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Croma Sec. Sol. Grp CSSG Preliminary Results

  Croma Sec. Sol. Grp (CSSG) - Preliminary Results

RNS Number : 2934Q
Croma Security Solutions Group PLC
05 November 2012




                                                                             



                      Croma Security Solutions Group plc

                                 (LON: CSSG)

                                      

                             PRELIMINARY RESULTS

                       FOR THE YEAR TO30^THJUNE 2012



Croma Security Solutions  Group plc ("CSSG"  or the "Group"),  the AIM  listed 
total security services provider, announces its unaudited preliminary  results 
for the year to 30 June 2012. The results reflect a full year's  contribution 
from the  historical Croma  business ("Croma"),  together with  three  months' 
contribution from the  CSS Companies  (being CSS Total  Security Limited,  CSS 
Locksmiths Limited and Alarm Bell Company Limited, together "CSS") which  were 
acquired on  27 March  2012 transforming  the Group  into a  fully  integrated 
security services specialist.



FINANCIAL HIGHLIGHTS



· Revenue growth to £9.90 million, an increase of 17.0%

· Growth in gross profit to £1.76 million, an increase of 8.9%

· Adjusted EBITDA of £0.09 million

· Balance sheet strengthened with net assets of £8.4 million

· Net asset value per share of 57.9 pence

· Successful placing of new ordinary shares raising £5 million less costs



OPERATIONAL HIGHLIGHTS



· Transformational acquisition creates a fully integrated security
services specialist operating across four key divisions

· The Group enjoyed a fourth year of sales growth

· Contracts secured with Odeon, Colas, the NHS and London 2012 Olympics

· Board strengthened through key appointments



Commenting on today's news, Sebastian Morley, Chairman of CSSG, said:



"The financial year to 30 June 2012  was transformational for the Group as  it 
grew by acquisition from  a manned guarding business  into a fully  integrated 
security services specialist. The process  of of acquiring the CSS  Companies 
took almost a year and entailed  the complexity of a re-admission process  and 
equity fundraising.  Whilst  the  Croma and  CSS  businesses  both  performed 
creditably through  this period  of change  and management  distraction, I  am 
confident that  we will  see the  full  benefit of  the combination  of  these 
businesses in the current financial year and beyond.



The Board continues to view future prospects with confidence. Moving into the
second half of 2012 and beyond, our main focus is on the continued integration
of the Group  in support of  further organic growth  across the Group.  Going 
forward we will look to develop further new business from high-end  corporates 
that are seeking a one-stop-shop of  security services under one single  roof, 
ensuring both cost and time efficiencies.



The Group has a number of key opportunities in its new business pipeline, both
with current and new prospects,  in the UK and  overseas, and the Board  looks 
forward to updating on these developments in due course."





For further information visit www.cssgroupplc.com or contact:



Croma Security Solutions Group plc

Sebastian Morley,
Chairman
 Tel: +44 (0)7768 006 909



WH Ireland Limited

Adrian Hadden / Nick
Field
Tel: +44 (0)207 220 1666



Yellow Jersey PR Limited

Dominic
Barretto
Tel: +44 (0)7768 537 739





CHAIRMAN'S STATEMENT

In my first  Chairman's Statement  since my  appointment, I  have pleasure  in 
reporting to shareholders the  Group's Final Results for  the year to 30  June 
2012, a transformational period in CSSG's history .



The focus of  the business remains  that of maintaining  growth and  unlocking 
shareholder value by accessing significant opportunities that exist within the
markets in which we operate. Roberto Fiorentino, who has taken up the role of
CEO, and I believe the newly incorporated CSSG business presents a  compelling 
offer in today's  fragmented market  place, where  customers are  increasingly 
seeking out vertically integrated providers of well-managed and cost-effective
services.



The period under review is skewed in  terms of financials, as it includes  the 
acquisition of the CSS Companies. The acquisition of CSS is  transformational 
for the Group, completing  the stated ambition of  the Board to re-focus  CSSG 
into a  total  security services  provider.  The acquisition  brings  security 
personnel, CCTV, intruder, fire  and access control  systems into an  enlarged 
group targeting the high-end security market. The acquisition was funded by  a 
successful placing of new ordinary shares raising £5 million in March 2012.



2012 has been a key year in the restructuring and development of the Group and
the Board believes that the synergies and cross-selling opportunities  created 
by the acquisition will drive growth and increase shareholder value.



Operational Overview

With the acquisition  of the CSS  Companies the Group  now comprises four  key 
operating divisions:  Croma Vigilant  (guarding and  asset protection);  Croma 
Locksmiths (locks,  safes  and keys);  Croma  Security Systems  (security  and 
fire); and  Croma Biometrics  (identity management  and access  control),  and 
these are discussed individually below.



Croma Vigilant

Croma Vigilant continues to  be the largest sales  revenue contributor to  the 
Group. It comprises manned guarding, key holding and commissionaire services.



Turnover grew 10.9%  to £8.60m  (2011: £7.75m). This  growth resulted  mainly 
from client wins including the  previously announced guarding contract with  a 
major international utilities  business (Balfour  Beatty Utilities),  guarding 
and key-holding  with highly  prestigious residential  communities in  Central 
London and Surrey (Earls Terrace and St George's Hill Residents  Association), 
and the five year contract worth £1.15m  per annum (£0.3m to 30 June 2012)  to 
secure the premises of  a major listed London  property group (Great  Portland 
Estates).  Turnover  also  benefited  from   a  full  year's  turnover   from 
significant contracts with GVA and with Grainger plc.



On the  back of  higher turnover,  gross  profit grew  8.9% to  £1.17m  (2011: 
£1.07m) reflecting a gross margin of 13.6%, which declined slightly from 13.8%
(2011) due to changes in the mix of contracts.



Vigilant operates in the  upper echelon of the  manned guarding market.  This 
market  demands  the  highest  grade  of  security  officer  and   management. 
Vigilant's ex-military offering is an attractive USP to these clients.



Vigilant has experienced a lack of  willingness to deploy a luxury head  count 
of security  officers that  was seen  before the  true bite  of recession  but 
essential and core  contract security  spend has  been maintained.  Insurance 
demands keep the market and client spend steady, in addition, the business has
seen a  demise in  total facilities  management and  a return  to  specialised 
managed soft services.



Vigilant has a contract retention rate  that is maintained through very  close 
client liaison  and this  has proved  enduring.  2012-13 will  be a  year  of 
consolidating the fast  growth of  previous years,  maintaining contracts  and 
controlled growth  with  an  emphasis  on  improved  gross  margin.  Vigilant 
management will  encourage  clients to  spend  smarter, utilising  systems  to 
decrease head count but to increase the CSSG offering.



Croma Security Systems & Croma Locksmiths

Despite the generally strong market for the Vigilant manned guarding business,
the same  cannot be  said of  the the  traditional areas  of Locksmithing  and 
Security Systems which in the past few months have seen a general decline  not 
only in new business  but in maintenance spending,  as customers have  allowed 
contracts to  lapse. We  have  seen local  authorities and  other  government 
sectors not only cutting spending but terminating contracts due to pressure on
budgets. The  domestic  sector is  also  spending  less and  in  many  cases 
avoiding essential works.



This fall in  activity levels  is compounded  by an  increasing proportion  of 
existing clients seeking  discounts or  changes in payment  terms to  continue 
maintenance contracts. Regrettably this  is a sign of  the times where  every 
household and purchasing  officer in the  land is being  pushed to drive  down 
costs, particularly capital expenditure.



Against this  generally challenging  background,  CSS has  begun to  feel  the 
benefits of  the merger  with the  existing  business of  Croma. We  are  now 
engaging with  large  national  clients  for  whom  our  integrated  technical 
capabilities can deliver  significant value. Our  relationships with  clients 
such as GVA are starting now to deliver systems based revenue, and so  despite 
difficult economic conditions over the coming  year we expect to see a  steady 
rise in maintenance spending, remedial works, and further capital  expenditure 
for systems.



The value of our integrated proposition is further reinforced by our  contract 
wins with Odeon Cinemas where our client indicated that they required a single
security services provider with advanced capabilities in all areas. The first
contracts in Dorchester  and Llanelli  will contribute nearly  £100k of  sales 
initially and on-going maintenance arrangements thereafter. As the  preferred 
supplier of security to Odeon Cinema's,  CSSG can expect to see future  orders 
not only for on-going maintenance but  for remedial works, refits and all  new 
builds.



In May, CSS won a contract  with the UK's leading traffic management  company, 
Colas, to  provide  incident reporting,  CCTV  and early  warning  for  impact 
protection vehicles. This £70k initial order may increase significantly  over 
the next two  years, and represents  the first  fruit of our  work to  capture 
market share in the traffic management arena.



The system is designed to alert drivers using advanced video analytics to give
early warning  of  an impending  collision.  It  is likely  that  all  traffic 
management companies will follow  the lead set by  Colas as will the  Highways 
Agency and therefore the CSSG Vehicle Impact Protection System presents a very
unique opportunity for the Group to grow and develop.



Despite these positive developments, it is clear that many clients are holding
back on  capital  expenditure. We  see  it as  essential  that we  are  there 
supporting them with  repairs and  on-going maintenance ready  for times  when 
spending returns to more normal levels.



Croma Biometrics

Fastvein®, the key  development project of  Croma Biometrics has  historically 
been managed by the  CSS team under a  licencing arrangement from Croma.  This 
was the relationship that lead ultimately to the acquisition of CSS by Croma.



Following two years of development effort, in April 2011 the FastVein®  system 
was launched commercially. This is a complete biometric identification  system 
which can  be integrated  with  existing security  systems  or deployed  as  a 
stand-alone solution. FastVein® is quick and easy to access and eliminates the
need for security cards, fobs ortokens. The system uses a sub-dermal scanning
technology to  perform ultra-rapid  identity matching,  with an  ISO  verified 
certainty  of  1,000,000:1,   and  is  recognised   as  a  leading   biometric 
identification system in the security sector market.



The system has been adopted by 18 HM Prisons and Immigration Removal  Centres, 
and its potential was  demonstrated recently during  the London 2012  Olympics 
and Paralympics



Turnover for the  year was £0.15m  (2011: £0.17m) and  although proven with  a 
small number  of  customers,  in  order to  exploit  fully  the  potential  of 
Fastvein®, further product development will be required over the coming  year, 
with the  aim  of both  reducing  the  average unit  cost  significantly,  and 
widening the scope of potential applications for the system.



Financials

The Group's financial performance reflects  the costs incurred and  management 
time diverted to ensure the successful reverse acquisition and integration  of 
the CSS Group. Included in these results  are a full year's trading from  the 
existing  businesses  together  with  three  months'  results  from  the   CSS 
Companies, and  significant  non-recurring  items  arising  from  the  reverse 
acquisition.



Turnover rose to  £9.89m (2011: £8.46m),  growth of 16.9%  or £1.43m.  Organic 
growth delivered sales growth of £0.62m, whilst the CSS Companies  contributed 
£0.81m for  the last  quarter.  Gross profit  grew  £0.14m to  £1.76m  (2011: 
£1.62m), reflecting growth  across the main  operating divisions, tempered  by 
continued pressure  on  margins  particularly  in  guarding  &  commissionaire 
services.



With the inclusion of the CSS Companies  and other cost increases as a  result 
of the higher  turnover base  in Vigilant,  administrative expenses  increased 
£0.56m to  £1.69m  (2011: £1.13m).  Whilst  the  Board is  conscious  of  the 
importance of cost management, at this  stage of the Group's development,  the 
enlargement of the  business and  the investment necessary  to support  growth 
over the  coming years  have inevitably  enlarged our  cost base.  The  Group 
generated  £0.09  million   at  the   EBITDA  level,   after  adjustment   for 
non-recurring items related to the reverse acquisition.



The  operating  profit  for  the  year  after  the  inclusion  of  £0.37m   of 
non-recurring acquisition costs, depreciation and amortisation is an operating
loss of  £0.41m (2011:  Profit £0.32m).  This performance  reflects both  the 
inevitable costs of  a significant  corporate transaction,  and a  challenging 
year for margins.



With benefit of  both lower  average borrowings and  a lower  average cost  of 
debt, finance costs decreased £0.10m  to £0.08m (2011: £0.18m).  Additionally 
there was a non-recurring gain of  £0.12m, being the agreed and final  tranche 
of the earn-out proceeds  of the sale  of RDDS Avionics  Limited in the  prior 
year. These factors resulted in a net loss for the year of £0.30m (2011:  Loss 
£0.63m).



New cash arising from the  placing of shares in  March 2012 allowed the  Group 
both to purchase  the CSS  Companies, repay  a significant  proportion of  the 
borrowings extant at  30 June 2011  and fund the  working capital required  to 
support revenue  growth. Overall  borrowings  therefore decreased  £1.51m  to 
£0.77m, and cash increased  £0.09m to £0.69m. With  significant cash on  hand 
and the invoice  discounting facility  of £2m  in place,  the Group  therefore 
closed the year in  a financially sound  position, with significant  resources 
available to support future growth.



Goodwill of £4.47m and intangible  assets of £1.67m were recognised  following 
the acquisition of the  CSS Companies, and the  total balance of goodwill  and 
intangible assets at the year-end  is therefore £7.5m. The intangible  assets 
represent primarily the customer relationships acquired with CSS and give rise
to an  amortisation charge  of  £0.05m, which  is included  in  administrative 
expenses. Part of  the consideration  of the CSS  Companies was  a share  for 
share exchange  which has  resulted in  the creation  of a  merger reserve  of 
£2.3m.



Team strengthened

During the period, a number of strategic management changes were made.In March
2012 following the acquisition of the CSS Companies, I was appointed Executive
Chairman  and  Roberto  Fiorentino,  one   of  the  UK's  prominent   security 
specialists, was  appointed  CEO. Mr.  Fiorentino  has been  involved  in  the 
security industry for 30 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,  CCTV 
over IP and, most recently, Video Analytics.



The amalgamation of Croma and CSS in March 2012 also prompted the  appointment 
of two new non-executive  directors, Charles McMicking  and Lord James  Percy, 
who together  with  the  outgoing Non-executive  Chairman  Nick  Hewson,  will 
provide three  independent  voices on  the  Board  to carry  out  the  various 
services required for proper governance of a Group of the size and ambition of
CSSG. Their biographies  and those of  all the  Board are set  out within  the 
Report and Accounts.



In June 2012, Richard Juett was appointed Finance Director. Mr Juett, who  is 
a Chartered Accountant and  a member of the  Chartered Institute of  Taxation, 
has served in a number of senior finance and tax roles with Ernst & Young, BDO
Stoy Hayward, B&Q plc and Kia Motors (UK) Limited. His experience of  working 
both in the accountancy  profession and with larger  businesses will bring  to 
the Board the strong reporting and financial controls which will be needed  to 
manage the finances of the enlarged  and growing business going forward.  The 
Board thanks Jay Dunion for his sterling efforts as Finance Director over  the 
preceding year and over the period of the re-admission process.



WH Ireland Limited was also appointed as the Group's new nominated adviser and
broker in June. The Group now stands ready to continue to target a much larger
portion of the security services sector  as the engine for its future  growth, 
and as a fully integrated services provider.



Outlook and Priorities

The security sector  is seeing  a downturn, and  as with  many other  business 
sectors we will see more business failures going forward. To place  ourselves 
to benefit from this industry consolidation, it is essential that we  continue 
to invest our time and resources in the development of our systems business in
order that  we  can grow  to  become  a national  organisation  with  in-house 
capabilities to support our growing list of clients and to continue  targeting 
clients that have a need for our  expertise with, of course, the funds to  pay 
for it.



We have seen high  margin orders and maintenance  slow down significantly  but 
our new clients are generally filling the holes left by the losses. We  expect 
to see turnover continue  to grow although pressure  on margin is unlikely  to 
abate as we continue to  develop and grow the  business. Many clients are  now 
choosing to build long  term relationships with us  as a security supplier  of 
choice, but  at the  same time  they  are scrutinising  our margins  and  ever 
seeking better value for money.



The Board continues,  however, to  view the prospects  for the  Group for  the 
current financial year  with confidence. The  original philosophy and  reasons 
for the integration of CSS into Croma remain on target; they were to create  a 
complete security services  Group which  we now  have. Moving  into 2013  and 
beyond, our main focus will  be on the continued  integration of the Group  in 
support of further  organic growth.  Going forward  we will  seek to  further 
develop new business from high-end corporates that are seeking a one-stop-shop
of security services under  one single roof and  team, ensuring both cost  and 
time efficiencies.



The Group has a number of key opportunities in its new business pipeline, both
with current clients  and new  prospects, in the  UK and  overseas, and  looks 
forward to updating on these developments in due course.



As Chairman, and  on behalf of  the Board  and shareholders, I  would like  to 
formally thank  our staff.  Each  year we  set ourselves  challenging  targets 
across  the   Group,  and   each   year  our   staff  react   positively   and 
enthusiastically to the  challenges set.  This year in  particular, given  the 
reverse acquisition, we are especially proud of their efforts.





Sebastian Morley

Chairman

5 November 2012





Consolidated Statement of Comprehensive Income

for the year ended 30 June 2012 (unaudited)



                                                    30 June 2012  30 June 2011
                                                               £             £
 Revenue                                               9,899,137     8,457,665
 Cost of sales                                       (8,137,965)   (6,840,379)
 Gross profit                                          1,761,172     1,617,286
 Administrative expenses                             (1,685,984)   (1,162,803)
 Other operating income                                   20,400             -
 Earnings before interest, tax, depreciation,             95,588       454,483
 amortisation and acquisition costs
 Depreciation                                           (80,626)     (132,623)
 Amortisation                                           (52,696)             -
 Acquisition costs                                     (370,028)             -
 Operating (loss)/profit                               (407,762)       321,860
 Finance expense costs                                  (77,803)     (179,358)
 (Loss)/profit before tax                                                   
                                                       (485,565)       142,502
 Tax                                                      67,613      (26,031)
 (Loss)/profit for the year from continuing            (417,952)       116,471
 operations
 Profit/(loss) from discontinued operations              115,000     (742,672)
 Loss and total comprehensive loss for the year        (302,952)     (626,201)
 attributable to owners of the parent
 Earnings per share
 Basic earnings per share (pence)
 - (Loss)/earnings from continuing operations             (6.33)          0.06
 - Earnings/(loss) from discontinued operations             1.74        (0.39)
 - Total                                                  (4.59)        (0.33)
 Diluted earnings per share (pence)
 - (Loss)/earnings from continuing operations             (6.33)          0.08
 - Earnings/(loss) from discontinued operations             1.74        (0.39)
 - Total                                                  (4.59)        (0.31)



Consolidated Statement of Financial Position

as at 30 June 2012 (unaudited)



Assets                                   £           £           £           £
Non-current assets                    2012        2012        2011        2011
Goodwill                                     5,866,961               1,396,390
Other Intangible assets                      1,621,304                       -
Property, plant and equipment                  401,910                 182,945
                                             7,890,175               1,579,335
Current assets
Inventories                        179,743                       -
Trade and other receivables      2,706,353               2,231,912
Cash and cash equivalents          692,531                 597,119
                                             3,578,627               2,829,031
Total assets                                11,468,802               4,408,366
Liabilities
Non-current liabilities
Convertible loan notes                   -               (398,371)
Deferred tax                  (443,450)                 (7,223)
Trade and other payables          (32,300)                (26,826)
Provisions                         (9,469)                (23,120)
                                             (485,219)               (455,540)
Current liabilities
Convertible loan notes           (239,704)             (1,000,000)
Trade and other payables         (823,492)               (333,288)
Current income tax liabilities   (688,787)               (385,273)
Accruals and deferred income     (295,820)               (164,001)
Borrowings                       (532,053)               (883,773)
                                           (2,579,856)             (2,766,335)
Total liabilities                          (3,065,075)             (3,221,875)
Net assets                                   8,403,727               1,186,491
Issued capital and reserves
attributable to owners of the
parent
Share capital                                  725,127                 189,338
Share premium                                5,176,644                 247,123
Merger Reserve                               2,139,454                       -
Retained earnings                             (78,605)                 139,627
Undistributable reserves                       422,322                 422,322
Other reserves                                  18,785                 188,081
Total equity                                 8,403,727               1,186,491







Consolidated Statement of Changes in Equity

for the year ended 30 June 2012 (unaudited)



                Share     Share    Merger  Retained Undistributable    Other     Total
              Capital   Premium   Reserve  earnings         Reserve  Reserve    equity
                    £         £         £         £               £        £         £
At 1 July     189,338   247,123         -   765,828         422,322  188,081 1,812,692
2010
Profit and
total
comprehensive       -         -         - (626,201)               -        - (626,201)
income for
the year
Balance at 30 189,338   247,123         -   139,627         422,322  188,081 1,186,491
June 2011
Loss and
total
comprehensive       -         -         - (302,952)               -        - (302,952)
income for
the year
Equity
element of          -         -         -    84,720               - (84,720)         -
redeemed Loan
Notes
Equity
element of          -    84,576         -         -               - (84,576)         -
converted
Loan Notes
Issue of      535,789 4,844,945 2,139,454         -               -        - 7,520,188
share capital
Balance at 30 725,127 5,176,644 2,139,454  (78,605)         422,322   18,785 8,403,727
June 2012











Consolidated Statement of Cashflows

for the year ended 30 June 2012 (unaudited)



                                         Year to 30 June 2012  Year to 30 June
                                                                          2011
                                                            £                £
 Cashflows from operating activities
 (Loss)/profit before taxation                      (485,565)          142,502
 Adjustments                                          204,129          294,835
 Net changes in working capital                     (444,545)        (620,731)
 Taxes paid                                          (29,119)         (23,209)
 Net cash used continuing operations                (755,100)        (206,603)
 Net cash used in discontinued
 operations                                                 -         (83,001)
 Net cash used in operating activities              (755,100)        (289,604)
 Investing activities
 Acquisition of subsidiaries net of
 cash                                             (2,758,248)                -
 Purchase of property, plant and
 equipment                                           (77,894)        (115,284)
 Proceeds on disposal of property,
 plant and equipment                                  (1,328)           15,953
 Cash proceeds from disposal of
 subsidiary net of cash disposed                      207,903          677,409
 Net cash (used)/generated in investing           (2,629,567)          578,078
 activities
 Cash flows from financing activities
 New HP loans net of repayments                        10,097          (4,123)
 Net repayment of invoice discounting
 facility                                           (272,752)          227,587
 Repayment of borrowings                            (600,000)                -
 Issue of share capital net of costs                4,483,353                -
 Interest paid                                       (61,651)        (125,911)
 Net cash from financing activities                 3,559,047           97,553
 Net increase in cash and cash
 equivalents                                          174,380          386,027
 Cash and cash equivalents at beginning
 of year                                              511,344          125,317
 Cash and cash equivalents at end of                  685,724          511,344
 year









Key Notes to the Accounts



Note 1 - Basis of preparation

While the financial information included in this preliminary announcement  has 
been computed in accordance  with International Financial Reporting  Standards 
("IFRSs"), this announcement does not itself contain sufficient information to
comply with  IFRSs.  The  company  expects  to  publish  its  full  financial 
statements in November 2012.



The financial information set out in  this announcement is unaudited and  does 
not constitute the company's statutory financial statements for the year ended
30 June 2012 for the purposes of  section 435 of the Companies Act 2006.  The 
financial information for  the year  ended 30 June  2011 is  derived from  the 
statutory financial statements for that year  which has been delivered to  the 
Registrar of  Companies. The  statutory financial  statements for  the  year 
ended 30 June 2012 will be finalised on the basis of the financial information
presented by  the  directors in  this  preliminary announcement  and  will  be 
delivered to the Registrar of Companies following the company's Annual General
Meeting.



Note 2 - Going concern

The Group's  activities  are funded  by  a  combination of  long  term  equity 
capital, and short  term invoice discounting  and bank overdraft  facilities. 
The day  to day  operations are  funded  by cash  generated from  trading  and 
primarily invoice discounting facilities.



In considering the ability of the Group  to meet its obligations as they  fall 
due, the directors have considered the expected trading and cash  requirements 
of the group  and the potential  cash outflows associated  with the  remaining 
convertible loan notes which are repayable between December 2012 and  February 
2013 and the contingent consideration.



The Board remains positive about the retention and outlook of its main trading
operations. The Board's  profit and  cash flow projections  suggest that  the 
Group will meet  its obligations as  they fall  due with the  use of  existing 
uncommitted invoice discounting facilities, including repaying the convertible
loan notes of  £245k and any  contingent consideration which  falls due.  The 
invoice discounting  and  overdraft  facilities  fall due  for  review  on  30 
September 2013.  The  Board believes  these  will  be renewed,  and  also  in 
mitigation, they  believe  that they  could  defer  payment of  £200K  of  the 
convertible loan notes, if this was so required.



The financial  statements  do  not  reflect  the  adjustments  that  would  be 
necessary were the trading performance of the Group to deteriorate and in  the 
unlikely event that  the funding  available from invoice  discounting and  the 
overdraft was  not available.  The financial  statements do  not include  the 
adjustments that would result if the Group  was unable to continue as a  going 
concern.



                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


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