Last checked at 22 Sep 2008 07:00
CEPS PLC (THE "GROUP" OR THE "COMPANY") HALF-YEARLY UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2008 HIGHLIGHTS * Group revenue up 13% to ‚£8.1m * Operating profit up 14.6% to ‚£611,000 * EPS up 11% to 4.15p * Cash generated from operating activities of ‚£676,000 * Gearing reduced to 35% * Capital and reserves increased to ‚£4,551,000 CHAIRMAN'S STATEMENTReview of the period
I am pleased to report a robust performance from the Group in a first half year during which all of our businesses have performed satisfactorily in increasingly difficult trading conditions.
Revenue from our businesses involved in the sale of goods, Davies Odell and Friedman's, increased by 11.4% to ‚£4.4m (2007: ‚£3.9m) and their segmental result before depreciation was ‚£365,000 (2007: ‚£404,000). Revenue from rendering of services, the Sunline business, was ‚£3.8m (2007 from February: ‚£ 3.2m) and the segmental result before depreciation ‚£538,000 (2007 from February: ‚£458,000).
Overall Group revenue increased by 13% to ‚£8.1m (2007: ‚£7.2m) and operating profit increased by 14.6% to ‚£611,000 (2007: ‚£533,000). After finance costs and provision for taxation the profit for the period was ‚£400,000 (2007: ‚£331,000).
Earnings per share, basic and diluted, for the half year were up almost 11% at 4.15p (2007: 3.74p).
Financial review
Cash generated from operating activities in the period was ‚£676,000 (2007: ‚£ 650,000) of which ‚£422,000 (2007: ‚£303,000) was used to repay bank loans and the capital element of hire purchase agreements. After finance costs and capital expenditure the net increase in cash for the period was ‚£108,000 (2007, a period that included a major fund raising and the acquisition of Sunline: ‚£ 581,000). Cash and cash equivalents at the period end were ‚£484,000 (2007: ‚£ 463,000).
Bank loans at 30 June 2008 were lower than a year earlier by ‚£706,000 at ‚£ 1,910,000 (2007: ‚£2,616,000). Of these loans ‚£1,890,000 (2007: ‚£2,496,000) were secured against the assets of subsidiary companies and with no recourse to the rest of the Group.
Gearing has been reduced to 35% (from 51% at 31 December 2007) and total capital and reserves attributable to equity shareholders of the company rose to ‚£4,551,000 (2007: ‚£3,788,000).
Operational review
1. Sale of Goods
Comprising Davies Odell and Friedman's, this division has achieved an 11.4% increase in revenue when compared to the same period of last year but has experienced a similar reduction in profitability.
Friedman's has increased its market share but has been adversely affected by the weakness of sterling against the euro.
The first half at Davies Odell has been encouraging with both revenue and profits ahead of 2007. Revenue from the Forcefield body armour range and from protection products for the equestrian industry continues to grow. The matting business has experienced a significant increase in revenue and the footwear components business remains a consistent performer and significant contributor to profitability.
2. Rendering of Services
This division, which comprises Sunline's Polywrapping and Lettershop businesses, has had an encouraging first half year with revenue of ‚£3.8m and segmental profit of ‚£538,000.
The Polywrapping business has concentrated on both efficiency and product mix and consequently has improved margins. The Lettershop business has continued to grow revenue, although margins were a little lower. Both businesses exceeded their profit expectations for the period.
Dividend
With the effect of the `credit crunch' on consumer behaviour and on the Group remaining unpredictable, the Board has again decided that it is prudent to conserve cash. As a result, the payment of a dividend is not recommended at this stage although the Board remains keen to do so as soon as conditions become favourable.
Prospects
Against a gloomy financial background, the second half of the year has begun positively for the Group and trading has so far been better than expected.
Encouraged by a continuing strong trading performance, Sunline has invested in a new polywrapping line that will enable the business to further increase its efficiency and broaden the range of services that it can provide.
Davies Odell has begun the second half strongly with revenue growth in the same sectors as in the first half. Friedman's, on the other hand, continues to suffer from the exchange rate difficulties that accompany the necessity to purchase much of its raw materials in euros and sell most of its output in sterling.
The board continues to review investment opportunities but valuations do not as yet adequately reflect the current uncertain economic outlook.
At this moment the Board is pleased with the start made by the Group to the second half of the year but remains cautious about the effect on our businesses of declining consumer spending.
The overall prospects for 2008 are therefore difficult to predict, but the Board remains confident in the strength of its management teams and of their ability to outperform their immediate competition and to maximise profitability and return on capital employed.
Richard OrganChairman22 September 2008CEPS PLCConsolidated Income StatementSix months ended 30 June 2008 Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 June 30 June 31 December 2008 2007 2007 ‚£'000 ‚£'000 ‚£'000 Revenue 8,140 7,188 15,394 Cost of sales (6,861) (6,049) (13,102) Gross profit 1,279 1,139 2,292 Net operating expenses (668) (606) (1,347) Operating profit 611 533 945 Analysis of operating profit - Trading 785 738 1,324 - Abortive acquisition costs - (71) (71) - Group costs (174) (134) (308) Finance costs (125) (125) (271) Profit before tax 486 408 674 Taxation (86) (77) (88) Profit for the period 400 331 586 Attributable to: Equity holders of the Company 345 270 491 Minority interest 55 61 95 400 331 586 Earnings per share - basic and diluted 4.15p 3.74p 6.32p Consolidated Statement of Recognised Income & Expense Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 June 30 June 31 December 2008 2007 2007 ‚£'000 ‚£'000 ‚£'000 Fair value gains, net of tax Actuarial gain on retirement - - 196benefit obligations Net income recognised directly in - - 196equity Profit for the period 400 331 586 Total recognised income for the 400 331 782period Attributable to: Equity holders of the Company 345 270 687 Minority interest 55 61 95 400 331 782CEPS PLCConsolidated Balance SheetAs at 30 June 2008 Unaudited Unaudited Audited as at as at as at 30 June 30 June 31 December 2008 2007 2007 ‚£'000 ‚£'000 ‚£'000 Assets Non-current assets Property, plant and equipment 1,145 1,180 1,239 Intangible assets 4,748 5,330 4,751 Deferred tax asset 45 144 45 5,938 6,654 6,035 Current assets Inventory 1,481 1,459 1,391 Trade and other receivables 2,913 3,095 3,151 Deferred tax asset 73 45 73 Cash and cash equivalents 555 463 383 5,022 5,062 4,998 Total assets 10,960 11,716 11,033 Equity Capital and reserves attributable to equity holders of the Company Called up share capital 416 416 416 Share premium 2,756 2,755 2,756 Profit and loss account 1,379 617 1,034 4,551 3,788 4,206 Minority interest in equity 214 219 159 Total equity 4,765 4,007 4,365 Liabilities Non-current liabilities Borrowings 1,659 2,393 2,138 Trade and other payables - 500 - Retirement benefit liabilities 126 470 162 Provisions 55 32 55 1,840 3,395 2,355 Current liabilities Borrowings 1,739 1,434 1,490 Trade and other payables 2,485 2,532 2,778 Current tax liabilities 131 348 45 4,355 4,314 4,313 Total liabilities 6,195 7,709 6,668 Total equity and liabilities 10,960 11,716 11,033CEPS PLCConsolidated Cash Flow StatementSix months ended 30 June 2008 Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 June 30 June 31 December 2008 2007 2007 ‚£'000 ‚£'000 ‚£'000 Cash flow from operating activities Cash generated from operations 676 650 1,466 Tax paid - - (237) Interest paid (125) (125) (254) Net cash generated from operations 551 525 975 Cash flow from investing activities Purchase of property, plant and (21) (11) (67)equipment Purchase of computer software and - (7) (49)website development Purchase of subsidiary undertakings - (3,940) (3,940) net of cash acquired Payment of deferred consideration - - (30) Net cash used in investing activities (21) (3,958) (4,086) Cash flow from financing activities Proceeds from issue of Ordinary share - 2,317 2,318capital Proceeds from new bank loans - 2,000 2,000 Repayment of bank loans (347) (245) (604) Repayment of capital element of hire (75) (58) (109)purchase agreements Net cash (used in)/ generated from (422) 4,014 3,605financing activities Net increase in cash and cash 108 581 494equivalents Cash and cash equivalents at the 376 (118) (118)beginning of the period Cash and cash equivalents at the end of 484 463 376the period Cash flows from operating activities The reconciliation of operating profit to cash flows from operating activities is as follows: Operating profit for the period 611 533 945 Adjustments for: Depreciation charge 118 124 264 Difference between pension charge and (36) (36) (76)cash contribution Operating profit before changes in 693 621 1,133working capital and provisions Movement in provisions - - (27) Increase in inventory (90) (71) (3) Decrease in trade and other receivables 238 220 164 (Decrease)/increase in trade and other (165) (120) 199payables Cash generated from operations 676 650 1,466 Cash and cash equivalents Cash at bank and in hand 555 463 383 Bank overdrafts repayable on demand (71) - (7) 484 463 376General information
This condensed consolidated half-yearly financial information does not comprise statutory accounts within the meaning of section 240 of the Companies Act 1985 (section 434 of the Companies Act 2006). Statutory accounts for the year ended 31 December 2007 were approved by the Board of directors on 20 May 2008 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 237 of the Companies Act 1985 (section 498 of the Companies Act 2006).
This condensed consolidated half-yearly financial information has not been reviewed or audited.
Basis of preparation
This condensed consolidated half-yearly financial information for the six months ended 30
June 2008 has been prepared under the historical cost convention and in accordance with the AIM Rules for Companies and the International Financial Reporting Standards ("IFRS") as adopted by the European Union.
Accounting policies
Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2007, as described in those annual financial statements.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.
The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1 January 2008, but are not currently relevant for the group.
* IFRIC 11, `IFRS 2 - Group and treasury share transactions'. * IFRIC 12, `Service concession arrangements'. * IFRIC 14, `IAS 19 - the limit on a defined benefit asset, minimum funding requirements and their interaction'.
Notes to the financial information
1. Segmental analysis
All activities are classed as continuing.
a) Primary reporting format - Business segments
The group is managed in two principal business segments.
i) Results by segment
Unaudited 6 months to 30 June
Sale of goods Rendering of Group services 2008 2007 2008 2007 2008 2007 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Revenue 4,380 3,933 3,760 3,255 8,140 7,188 Segmental result 365 404 538 458 903 862 Depreciation charge (40) (56) (78) (68) (118) (124) Abortive - (71)acquisition costs Group costs (174) (134) Interest expenses (125) (125) Profit before 486 408taxation Taxation (86) (77) Profit for the 400 331period
ii) Assets and liabilities by segment
Unaudited as at 30 June
Segment assets Segment liabilities Segment net assets 2008 2007 2008 2007 2008 2007 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 CEPS Group 133 225 (72) (29) 61 196 Sale of goods 5,068 4,867 (3,090) (3,433) 1,978 1,434 Rendering of 5,759 6,624 (3,033) (4,247) 2,726 2,377services Total - Group 10,960 11,716 (6,195) (7,709) 4,765 4,007
b) Secondary reporting format - Geographical segments
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 above therefore also represents the geographical segmental analysis.
2. Earnings per share
Basic earnings per share is calculated on the profit after taxation for the period attributable to equity holders of the Company of ‚£345,000 (2007, ‚£ 270,000) and on 8,314,233 (2007, 7,211,618) ordinary shares, being the weighted number in issue during the period.
Diluted earnings per share is calculated on the weighted number of ordinary shares in issue adjusted to reflect the potential effect of the exercise of share warrants. No adjustment is required in either period because the fair value of warrants was below the exercise price.
3. AIM Compliance Committee
In accordance with AIM Rule 31 the Company is required to have in place sufficient procedures, resources and controls to enable its compliance with the AIM Rules; seek advice from its nominated adviser ("Nomad") regarding its compliance with the AIM Rules whenever appropriate and take that advice into account; 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; ensure that each of the Company's directors accepts full responsibility, collectively and individually, for compliance with the AIM Rules; and 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 Committee"), chaired by Richard Organ, a non-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 Committee is satisfied that the Company's obligations under AIM Rule 31 have been satisfied during the period under review.
4. Distribution of the Half-Yearly Report
Copies of the Half-Yearly Report will be available to the public from the Group website, www.cepsplc.com, and from the Company Secretary at the Company's registered address at 11 George Street, Bath BA1 2EH.
This year a printed copy of the Half-Yearly Report will be mailed to all shareholders. In future years it will be mailed only to shareholders who specifically request this.
Contact:-
Peter Cook, Group Managing DirectorCEPS PLCTel: 07788 752560David Newton, Nominated AdviserDowgate Capital Advisers LimitedTel: 020 7492 4777
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