Croma Security Invests for Future Growth Amid Interim Profit Decline

Croma Security’s H1: Revenue Up, Profit Down, Strategy Reset

Croma Security Solutions has posted a tidy 9% rise in half-year revenue to £5.0 million, but with deliberately higher investment, profits stepped back. Management is clear this was planned: consolidate the estate, reset digital marketing, hire ahead of the growth curve, and ready the platform for more deals. The company remains debt free, cash rich, and says it is on track to meet full-year targets.

If you like simple stories: short-term margin squeeze for longer-term scale. Below are the moving parts and what they might mean for shareholders.

Half-Year Financial Highlights and Key Numbers

Metric	H1 FY26 (to 31 Dec 2025)	H1 FY25 (to 31 Dec 2024)
Revenue	£5.0 million	£4.6 million
EBITDA (earnings before interest, tax, depreciation and amortisation)	£0.436 million	£0.572 million
Operating profit	£0.168 million	£0.333 million
Profit before tax	£0.252 million	£0.456 million
Basic EPS (earnings per share)	1.35p	2.25p
Cash	£4.4 million	£4.2 million
Net debt	None	None
NAV per share (net asset value)	113p	111p

Cash from operations was a modest outflow of £38,000 (vs inflow of £222,000). That is not alarming in isolation, but worth watching if it repeated.

What Drove the Numbers: Investment First, Profits Later

Management leaned into investment. The company hired across Operations, HR, Engineering and Head Office to support a faster acquisition cadence. It also reorganised parts of the business and took the opportunity to merge two security centres in Peterborough and two in Southampton, plus refurbish stores including a sizeable upgrade in Portsmouth.

Two other factors weighed on short-term performance:

• Customer hesitation ahead of the 2025 Autumn Budget, which slowed ordering in some sectors.
• A deliberate reset of Google Ads and a complete reindexing of the online catalogue, which temporarily reduced web sales. The upside: early signs of better profitability per online order.

On the positive side, prior-year acquisitions in Peterborough and Leeds contributed to the 9% revenue growth. The core divisions – fire and security, and locksmith – were described as resilient, with education, utilities, healthcare and leisure remaining the main end-markets.

Balance Sheet Strength: Cash, No Debt, and More to Come

Debt free with £4.4 million cash at period end is the standout comfort. There is also £0.85 million still due by June 2026 from the 2023 sale of the Vigilant manned guarding business. Net asset value per share nudged up to 113p, helped by the robust equity base and retained earnings.

Dividend-wise, there is no interim. The Board intends to declare a single final progressive dividend with the FY26 results. In plain English: they are keeping flexibility for growth now, but still signalling an intent to reward holders at year-end.

Strategy Check: Building a National Security Network

Croma’s playbook is consistent: buy modestly valued, independent locksmiths, convert them into modern, full-service security centres, and plug them into Croma’s software, central purchasing and shared services. The network now stands at 17 locations, with a target of adding three to five centres each financial year.

Fresh deal in H2: TLS Security Systems

• Completed 2 January 2026 for £0.47 million plus £0.20 million for the freehold retail site.
• Delivered £0.94 million revenue and £0.11 million EBITDA in the 12 months to 31 March 2025.
• Strong positioning in healthcare, creating scope to cross-sell wider Group services.

Owning freeholds matters in this strategy. Croma had a 25-year lease unexpectedly terminated in Southampton, underlining why freehold control can reduce risk, offer cost stability, and provide financing optionality if needed.

Product Mix Tailwind: Fire and Security Doors

Management calls out rising demand for premium doors and shutters – motor-operated hinged doors, sliding doors, roller shutters and fire curtains. These carry attractive margins and are benefiting from orders in leisure and healthcare.

There is also a potential regulatory tailwind: the Terrorism (Protection of Premises) Act 2025 (often called Martyn’s Law or Protect Duty). This will require publicly accessible sites – schools, hospitals, theatres, shopping centres – to adopt appropriate security without compromising fire safety. Croma’s edge is the ability to integrate compliant mechanical door hardware with electronic security systems – not every competitor can do both.

Operational Changes: Stores, Digital Reset, and Governance

• Security centre consolidation in Peterborough and Southampton, with refurbished sites expected to trade better post-combination.
• Portsmouth refurbishment caused a short-term sales dip during closure, but management expects a rebound above prior levels.
• Google Ads and e-commerce overhaul: centralised, reindexed product range, new online platform. Short-term pain, but early margin improvement.
• Board strengthening with John Wakefield as Non-Executive Chair and Andy Wonnacott as Non-Executive Director.

Outlook: On Track, With A Busy H2 Lined Up

Trading since the half-year has been positive, backed by a healthy new business pipeline. With TLS closed just after period end, more acquisitions targeted for H2 2026, and improved customer sentiment post-Budget, the Board expects to meet full-year targets.

My take on the risk-reward

• Positives: clear M&A playbook, debt-free balance sheet, cash in hand plus £0.85 million due, growing presence in higher-margin doors, and a regulatory catalyst that suits Croma’s capabilities.
• Watch-outs: integration execution as the network scales, the speed of online sales rebuild after the Google reset, and ensuring cash conversion normalises after the small H1 outflow.

What Matters Next for Investors

• Acquisition cadence: does Croma land another two to four centres this year to stay within its 3–5 target range?
• Online channel recovery: evidence that the replatforming is lifting both sales and margin.
• Doors growth: order intake and delivery schedules, particularly in healthcare and leisure.
• Cash and dividend: maintaining a strong cash position while confirming the planned final progressive dividend with FY26 results.

In short, Croma is doing the unglamorous but necessary work: investing, consolidating, and standardising. That depresses near-term profit, but if the H2 pipeline converts and the digital reset pays off, the model should show better operating leverage into FY26’s second half and beyond.