase at 2% per annum (2019: 2%) 

For the year ended 30 June 2025 onwards, net revenues are assumed to increase by 2% per annum. 

Based on these assumptions the net present value of future cashflows is considerably in excess of the carrying 
value of goodwill. 

Croma Security Systems including Croma Biometric 
For the year ended 30 June 2020 sales were impacted by the COVID-19 pandemic and fell by 7% mainly as a 
result.  On the basis that any future Government lockdown provisions do not impact the business, we forecast a 
modest 5% increase in turnover for the year ending 30 June 2021 from this lower base. 

For the period from 2021 to 2025 the following assumptions have been made: 

 
 
 

Revenue growth of 3.14% (2019: 3.14%) 
Direct cost growth of 4.0% (2019: 2.6%) 
Overheads growth of 2.30% (2019: 2.06%) 

For the year ended 30 June 2025 onwards, net revenues are assumed to increase by 2% per annum. 

Primarily driven by the increase in the discount rate applied and based on these assumptions the net present 
value of future cashflows is £3,718k which when compared to the carrying value of goodwill and net assets has 
resulted in an impairment loss of £433k. 

50 

 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

Croma Locksmiths 
Towards the end of March through to May 2020 sales were severely impacted by lockdown measures and during 
the phased reopening of our retail units sales have remained below the levels seen during the period from July 
to February 2020.  Since the year end and following full reopening, we have seen a continued improvement in 
our retails sales but in the commercial sector we are still seeing reluctance to spend particularly for customers 
trading in the entertainment and holiday sectors.   For the year ended 30 June 2021 therefore we have prepared 
a conservative forecast which indicate a slight reduction from the level seen during the year ending 30 June 2020 
and operating profits reducing by approximately 3%. 

For the period from 2021 to 2025 the following assumptions have been made: 

 
 
 

Revenue growth of 3.14% (2019: 3.14%) 
Direct cost growth of 2.6% (2019: 2.6%) 
Indirect costs growth of 2.19% (2019: 1.97%) 

For the year ended 30 June 2025 onwards, net revenues are assumed to increase by 2% per annum. 

Primarily driven by the increase in the discount rate applied and based on these assumptions the net present 
value of future cashflows is £3,937k which when compared to the carrying value of goodwill and net assets has 
resulted in an impairment loss of £424k. 

Sensitivities 
The  Directors  have  applied  sensitivity  analysis  to  future  cashflows  to  estimate  the  likelihood  of  future 
impairment.   

The  cashflow  forecasts  are  sensitive  to  changes  in  the  discount  rate  and  to  long  term  revenue  growth.    For 
example, for each 0.1% increase in the discount rate the value of future cashflows reduces by approximately 
£70K  and  for  each  0.1%  decrease  in  long  term  revenue  growth  the  value  of  future  cashflows  reduces  by 
approximately £50k, each change would impact the impairment loss in a negative way. 

In difficult trading conditions the Directors have prepared conservative and achievable forecasts and believe it 
is likely that long term revenue growth can be achieved or exceeded.   

The  discount  rate  which  increased  by  1.1%  during  the  year,  is  determined  largely  by  factors  outside  of  the 
directors control, however the directors consider it unlikely that a similar increase will be seen in the year to 30 
June 2021 and so if a further impairment adjustment is necessary it is unlikely to be of the magnitude seen in 
the current year under review. 

51 

 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

12. Other intangible assets 

Fair value 

At 1 July 2018 

Additions 

At 30 June 2019 & 2020 

Amortisation 

At 1 July 2018 

Charge for the year 

At 30 June 2019 

Charge for the year 

At 30 June 2020 

Carrying Value at 1 July 2019 
Carrying Value at 30 June 2020 

R&D 
£000's 

Customer 
relationships 
£000's 

  Brands 
  £000's 

Software 
licences 
£000's 

Brand 
Royalties 
£000's 

Total 
£000's 

86  

-  

86  

86  

-  

86  

-  

86  

-  
-  

1,727  

295  

-  

-  

1,727  

295  

1,003  

161  

1,164  

162  

1,326  

563  
401  

184  

29  

213  

29  

242  

82  
53  

222  

2  

224  

222  

-  

222  

-  

222  

2  
2  

31  

-  

2,361  

2  

31  

2,363  

31  

-  

31  

-  

1,526  

190  

1,716  

191  

31  

1,907  

-  
-  

647  
456  

R&D was developed internally. The other intangible assets were acquired with the business of CSS Total Security 
Limited,  CSS  Locksmiths  Limited,  Croma  Locksmiths  &  Security  Solutions  Limited  and  Basingstoke  Locksmiths 
Limited.  

The amortisation expense of £191k has been categorised as an administrative expense in the consolidated statement of 
comprehensive income. 

At the year end the Directors reviewed intangible assets for impairment. 

Customer relationships 
Customer  relationships  extant  at the  date of  acquisition  were  considered.    A  forecast  was  prepared  of future  gross 
revenues from the relationships after giving due consideration to historic attrition rates.  A discount rate of 12.70% 
(2019: 11.60%) was then applied to give the present value of these future cashflows. 

No impairment adjustment has been found to be necessary against the carrying value of customer relationships acquired 
with the business of CSS Total Security Limited and the business of Croma Locksmiths & Security Solutions Limited.  
The useful lives as noted in the accounting policies were considered appropriate.  Customer relationships with a net 
book value of £401k have a remaining life of between 1.5 to 5.5 years. 

52 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
 
 
 
 
 
 
 
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

12. Other intangible assets (continued)  

Brands 
The brand of Croma Locksmiths is enduring within its locality.  An assessment of the brand value was made by applying 
a comparable third-party royalty rate of 7.5% to forecast turnover using a nil rate growth model.  After-tax revenues of 
the remaining estimated useful  life of 2 years  were then  valued using  the  same discount  factor noted above  and no 
impairment adjustment to the carrying value of the brand was considered necessary.  The useful life of the asset as noted 
in the accounting policy note was considered appropriate.  Brands with a net book value of £53k, have a remaining 
useful life of 2 years. 

13. Property, plant and equipment 

Property 

£000's 

Plant and 
office 
equipment 
£000's 

Motor 
vehicles 

Total 

£000's 

£000's 

Cost 
At 30 June 2018 
Additions 
Disposals 
At 30 June 2019 
Additions 
Disposals 
At 30 June 2020 

Accumulated depreciation 
At 30 June 2018 
Charge for the year 
On disposals 
At 30 June 2019 
Charge for the year 
On disposals 
At 30 June 2020 

Carrying amount 
At 30 June 2020 
At 30 June 2019 

583  
208  
-  
791  
96  
-  
887  

385  
114  
-  
499  
120  
-  
619  

268  
292  

314  
58  
(19) 
353  
23  
(24) 
352  

113  
100  
(7) 
206  
62  
(17) 
251  

101  
147  

1,040  
436  
(19) 
1,457  
121  
(24) 
1,554  

564  
232  
(7) 
789  
208  
(17) 
980  

574  
668  

143  
170  
-  
313  
2  
-  
315  

66  
18  
-  
84  
26  
-  
110  

205  
229  

53 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

14. Right-of-use assets 

Cost 
At 1 July 2019 

Adjusted on adoption of new accounting standards 

At 1 July 2019 (amended) 

Additions 
At 30 June 2020 

Accumulated depreciation 
At  1 July 2019 

Charge for the year 

At 30 June 2020 

Carrying amount 
At 30 June 2020 
At 30 June 2019 

15. Inventories 

Raw materials and consumables 
Work in progress 

  Property 
£000's 

Motor 
vehicles 
£000's 

  Total 
  £000's 

-  

1,282  
1,282  

-  

1,282  

-  
283  
283  

999  
-  

-  

154  
154  

46  
200  

-  
79  
79  

-  

1,436  

1,436  

46  

1,482  

-  
362  

362  

121  
-  

1,120  
-  

2020 
£000's 

2019 
£000's 

742  
22  
764  

761  
64  
825  

54 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

16. Trade and other receivables 

Trade receivables 
Allowance for bad debts 

Net trade receivables 
Other receivables 
Prepayments 

2020 
£000's 

2019 
£000's 

4,160  
-  

4,160  

30  
345  

5,702  
(7) 

5,695  

10  
458  

Total trade and other receivables 

4,535  

6,163  

Owing to the short-term nature of the trade receivables, their fair value is the same as the book value.  A provision 
for impairment of trade receivables is established using an expected loss model.  Expected loss is calculated 
from a provision matrix based on the expected lifetime default rates and estimates of loss on default. 

Provision for impairment of trade receivables 

As at 1 July 
Charge for the period 
Uncollected amounts written off, net of recoveries 

As at 30 June 

2020 
£000’s 

2019 
£000’s 

7  
10  
(17) 

-  

35  
10  
(38) 

7  

In the view of the Board the level of credit risk remains low, due to a wide mix of clients in different trade sectors. 
No significant impairment has arisen because of the Covid-19 crisis.  The maximum exposure to credit risk at the 
reporting date is the carrying value of each class of receivable set out above.  The Directors review debt collection 
at each Board meeting and close attention is paid to collection of debt and credit control.  Although there has been 
some  deterioration  in  cash  collection  this  is  largely  due  to  operational  difficulties  with  our  more  significant 
customers and is not an indication of an increase in credit risk. 

Age profile 

Debts past due but not paid 
Under 60 days 
60-90 days 
Over 90 days 

Debtor days 

55 

2020 
£000's 

2019 
£000's 

455 
206 
233 
894 

44 

407 
342 
37 
786 

55 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

17. Categories of financial asset 

Loans and receivables 

Trade and other receivables 
Cash at bank and in hand 

18. Trade and other payables 

Trade payables 
Other payables 

Other taxes and social security 
Corporation tax liability 
Accruals and contract liabilities 

2020 
£000's 

2019 
£000's 

4,190  
4,076  
8,266  

5,705  
1,729  
7,434  

2020 
£000's 

2019 
£000's 

345  
158  

503  

1,854  
166  
2,459  

603  
103  
706  

1,253  
319  
2,848  

Total trade and other payables, excluding borrowings and lease 
liabilities 

4,982  

5,126  

Interest bearing borrowings and lease liabilities due within 1 year 

Lease liabilities (due in less than 1 year) 
Credit card liabilities 

Lease liabilities due after 1 year 

Lease liabilities (due in 1 to 5 years) 

2020 
£000's 

2019 
£000's 

325  
15  

340  

837  

837  

16  
30  
46  

23  
23  

Lease liabilities are secured against the assets to which they relate. 

Due to the COVID-19 crisis, HMRC has allowed the Group to defer payment of certain VAT and PAYE 
liabilities 

56 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

19. Leases 

As indicated in note 1, the Group has adopted IFRS 16 Leases retrospectively from 1 July 2019 but has not 
restated comparatives for the 2019 reporting period, as permitted under the specific transition provisions in the 
standard.  The reclassifications and the adjustments arising from the new leasing rules are therefore recognised 
in the opening balance sheet on 1 July 2019.  The new accounting policies are disclosed in note 1.  Relevant 
practical expedients have been used in applying IFRS 16 as noted below. 

The Group has lease contracts for property, vehicles and other assets which have lease terms varying between 1 
and 10 years.  The  Group also has certain leases with lease terms  of 12 months  or less and leases  of office 
equipment  with  low  value;  these  leases  have  been  expensed  in  accordance  with  the  practical  expedients 
permitted under IFRS 16. 

Contracts may contain both lease and non- lease components.  The Group allocates consideration between lease 
and  non-lease  components  based  on  the  price  a  lessor,  or  similar  supplier,  would  charge  to  purchase  that 
component separately. 

The lease term begins  at the commencement date and  includes  any  rent-free  periods  provided by  the  lessor. 
Lease terms vary between contracts and depend on the individual facts and circumstances of the contract. 

Lease liabilities are measured at the present value of the remaining lease payments, discounted using the Group's 
incremental borrowing rate as at 1 July 2019.  The Group's incremental borrowing rate is the rate at which a 
similar borrowing could be obtained from an independent creditor under comparable terms and conditions.  The 
weighted average rate applied was 3.5%. The Group has taken advantage of the practical expedient permitted 
under IFRS 16 to apply a single discount rate to a portfolio of leases with similar characteristics. 

A reconciliation of the changes to reported operating lease commitments for 2019 is as follows: 

Operating lease commitments disclosed at 30 June 2019 
New arrangements entered into on 1 July 2019 
Less: Low value leases recognised as an expense 
Discounted using the incremental borrowing rate at 1 July 2019 
Lease liability and right of use assets recognised at 1 July 2019 

Minimum lease payments fall due as follows: 
Gross obligations repayable: 
Within one year 
Between one and five years 
Over five years 

Net obligations repayable: 
Within one year 
Between one and five years 
Over five years 

Amounts recognised in the consolidated statement of comprehensive income: 

Interest on lease liabilities 

Amounts recognised in the consolidated statement of cashflows: 

Payments to reduce lease liabilities 

57 

£000's 
1,359  
245  
(3) 
(165) 
1,436  

360  
598  
335  

325  
525  
312  

49  

408  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

20. Interest rate and liquidity risk 

2020 

Fixed rate 
Trade and other payables 
Lease obligations 
Accruals 
Floating rate 
Credit card liabilities 

Total 

2019 

Weighted 
average 
effective 
interest  
rate 
% 

Less than 
one 
month or 
on 
demand 
£000's 

1-12  
months 
£000's 

1-3 
years 
£000's 

3.50% 

345  
-  
1,265  

158  
325  
1,194  

-  
837  
-  

Total 
£000's 

503  
1,162  
2,459  

2.80% 

-  

15  

-  

15  

1,610  

1,692  

837  

4,139  

Weighted 
average 
effective 
interest  
rate 
% 

Less than 
one 
month or 
on 
demand 
£000's 

1-12  
months 
£000's 

1-3 
years 
£000's 

Total 
£000's 

Fixed rate 
Trade and other payables 
Lease obligations 
Accruals and contract liabilities 
Floating rate 
Credit card liabilities 

11.40% 

2.80% 

603  
-  
-  

-  

103  
16  
2,848  

30  

-  
23  
-  

-  

706  
39  
2,848  

30  

Total 

603  

2,997  

23  

3,623  

21. Contingent liabilities 

There are no contingent liabilities either at the year-end or up to the date of signing the financial statements.  

58 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

21. Deferred tax 

The movement on the deferred tax account is shown below 

At 1 July 

Charged to the statement of comprehensive income 

At 30 June 

The deferred tax provision at 30 June comprises the following temporary 
differences: 

Capital allowances in advance of depreciation 
Arising on fair value adjustments recognised on business combination 
Other short term temporary differences 

2020 
£000's 

2019 
£000's 

160  

(32) 
128  

59  
83  
(14) 
128  

197  

(39) 
158  

55  
109  
(6) 
158  

At 30 June 2020 deferred tax has been provided at a rate of 19% (2019: 17%) 

The Group has tax losses of approximately £1.8m (2019: £1.8m) to carry forward which could not be utilised 
against trading profits.  The potential deferred tax asset arising on these tax losses of £324k (2019: £306k) 
has not been recognised as it is doubtful that it will be utilised in the foreseeable future. 

22. Share capital 

Authorised, allotted, called up and fully paid: 

Ordinary shares of 5 pence each 

Issued and fully paid 

Ordinary shares of 5 pence at the start and end of the year 

2020 
£000's 

2019 
£000's 

794  

794  

Number 
000's 

  Number 
000's 

15,899  

15,899  

59 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

22. Share capital (continued) 

The  Group  operates  the  CSSG  Share  Option  Scheme  2014  (the  Scheme),  which  is  a  share  option  scheme 
approved by HMRC.   

Although there are no current share options in issue, the Board keep the scheme under review, and consider new 
options as a way to motivate, retain and recruit high calibre employees and with regard to the contribution that 
such employees are expected to make in achieving the Group’s objectives. 

Employment Options vest and become exercisable on the third anniversary of date of grant, and lapse on the 
earlier of cessation of employment (or 6 months thereafter if options have vested at cessation date) or the 5th 
anniversary of date of grant. 

At the start and end of the year, the number of options not exercised is as follows: 

Share options in issue at the start of the year 

Lapsed in the year 
Exercised in the year 

Share options in issue at the end of the year 

2020 
Number 

2019 
Number 

-  

-  

-  

2,000  

(2,000) 

-  

The charge to the statement of comprehensive income in the year was £nil (2019: £nil) 

60 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

23. Reserves 

The following describes the nature and purpose of each reserve within equity: 

Reserve 

Share Premium 

Merger Reserve 

Description and purpose 

Amount subscribed for share capital in excess of nominal value less related 
professional and regulatory fees.  

The merger reserve arose on the acquisition of the CSS Group to the extent 
that this was funded by the issue of new shares.  

Retained Earnings 

Cumulative net gains and losses recognised in the statement of 
comprehensive income less amounts distributed to shareholders. 

Capital Redemption 
Reserve 

The capital redemption reserve arose on the purchase and cancellation of 
own shares. 

Ordinary Shares 

Amount subscribed for share capital at nominal value. 

Treasury Shares Reserve 

Arose on the purchase of own shares 

Company  Share  Option 
Scheme  

This represents the change in equity relating to the issue of company share 
options. 

24. Related party transactions 

Identity of related parties 

The Parent Company has a controlling related party relationship with its subsidiary companies.  The Group has 
a  related  party  relationship  with  its  Directors,  executive  officers,  pension  funds  and  trusts,  who  with  their 
immediate relatives control 33% of the voting shares. 

Rental of Premises 
R M Fiorentino and his family are beneficiaries of the County Access Systems Limited Retirement Benefits 
Scheme from which the Group leases trading and ex-trading premises.  The total rental on these premises was 
£117k (2019: £117k) and in respect of these leases, £484k (2019: £nil) is included in lease liabilities at 30 June 
2020. 

Salaries paid to close family members 
During the  year  salaries totalling  £70k (2019:  £78k)  were  paid  to  close  family members  of  key  management 
personnel. 

61 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 30 JUNE 2020 

25. Notes supporting the cash flow statement 

Net changes in working capital 

Decrease/(increase) in inventories 
Decrease/(increase) in trade and other receivables 
Increase/(decrease) in trade and other payables 

26. Cash and cash equivalents 

2020 
£000's 

2019 
£000's 

61    

1,628  

9    

1,698  

2020 
£000's 

(67) 
(49) 
(857) 
(973) 

2019 
£000's 

Cash at bank and in hand 

4,076  

1,729  

27. Reconciliation of liabilities arising from financing activities 

Invoice 
discounting 
and credit 
card 
liabilities 
£000's 

Lease 
liabilities 
£000's 

47  

34  
(42) 

39  

1,436  

1,475  

46  
(359) 

1,162  

31  

-  
(1) 

30  

-  
30  

-  
(15) 

15  

Total 
£000's 

78  

34  
(43) 

69  
1,436  

1,505  

46  
(374) 

1,177  

At 1 July 2018 

New lease liabilities 
Cash flows 

At 30 June 2019 

Application of IFRS16 

At 1 July 2019 (amended) 

New lease liabilities 
Cash flows 

At 30 June 2020 

28. Subsidiary audit exemption 

The wholly-owned subsidiaries of Croma Security Solutions Group Plc: Vigilant Security (Scotland) Limited, 
CSS Total Security Limited, CSS Locksmiths Limited, Croma Locksmiths and Security Solutions Limited and 
Basingstoke Locksmiths Limited are exempt from the requirements of Companies Act 2006 relating to the 
audit of individual accounts by virtue of section 479A. 

62 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF CROMA SECURITY 
SOLUTIONS GROUP PLC 
FOR THE YEAR ENDED 30 JUNE 2020 

Opinion 
We  have  audited  the  financial  statements  of  Croma  Security  Solutions  plc  (the  ‘parent 
company’) for the year ended 30 June 2020 which comprise the statement of financial position, 
the statement of cash flows, the statement of changes in equity and the parent company notes 
to  the  financial  statements,  including  a  summary  of  significant  accounting  policies.  The 
financial reporting framework that has been applied in their preparation is applicable law and 
United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard 
applicable in the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting 
Practice). 

In our opinion, the parent company financial statements: 

  give a true and fair view of the state of the parent company’s affairs as at 30 June 2020;   
  have  been  properly prepared  in  accordance with United  Kingdom Generally  Accepted 

Accounting Practice; and 

  have been prepared in accordance with the requirements of the Companies Act 2006. 

Basis for opinion 
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs 
(UK)) and applicable law.  Our responsibilities under those standards are further described in 
the Auditor’s responsibilities for the audit of the parent company financial statements 
section of our report.  We are independent of the parent company in accordance with the 
ethical requirements that are relevant to our audit of the parent company financial 
statements in the UK, including the FRC’s Ethical Standard as applied to SME listed entities, 
and we have fulfilled our other ethical responsibilities in accordance with these 
requirements.  We believe that the audit evidence we have obtained is sufficient and 
appropriate to provide a basis for our opinion.  

Conclusions relating to going concern 
We have nothing to report in respect of the following matters in relation to which the ISAs 
(UK) require us to report to you where: 

  the  directors’  use  of  the  going  concern  basis  of  accounting  in  the  preparation  of  the 

parent company financial statements is not appropriate; or 

  the  directors  have  not  disclosed  in  the  parent  company  financial  statements  any 
identified  material  uncertainties  that  may  cast  significant  doubt  about  the  parent 
company’s ability to continue to adopt the going concern basis of accounting for a period 
of at least twelve months from the date when the parent company financial statements 
are authorised for issue. 

Other information 
The other information comprises the information included in the Report and Financial 
Statements other than the group and parent company financial statements and our auditor’s 
reports thereon.  The directors are responsible for the other information.  Our opinion on the 
parent company financial statements does not cover the other information and, except to 
the extent otherwise explicitly stated in our report, we do not express any form of assurance 
conclusion thereon.   

In connection with our audit of the parent company financial statements, our responsibility 
is to read the other information and, in doing so, consider whether the other information is 
materially inconsistent with the parent company financial statements or our knowledge 
obtained in the audit or otherwise appears to be materially misstated.  If we identify such 
material inconsistencies or apparent material misstatements, we are required to determine 

63 

 
 
 
 
 
 
 
 
 
 
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF CROMA SECURITY 
SOLUTIONS GROUP PLC 
FOR THE YEAR ENDED 30 JUNE 2020 

whether there is a material misstatement in the parent company financial statements or a 
material misstatement of the other information.  If, based on the work we have performed, 
we conclude that there is a material misstatement of this other information, we are required 
to report that fact.  

We have nothing to report in this regard.  

Opinion on other matters prescribed by the Companies Act 2006 
In our opinion, based on the work undertaken in the course of the audit: 

 

 

the information given in the strategic report and the directors’ report for the 
financial year for which the parent company financial statements are prepared is 
consistent with the parent company financial statements; and 
the strategic report and the directors’ report have been prepared in accordance with 
applicable legal requirements. 

Matters on which we are required to report by exception 
In the light of the knowledge and understanding of the group and the parent company and 
their environment obtained in the course of the audit, we have not identified material 
misstatements in the strategic report or the directors’ report. 

We have nothing to report in respect of the following matters where the Companies Act 2006 
requires us to report to you if, in our opinion: 

  adequate  accounting  records  have  not  been  kept  by  the  parent  company,  or  returns 

adequate for our audit have not been received from branches not visited by us; or 

  the  parent  company  financial  statements  are  not  in  agreement  with  the  accounting 

records and returns; or 

  certain disclosures of directors’ remuneration specified by law are not made; or 
  we have not received all the information and explanations we require for our audit. 

Responsibilities of directors 
As explained more fully in the directors’ responsibilities statement set out on 27, the directors 
are responsible for the preparation of the parent company financial statements and for being 
satisfied  that  they  give  a  true  and  fair  view,  and  for  such  internal control  as  the  directors 
determine is necessary to enable the preparation of parent company financial statements that 
are free from material misstatement, whether due to fraud or error. 

In preparing the parent company financial statements, the directors are responsible for 
assessing the group’s and the parent company’s ability to continue as a going concern, 
disclosing, as applicable, matters related to going concern and using the going concern basis 
of accounting unless the directors either intend to liquidate the group or the parent company 
or to cease operations, or have no realistic alternative but to do so.  

Auditor’s responsibilities for the audit of the parent company financial statements 
Our objectives are to obtain reasonable assurance about whether the parent company 
financial statements as a whole are free from material misstatement, whether due to fraud 
or error, and to issue an auditor’s report that includes our opinion.  Reasonable assurance is 
a high level of assurance, but is not a guarantee that an audit conducted in accordance with 
ISAs (UK) will always detect a material misstatement when it exists.  Misstatements can arise 
from fraud or error and are considered material if, individually or in the aggregate, they 
could reasonably be expected to influence the economic decisions of users taken on the basis 
of these parent company financial statements.  

A further description of our responsibilities for the audit of the parent company financial 
statements is located on the Financial Reporting Council’s website at: 
www.frc.org.uk/auditorsresponsibilities.  This description forms part of our auditor’s report. 

64 

 
 
 
 
 
 
 
 
 
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF CROMA SECURITY 
SOLUTIONS GROUP PLC 
FOR THE YEAR ENDED 30 JUNE 2020 

Other matter  
We have reported separately on the group financial statements of Croma Security Solutions 
Group Plc for the year ended 30 June 2020. This separate auditor’s report on the group 
financial statements includes other audit planning and scoping matters that relate to the 
parent company audit. The recoverability of investment in subsidiaries was considered to be 
a key audit matter in relation to the parent company and has been reported on in the 
separate auditor’s report on the group financial statements. 

Use of our report  
This report is made solely to the parent company’s members, as a body, in accordance with 
Chapter 3 of Part 16 of the Companies Act 2006.  Our audit work has been undertaken so that 
we might state to the parent company’s members those matters we are required to state to 
them in an auditor’s report and for no other purpose.  To the fullest extent permitted by law, 
we do not accept or assume responsibility to anyone other than the parent company and the 
parent company’s members as a body, for our audit work, for this report, or for the opinions 
we have formed. 

Nexia Smith & Williamson

Nexia Smith & Williamson (Oct 20, 2020 16:17 GMT+1)

Julie Mutton 
Senior Statutory Auditor, for and on behalf of 
Nexia Smith & Williamson 
Statutory Auditor 
Chartered Accountants 

Cumberland House  
15 – 17 Cumberland Place  
Southampton  
Hampshire  
SO15 2BG 

Date:  

65 

20/10/2020 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATEMENT OF FINANCIAL POSITION   
FOR THE YEAR ENDED 30 JUNE 2020 

Assets 
Fixed assets 
Investments 

Current assets 
Debtors 
Cash and bank and in hand 

Current liabilities 
Creditors: Amounts falling due within one year 

Net current assets 

Total assets less current liabilities 

Notes 

2020 
£000's 

2019 
£000's 

E 

F 

8,498  
8,498  

1,544  
76  
1,620  

8,935  
8,935  

1,484  
47  
1,531  

G 

(413) 

(631) 

1,207  

900  

9,705  

9,835  

Issued capital and reserves attributable to owners of the parent  
Share capital 
Capital redemption reserve 
Treasury shares 
Share premium 
Merger reserve 
Profit and loss account 

H 

C 

794  
51  
(399) 
6,133  
2,139  
987  

794  
51  
(399) 
6,133  
2,139  
1,117  

Total equity 

9,705  

9,835  

The company profit for year totalled £34k (2019:£911k) 

These financial statements were approved and authorised for issue by the Board of Directors on 16 
October 2020 and signed on their behalf by 

Sebastian Morley (Oct 20, 2020 15:38 GMT+1)

S J F Morley 
Director 
Croma Security Solutions Group plc - Company Number: 03184978 

66 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
STATEMENT OF CASH FLOWS 
FOR THE YEAR ENDED 30 JUNE 2020 

Cash flows from operating activities 

Profit before taxation 
Net changes in working capital 
Impairment losses 
Net cash generated from operations 

Cash flows from financing activities 
Dividends paid 
Net cash used in financing activities 

Net increase in cash 
Cash and cash equivalents at beginning of period 
Cash and cash equivalents at end of the period 

Notes 

J 

2020 
£000's 

34  
(278) 
437  
192  

(164) 
(164) 

28  
47  
75  

2019 
£000's 

911  
(633) 
-  
278  

(253) 
(253) 

25  
22  
47  

67 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATEMENT OF CHANGES IN EQUITY 

FOR THE YEAR ENDED 30 JUNE 2020 

Share 
Capital 
£000s 

Capital 
Redemption 
Reserve 
£000s 

Treasury 
Shares 
£000s 

Share 
Premium 
£000s 

Merger 
Reserve 
£000s 

Retained 
Earnings 
£000s 

Total 
Equity 
£000s 

At 1 July 2018 

Profit for the year 
Dividends paid 
At 30 June 2019 

Profit for the year 
Dividends paid 
At 30 June 2020 

794  

-  
-  
794  

-  
-  
794  

51  

-  
-  
51  

-  
-  
51  

(399) 

6,133  

2,139  

459  

9,177  

-  
-  
(399) 

-  
-  
(399) 

-  
-  
6,133  

-  
-  
6,133  

-  
-  
2,139  

-  
-  
2,139  

911  
(253) 
1,117  

34  
(164) 
987  

911  
(253) 
9,835  

34  
(164) 
9,705  

The following notes form part of the primary financial statements 

68 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS 
FOR THE YEAR ENDED 30 JUNE 2020 

A. Significant accounting policies 

Croma Security Solutions Group Plc is a public limited company incorporated and domiciled in England 
and Wales and in AIM listed. 

The address of the registered office is Unit 7&8 Fulcrum 4, Solent Way, Whiteley, Fareham, Hampshire 
PO15 7FT 

Basis of accounting 
The  separate  financial  statements  of  the  Company  have  been  prepared  under  the  historical  cost 
convention and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard 
applicable in the United Kingdom and the Republic of Ireland and the Companies Act 2006. 

The  principal  accounting  policies  are  summarised  below.    They  have  all  been  applied  consistently 
throughout the year and the preceding year. 

Going Concern  
These financial statements have been drawn up on the going concern basis.   

The Company made an operating loss for the year of £767k (2019: £389k).  Dividends of £0.8m were 
received from its subsidiary undertakings (2019: £1.3m). 

The Company's activities are funded by long term equity capital and by profits and cash generated from 
the activity of a holding company. 

The financial statements do not reflect the adjustments that would be necessary were the performance 
of the Company to deteriorate and the Group’s funding from invoice discounting to become unavailable. 
However, the Directors have considered expected cash requirements of the Company until 31 October 
2021 and these projections suggest that the Company will meet its obligations as they fall due at least 
until this date. 

Investments 
Fixed asset investments in subsidiaries are shown at cost less provision for impairment. 

Financial instruments 
Financial assets and financial liabilities are recognised on the Company's statement of financial position 
when the Company becomes a party to the contractual provision of the instrument. 

69 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS (continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

A. Significant accounting policies (continued) 

Financial liabilities and equity 
Financial  liabilities  and  equity  instruments  are  classified  according  to  the  substance  of  the  contractual 
arrangements entered into.  An equity instrument is any contract that evidences a residual interest in the assets 
after deducting all of its financial liabilities. 

Where  the  contractual  obligations  of  the  financial  instruments  (including  share  capital)  are  equivalent  to  a 
similar debt instrument they are classified as financial liabilities.  Financial liabilities are presented as such in 
the statement of financial position.  Finance costs and gains or losses relating to financial liabilities are included 
in the statement of comprehensive income. Finance costs are calculated so as to produce a constant rate of return 
on the outstanding liability. 

Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability 
then this is classed as an equity instrument.  Dividends and distributions relating to equity are debited direct to 
equity. 

Taxes 

Deferred  tax  is  recognised  in  respect  of  all  timing  differences  that  have  originated  but  not  reversed  at  the 
statement of financial position date.  Timing differences are differences between the Company's taxable profits 
and  its  results  as  stated  in  the  financial  statements  that  arise  from  the  inclusion  of  gains  and  losses  in  tax 
assessments in periods different from those in which they are recognised in the financial statements. 

A  net  deferred  tax  asset  is  regarded  as recoverable  and  therefore  recognised  only  when,  on  the  basis of all 
available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from 
which the future reversal of timing differences can be deducted. 

Deferred tax is measured on a non-discounted basis at the average tax rates that are expected to apply in the 
periods in which the timing differences are expected to reverse. 

Equity instruments 

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. 

70 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS (continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

B. Judgements in applying accounting policies and key sources of estimation uncertainty  

Estimates and judgements  are  evaluated  and  are based  on  historical  experience  and  other factors,  including 
expectations  of  future  events  that  are  believed  to  be  reasonable  under  the  circumstances.  The  resulting 
accounting estimates and assumptions will, by definition, seldom equal the related actual results. The estimates 
and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets 
and liabilities within the next financial year are discussed below. 

Estimates and assumptions:  
Impairment of investments in subsidiaries. The directors have considered if there are any areas of impairment 
and  concluded  that  under  current  market  conditions,  and  in  particular  the  unknown  future  impacts  of  the 
COVID-19  crisis  on  cashflow  projections  that  there  are  indicators  of  impairment.  Determining  whether 
investments in subsidiaries is impaired requires an estimation of the value in use of the cash generating units to 
which the investment relates. The value in use calculation requires the entity to estimate the future cashflows 
expected to arise from the cash generating unit. In order to derive the present value, the discount rate that has 
been calculated is 12.7%. 

An impairment of £437k against fixed assets investments has been recorded and at the year end the carrying 
value of investments totalled £8,498k (2019:£8,935k). 

The directors do not consider there to be any key areas of judgement. 

C. Profit attributable to ordinary shareholders 
The  Company  has  taken  advantage  of  the  exemption  under  Section  408  of  the  Companies  Act  2006  from 
presenting its own profit and loss account.  The profit dealt within the financial statements of the Company was 
£33k (2019: £911k). 

D. Staff costs 

The average monthly number of persons (including Directors) 
employed by the company during the period was: 

Management and administration 

Staff cost (for the above persons): 

Wages and salaries 
Pension 
Social security costs 

71 

2020 
No. 

2019 
No. 

6 

6 

£000's 

£000's 

521  
18  
72  
611  

540  
15  
93  
648  

 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS (continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

E. Fixed asset investments 

Cost 
At 1 July 2019 and 30 June 2020 

Impairment 
At 1 July 2019 

Arising in the year 

At 30 June 2020 

Net book value 
At 30 June 2020 
At 30 June 2019 

Shares in 
subsidiary 
undertakings 

£000's 

9,059  

124  

437  

561  

8,498  
8,935  

The principal fixed asset investments are as follows: 

Company 

  % Ordinary shareholding 

Vigilant Security (Scotland) Limited 
CSS Total Security Limited 
Croma Locksmiths & Security 
Solutions Limited 

  100% directly 
  100% directly 

  100% directly 

Basingstoke Locksmiths Limited 
CSS Locksmiths Limited 
Centre Security Limited 
Access Key and Lock Limited 

  100% indirectly 
  55% directly 45% indirectly 
  100% indirectly 
  100% indirectly 

  Nature of business 
Asset protection and 
guarding 

  CCTV and security systems 
Locksmithing, Keys and 
Safes 
Locksmithing, Keys and 
Safes 
  Dormant 
  Dormant 
  Dormant 

The  registered  office  of  CSS  Total  Security  Limited,  CSS  Locksmiths  Limited,  Croma  Locksmiths  & 
Security Solutions Limited and Centre Security & Access key and Lock Limited is Units 7 & 8 Fulcrum 4, 
Fareham, Whiteley PO15 7FT 

The registered office of Vigilant Security (Scotland) Limited is 1st Floor Left, 161 Brooms Road, Dumfries, 
Scotland, DG1 2SH 

72 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS (continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

F. Debtors 

Amounts due from subsidiary undertakings, repayable on demand 
Prepayments 

G. Creditors: Amounts falling due within 1 year 

Amounts due to subsidiary undertakings, repayable on demand 
Trade creditors 
Other creditors 
Other taxes and social security 

H. Share capital 

Authorised, allotted, called up and fully paid: 

Ordinary shares of 5 pence each 

Issued and fully paid 

2020 
£000's 

1,531  
13  
1,544  

2020 
£000's 

259  
20  
22  
112  
413  

2019 
£000's 

1,456  
28  
1,484  

2019 
£000's 

521  
23  
51  
36  
631  

2020 
£000's 

2019 
£000's 

794  

794  

2020 
  Number 
000's 

2019 
Number 
000's 

Ordinary shares of 5 pence at the start and end of the year 

15,899  

15,899  

Rights attaching to shares 
The holders of the ordinary shares of 5 pence each are entitled to receive dividends and a return of capital on 
liquidation as well as attend and vote at a general meeting of the Company. 

Share option scheme 
In 2014 the Group instigated an Approved Company Share Option Scheme. Details are in Note 22 of the 
consolidated accounts. 

73 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS (continued) 
FOR THE YEAR ENDED 30 JUNE 2020 

I. Related party transactions 

Identity of related parties 
The Parent Company has a controlling related party relationship with its subsidiary companies.  The Group 
has a related party relationship with its Directors, executive officers, pension funds and trusts, who with their 
immediate relatives’ control 33% of the voting shares. 

Full details of compensation to Key Management Personnel of the parent company is included in note 7 to the 
financial statements of the Group. 

J. Notes supporting the cash flow statement 

Net changes in working capital 

(Increase)/decrease in trade and other receivables 
(Decrease)/Increase in trade and other payables 

2020 
£000's 

2019 
£000's 

(60) 
(218) 
(278) 

(829) 
196  
(633) 

74