Ceps Regulatory News (CEPS)

27 September 2018

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 (MAR).

CEPS PLC

(the "Group" or the "Company")

HALF-YEARLY REPORT

The Board is pleased to announce its unaudited half-yearly report for the six months ended 30 June 2018.

CHAIRMAN'S STATEMENT

Unfortunately, there is no getting away from it at the moment as the interminable "Brexit" discussions lumber forward to hopefully some sort of conclusion by the end of March next year.

Until the situation is clarified and we return to "normal" politics and business analysis, every comment from Brussels and counter comment from the Government and the numerous interested parties will dominate the investment and business landscape.

In the meantime, the CEPS Group of companies are getting on with getting on trying to manage in these extraordinary times.

Review of the period

On the face of it the most significant corporate event in the period was Sunline Direct Mail going into administration, but as we said at the time of this unfortunate event the impact on CEPS's balance sheet was effectively neutral and, of course, the removal of a loss-making company going forward is positive for the rest of the Group.

In addition, just before the period end on the 27 June, 3.8m new shares were placed at 35p with my family and two other existing shareholders. Of the net proceeds of £1.325m, £1m was used to repay the short-term loan that the company had drawn down over the previous year.

As a result of this placing there are now 17m shares in issue.

Financial review

The interim accounts are even more complicated than normal because of the removal of Sunline from the consolidated accounts. The gross profit from continuing operations of £3.437m (2017: £2.236m) on sales of £9.056m (2017: £8.497m) is a much healthier 38% (2017: 26%) than the historical comparatives which have been dragged back by the underperformance at Sunline. The profit before tax from continuing operations of £346,000 compares to £642,000 for the same period last year, when a bank interest refund of £123,000 boosted results.

The taxation charge has been inflated by the writing-off of a deferred tax asset. This is a non-cash item and it remains as an unrecognised asset when it can be utilised against profits.

Gearing has been reduced to 14% from 33% for the comparable period last year.

Operational review

Aford Awards

The company has continued its steady progress and with all the vendor loans now repaid the company has commenced repaying the outstanding CEPS acquisition loan notes.

The company has continued to review a number of acquisition opportunities and remains keen to add to its business activities, at the right time and at the right price.

CEM Press

The company has continued to make progress on sales but is currently struggling to produce all the orders it has won during the course of the year on time. The negative impact of this will be felt in the second half.

Again, it is our belief that the business needs to be scaled-up and opportunities are being reviewed to achieve this.

Davies Odell

The company is beginning to make steady progress with sales increasing for the first time in a number of years on the back of the new product development reported a year ago.

The company has been able to reduce the cost of production and has also reduced overheads.

Friedman's

The company has relocated to new premises for the second time in our ownership. The company has doubled its premises and has secured the necessary power supply to continue the development of the company.

The costs of the move have been expensed through the profit and loss account. This explains the reduction in profit in these accounts even though sales have increased.

The move to larger premises and the installation of new machines has increased capacity and also means that the company is able to develop new product areas which will provide the growth in the next few years.

Hickton

Integration of the two companies continues with the harmonisation of systems and the employment of a senior recruit for BRCS based at Hickton's premises in Elsecar. This will further facilitate the alignment of cultures over time.

Against this back-drop both companies continue to perform well. There has been a complete change to the finance function and an IT systems overhaul, the benefits of which will filter through in the second half.

Dividend

With the administration of Sunline Direct Mail, the Board has placed the payment of a dividend on hold for the time being.

Prospects

Despite the Group suffering the loss of Sunline, the Board is confident that the remaining Group companies, as a whole, will make progress over the next year.

David Horner

Chairman

27 September 2018

CEPS PLC

Consolidated Statement of Comprehensive Income

Six months ended 30 June 2018

CEPS PLC

Consolidated Statement of Financial Position

As at 30 June 2018

CEPS PLC

Consolidated Statement of Cash Flows

Six months ended 30 June 2018

CEPS PLC

Consolidated Statement of Changes in Equity

Six months ended 30 June 2018

Notes to the financial information

1. General information

The Company is a limited liability company incorporated and domiciled in the UK. The address of its registered office is 11 Laura Place, Bath BA2 4BL and the registered number of the company is 00507461.

The Company is listed on AIM.

This condensed consolidated half-yearly financial information was approved by the Directors for issue on 27 September 2018.

This condensed consolidated half-yearly financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2017 were approved by the Board of directors on 10 May 2018 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.

This condensed consolidated half-yearly financial information has not been reviewed or audited.

There is no seasonality or cyclicality in relation to the condensed consolidated half-yearly financial information.

Basis of preparation

This condensed consolidated half-yearly financial information for the six months ended 30 June 2018 has been prepared in accordance with IAS 34, 'Interim Financial Reporting' as adopted by the European Union. The condensed consolidated half-yearly financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2017, which have been prepared in accordance with IFRSs as adopted by the European Union.

Accounting policies

The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2017, as described in those annual financial statements. Where new standards, or amendments to existing standards, have become effective during the year there has been no material impact on the results of the Group.

2. Exceptional item

Sunline Direct Mail Limited

As announced on 13 June 2018, Sunline Direct Mail Limited ("SDM") filed a notice of intention to appoint an administrator. The company went into liquidation on 26 June 2018. The impact of the new General Data Protection Regulation ("GDPR"), as highlighted by the Royal Mail in its recent results where it forecast a severe decline in volumes, coupled with the reaction to the plastics debate prompted by the BBC's Blue Planet Television series, had an impact on the sector. As a result, SDM's order book did not fill at the rate that management would have expected it to at that time of year, being the "golden period" from August to November. As the business was likely to have required significant amounts of additional funding to carry on trading, the CEPS PLC Board made the decision to make no further funding available.

The exceptional item relates to SDM. At 30 June 2018 this is a provisional result as the company is subject to liquidation processes. This will be updated at the year end.

3. Segmental analysis

All activities, apart from those relating to Sunline, are classed as continuing.

The chief operating decision maker of the Group is its Board. Each operating segment regularly reports its performance to the Board which, based on those reports, allocates resources to and assesses the performance of those operating segments.

Operating segments and their principal activities are as follows:

- Aford Awards, a sports trophy and engraving company;

- CEM Press, a manufacturer of fabric and wallpaper pattern books, swatches and shade cards;

- Davies Odell, a manufacturer and distributor of protection equipment, matting and footwear components;

- Friedman's, a convertor and distributor of specialist Lycra;

- Hickton Consultants, a provider of services to the construction industry together with BRCS (Building Consultants), a leading provider of building control services nationally;

- Sunline, a supplier of services to the direct mail market (see note 2).

The United Kingdom is the main country of operation from which the Group derives its revenue and operating profit and is the principal location of the assets of the Group. The Group information provided below, therefore, also represents the geographical segmental analysis. Of the £12,174,000 (2017: £12,077,000) revenue, £10,790,000 (2017: £10,735,000) is derived from UK customers.

The Board assesses the performance of each operating segment by a measure of adjusted earnings before interest, tax, depreciation and amortisation and Group costs. Other information provided to the Board is measured in a manner consistent with that in the financial statements.

i) Results by segment

Unaudited 6 months to 30 June 2018

Unaudited 6 months to 30 June 2017

Audited Year to 31 December 2017 

ii) Assets and liabilities by segment

Unaudited as at 30 June

Audited as at 31 December 2017

4. Earnings per share

Basic earnings per share is calculated on the loss after taxation for the period attributable to owners of the Company of £728,000 (2017: profit of £418,000) and on 13,199,940 (2017: 12,659,027) ordinary shares, being the weighted number in issue during the period.

The new shares authorised were not admitted to the AIM market until 3 July 2018. Consequently, the additional 3,800,060 shares have not been included in the EPS calculation.

No adjustment is required for dilution in either period as there are no items that would have a dilutive impact on earnings per share.

5. Net debt and gearing

Gearing ratios at 30 June 2018, 30 June 2017 and 31 December 2017 are as follows:

In order to provide a more meaningful gearing ratio, total borrowings have been revised to be the sum of bank borrowings and third-party debt, excluding loan notes used to finance the Group's acquisitions. The prior period comparatives have also been revised.

6. Share capital and premium

7. Related-party transactions

The Group has no material transactions with related parties which might reasonably be expected to influence decisions made by users of these financial statements.

During the period the Company entered into the following transactions with its subsidiaries:

8. AIM Compliance Committee

CEPS PLC is quoted on AIM and, as such, under AIM Rule 31 the Company is required to:

1. have in place sufficient procedures, resources and controls to enable its compliance with the AIM Rules;

2. seek advice from its nominated advisor ("Nomad") regarding its compliance with the AIM Rules whenever appropriate and take that advice into account;

3. provide the Company's Nomad with any information it requests in order for the Nomad to carry out its responsibilities under the AIM Rules for Companies and the AIM Rules for Nominated Advisers

4. ensure that each of the Company's directors accepts full responsibility, collectively and individually, for compliance with the AIM Rules; and

5. ensure that each director discloses without delay all information which the Company needs in order to comply with AIM Rule 17 (Disclosure of Miscellaneous Information) insofar as that information is known to the director or could with reasonable diligence be ascertained by the director.

In order to ensure that these obligations are being discharged the Board has established a committee of the Board (the "AIM Compliance Committee"), chaired by Vivien Langford, an executive director of the Company.

Having reviewed relevant Board papers and met with the Company's Executive Board and the Nomad to ensure that such is the case, the AIM Compliance Committee is satisfied that the Company's obligations under AIM Rule 31 have been satisfied during the period under review.

9. Equity Placing

On 28 June 2018 CEPS PLC successfully placed 3,800,060 new ordinary shares at a price of 35 pence per share to raise £1,330,021 (before expenses of £4,000) with institutional and private investors. The placing's proceeds were used to repay a loan and for general working capital purposes.

Following the issue of the placing shares on 3 July 2018 (post period end), the enlarged issued share capital of CEPS PLC comprised 17,000,000 ordinary shares of 10 pence each.

Statement of directors' responsibility

The directors confirm that, to the best of their knowledge, these condensed consolidated half‑yearly financial statements have been prepared in accordance with IAS 34 as adopted by the European Union. The interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:

· an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and

· material related-party transactions in the first six months of the financial year and any material changes in the related-party transactions described in the last Annual Report.

A list of current directors is maintained on the CEPS PLC Group website: www.cepsplc.com