LONDON (Alliance News) - CEPS PLC Monday said its pretax profit declined fractionally in the first half of 2015 and said it will use the excess funds raised in June to make "bolt-on" acquisitions in the second half of the year.
The investment company reported a GBP295,000 pretax profit in the first six months of 2015, slightly lower than the GBP312,000 profit reported a year earlier, despite revenue rising to GBP9.2 million from GBP8.8 million.
Gross profit rose to GBP1.2 million from GBP1.1 million, and operating profit increasing to GBP419,000 from GBP361,000. However, finance costs grew to GBP140,000 from GBP82,000.
Importantly, the company reduced its net debt to stand at GBP2.5 million at the end of June from GBP3.9 million at the end of December, meaning its gearing level ratcheted down to 45% from 97%.
CEPS has an interest in five companies. Trophy and award manufacturer Aford Awards performed in line with expectations in the half. CEPS said the sector is made up of many small companies which offer consolidation opportunities.
Fabric, wallpaper and carpet sample book manufacturer CEM Press had a "subdued" first half as it is battling a more competitive market compared to three years ago, it said. CEPS said this investment will "take a little while" to start benefiting its results but is "undoubtedly moving steadily in the right direction".
Davies Odell, a manufacturer of body armour, matting products and footwear repair products, is currently going through a "change process" to concentrate on the areas of its business which have long-term growth potential.
Textile importer, converter and distributor of plain and bespoke Lycra based material Friedman's produced "another good set of results", and the company is set to further expand the scope of the business.
Packaging and mail provider Sunline reported earnings before interest, tax, depreciation and amortisation of GBP159,000 in the half, which was down from GBP240,000 a year earlier. CEPS said this reduction was deliberate following "very poor" results in the last financial year when Sunline reported a poor second half and struggled to provide the level of service needed to meet demand.
CEPS said Sunline has been encouraging staff to take holiday in the first half of the year to ensure there are enough skilled members of staff available in the busier second half to ensure the results of last year are not repeated.
"To date this appears to have worked and the better control of the business means that further steps can be taken to manage labour costs next year and take on more business to produce much better profits," said CEPS.
Overall for CEPS, "for the full year we are optimistic about the prospective outcome and view the outlook for next year even more positively," said Chairman David Horner. "We expect to utilise the excess funds raised in the fundraising in June to finance an acquisition in the second half."
That fundraising in June generated GBP1.3 million for CEPS after placing 4.2 million new shares at 30.0 pence per share. Of those proceeds, GBP800,000 was used to repay debt and the balance will be used for further acquisitions.
"A number of small "bolt-on" acquisitions have been reviewed over the period and one or more smaller purchases are expected to be made by CEPS' principal companies in the future. These transactions, whilst not large in size, will, relative to the funds invested, add significantly to the profits of individual principal companies," said Horner.
CEPS shares were up 5.0% to 52.50 pence per share on Monday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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Ceps (CEPS)