Preliminary Results
CEPS PLC ("CEPS" OR THE "COMPANY")
PRELIMINARY ANNOUNCEMENT OF UNAUDITED RESULTS FOR
YEAR ENDED 31 DECEMBER 2008
Chairman's Statement (extract)
HIGHLIGHTS
* Group revenue up 9% to £16.8m (2007: £15.4m)
* Operating profit up 21.5% to £1,148,000 (2007: £945,000)
* EPS up 19% to 7.51p (2007: 6.32p)
* Bank loans and hire purchase repaid £926,000
* Gearing reduced to 57% (2007: 74%)
* Total equity increased 18% to £5.1m (2007: £4.4m)
Review of the period:
The robust performance of the Group noted at the half-year has continued
strongly through the second half despite the very evident turmoil in the
external environment.
Revenue from the businesses involved in the sale of goods (Davies Odell and
Friedman's) increased by 10.7% to £9.1m (2007: £8.2m) and their segmental
profit before depreciation was £689,000 (2007: £723,000). Revenue from the
rendering of services, the Sunline business, was £7.7m (2007 from February:
£7.2m) and the segmental profit before depreciation was £1.1m (2007 from
February: £865,000).
Overall Group revenue increased by 9% to £16.8m (2007: £15.4m) and operating
profit increased by 21.5% to £1,148,000 (2007: £945,000). After finance costs
and provision for taxation the profit for the period was £714,000 (2007: £586,000).
Earnings per share, basic and diluted, for the year were up almost 19% at 7.51p
(2007: 6.32p).
Financial review:
Cash generated from operations in the year was £1,388,000 (2007: £1,466,000) of
which £926,000 (2007: £713,000) was used to repay bank loans and the capital
element of hire purchase agreements. After finance costs, tax and capital
expenditure, the net increase in cash for the year was £156,000 (2007: £494,000).
Cash and cash equivalents at the year end were £532,000 (2007: £376,000).
Bank loans at the year end were lower than a year earlier by £686,000 at
£1,571,000 (2007: £2,257,000). All of these loans were secured against the
assets of subsidiary companies with no recourse to the rest of the Group (2007:
£2,190,000).
Net debt, defined as total borrowings after deducting cash and cash
equivalents, reduced by 10% to £2,920,000 (2007: £3,245,000) and total equity
increased by 18% to £5,138,000 (2007: £4,365,000). Gearing has, in consequence,
reduced to 57% (2007: 74%).
Operational review:
1. Sale of Goods
Comprising Davies Odell and Friedman's, this division increased its revenue by
10.7% compared with the same period last year, but saw a small reduction in
operating profit before depreciation, largely because of the impact of exchange
rates at Friedman's.
Friedman's saw its revenue increase 10% and its market share grow steadily,
with particular strength also in its export sales. Its profitability however
has been seriously impacted by the weakness of sterling against the Euro. Most
of its material purchases are made in this currency and it has not been able to
pass all of its material price increases on to its recession-struck UK
customers.
Davies Odell continued the strong performance evident in the first half.
Overall revenue was up 10.8% and its operating profit rose even more strongly
on the back of a strong margin mix within the sales achieved. All parts of the
matting business had a particularly strong year, with exceptional sales of
cowmats in the Irish Republic. The Forcefield product range continued to be
widened, with an increasing number of UK retail and export distributor
stockists. Despite the tough retail conditions in the UK, sales were ahead of
2007 and margins improved as the product sourcing settled down.
2. Rendering of services
This division, which comprises Sunline's Polywrapping and Lettershop
businesses, has continued the progress noted at the half year. After taking
account that the business was only acquired in February 2007, revenue this year
is broadly in line with the previous year, but profitability has improved
substantially.
Within the Polywrap business, revenue was slightly up, but more importantly
gross margins were well up on the previous year. The new Sitma polywrapping
line was installed in the summer, and by the final quarter was beginning to
operate at full efficiency making an impact on contributions. In addition,
overhead control in this business has been exemplary throughout the year.
The Lettershop business has made considerable progress in 2008. Both revenue
and margins rose strongly through the year thanks to a wider range of
capabilities and customers, enabling the factory to remain busy through many
more months of the year. Modest capital expenditure has been made, but much of
the credit for the outstanding result should go to the dedicated team at
Redditch.
Dividend:
With the effect of the recession 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.
Prospects:
The Board continues to review investment opportunities but believe that
valuations do not as yet adequately reflect the current uncertain economic
outlook.
The trading start to 2009 has been difficult. The background is well documented
now. The recession has well and truly arrived since I wrote the Half-yearly
Report in September last year. Consumer spending remains unpredictable not only
in the UK, but across many of our global markets. Access to credit, both
commercial and private, has further deteriorated and the exchange rate of
sterling against both the US$ and the Euro has remained weak.
Much of the trading uncertainty we anticipated in the second half of 2008 is
only now manifesting itself. In these circumstances the Group will manage its
cash and balance sheet with great care and seek every opportunity to maximise
profit and control costs. As ever I am confident that our management teams will
more than match the performance of their immediate competition, but I am
expecting overall that 2009 will prove a difficult year for the Group.
Richard Organ
Chairman
23 April 2009
CEPS PLC
CONSOLIDATED INCOME STATEMENT
YEAR ENDED 31 DECEMBER 2008
(unaudited) (unaudited)
2008 2007
£'000 £'000
Revenue (note 2) 16,796 15,394
Cost of sales (14,228) (13,102)
Gross profit 2,568 2,292
Distribution expenses (359) (366)
Administration expenses (1,061) (981)
Operating profit 1,148 945
Analysis of operating profit
- Trading 1,514 1,324
- Abortive acquisition costs - (71)
- Group costs (366) (308)
Finance costs (241) (271)
Profit before tax 907 674
Taxation (note 3) (193) (88)
Profit for the year 714 586
Attributable to:
Equity holders of the Company 624 491
Minority interest 90 95
714 586
Earnings per share (note 4)
- basic and diluted 7.51p 6.32p
Consolidated Statement of Recognised Income & Expense
(unaudited) (unaudited)
2008 2007
£'000 £'000
Fair value gains, net of tax 59 196
- Actuarial gain on retirement benefit obligations
Net income recognised directly in equity 59 196
Profit for the year 714 586
Total recognised income for the year 773 782
Attributable to:
Equity holders of the Company 683 687
Minority interest 90 95
773 782
CEPS PLC
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2008
(unaudited) (unaudited)
2008 2007
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 1,610 1,239
Intangible assets 4,826 4,751
Deferred tax asset - 45
6,436 6,035
Current assets
Inventory 1,795 1,391
Trade and other receivables 2,828 3,151
Deferred tax asset 24 73
Cash and cash equivalents 665 383
5,312 4,998
Total assets 11,748 11,033
Equity
Capital and reserves attributable to equity holders
of the Company
Called up share capital 416 416
Share premium 2,756 2,756
Profit and loss account 1,717 1,034
4,889 4,206
Minority interest in equity 249 159
Total equity 5,138 4,365
Liabilities
Non-current liabilities
Borrowings 1,751 2,138
Retirement benefit liabilities - 162
Provisions for liabilities and charges 55 55
1,806 2,355
Current liabilities
Borrowings 1,834 1,490
Trade and other payables 2,819 2,778
Current tax liabilities 151 45
4,804 4,313
Total liabilities 6,610 6,668
Total equity and liabilities 11,748 11,033
CEPS PLC
CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31 DECEMBER 2008
(unaudited) (unaudited)
2008 2007
£'000 £'000
Cash flows from operating activities
Cash generated from operations 1,388 1,466
Tax paid (16) (237)
Interest paid (222) (254)
Net cash generated from operating activities 1,150 975
Cash flow from investing activities
Purchase of property, plant and equipment (78) (67)
Disposal of property, plant and equipment 11 -
Purchase of computer software and website (1) (49)
development
Purchase of subsidiary undertakings net of cash - (3,940)
acquired
Payment of deferred consideration - (30)
Net cash used in investing activities (68) (4,086)
Cash flow from financing activities
Proceeds from issue of Ordinary share capital - 2,318
Proceeds from new bank loans - 2,000
Repayment of bank loans (686) (604)
Repayment of capital element of hire purchase (240) (109)
agreements
Net cash (used in)/generated from financing (926) 3,605
activities
Net increase in cash and cash equivalents 156 494
Cash and cash equivalents at the beginning of the 376 (118)
year
Cash and cash equivalents at the end of the year 532 376
Cash flows from operating activities
The reconciliation of operating profit to cash
flows from operating activities is as follows:
Operating profit for the year 1,148 945
Adjustments for:
Depreciation and amortisation charge 275 264
Loss on disposal of property, plant and equipment 23 -
Difference between pension charge and cash (80) (76)
contribution
Operating profit before changes in working capital 1,366 1,133
and provisions
Movement in provisions - (27)
Increase in inventories (404) (3)
Decrease in trade and other receivables 323 164
Increase in trade and other payables, including 103 199
trade receivables backed working capital facilities
Cash generated from operations 1,388 1,466
Cash and cash equivalents
Cash at bank and in hand 665 383
Bank overdrafts repayable on demand (133) (7)
532 376
NOTES TO THE FINANCIAL INFORMATION
1. Basis of preparation
These unaudited preliminary results have been prepared under the historical
cost convention and in accordance with International Financial Reporting
Standards ("IFRS") and interpretations in issue at 31 December 2008.
The preliminary results were approved by the Board of Directors on 23 April
2009. The preliminary results do not constitute statutory accounts within the
meaning of Section 240 of the Companies Act 1985.
All periods presented are unaudited.
2. Segmental analysis
All activities are classed as continuing.
a) Primary reporting format - Business segments
The Group is managed in two principal business segments, with each segment
operating in a defined business sector.
i) Results by segment
Year ended 31 December 2008
Sale of goods Rendering of services Group
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
2008 2007 2008 2007 2008 2007
£'000 £'000 £'000 £'000 £'000 £'000
Revenue 9,117 8,239 7,679 7,155 16,796 15,394
Segmental result 689 723 1,095 865 1,784 1,588
Depreciation (81) (111) (189) (153) (270) (264)
charge
Abortive - (71)
acquisition
costs
Group costs (366) (308)
Operating profit 1,148 945
Interest (241) (271)
expenses
Profit before 907 674
taxation
Taxation (193) (88)
Profit for the 714 586
year
ii) Assets and liabilities by segment
As at 31 December 2008
Segment assets Segment liabilities Segment net assets
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
2008 2007 2008 2007 2008 2007
£'000 £'000 £'000 £'000 £'000 £'000
CEPS Group 103 83 (24) (72) 79 11
Sale of goods 5,443 5,082 (3,318) (3,130) 2,125 1,952
Rendering of 6,202 5,868 (3,268) (3,466) 2,934 2,402
services
Total - Group 11,748 11,033 (6,610) (6,668) 5,138 4,365
iii) Non-cash expenses and capital expenditure
Other than as stated above there were no significant non-cash expenses.
Year ended 31 December
Capital expenditure
(unaudited) (unaudited)
2008 2007
£'000 £'000
CEPS Group - 17
Sale of goods 44 145
Rendering of services 710 102
Total - Group 754 264
b) Secondary reporting format - Geographical segments
The United Kingdom is the source of turnover, operating profit and is the
principal location of the assets of the Group. The Group information provided
above therefore represents the geographical segmental analysis.
3. Taxation
The charge for taxation on the profit for the year is analysed as follows:
2008 2007
(unaudited) (unaudited)
£'000 £'000
Current tax
UK corporation tax on profits of the year at 28.5% 127 123
(2007, 30%)
Tax repaid in respect of prior periods (5) (34)
Total current tax 122 89
Deferred tax
Current year charge/(credit) to the income statement 76 (59)
Prior year (5) 58
Total deferred tax 71 (1)
Total tax charge/(credit) 193 88
Deferred tax charge to the statement of recognised 23 83
income and expense
4. Earnings per share
Basic earnings per share is calculated on the profit for the year after
taxation attributable to equity holders of the Company of £624,000 (2007: £491,000)
and on 8,314,249 (2007: 7,767,435) ordinary shares, being the weighted number
in issue during the year.
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.
5. 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 year under review.
6. Distribution of the Annual Report
A copy of the Annual Report and Financial Statements will be sent to all
shareholders on or around 6 May 2009 and its provision will be announced.
Further copies will be available to the public from the Company Secretary at
the Company's registered address at 11 George Street, Bath BA1 2EH or from the
Group website, www.cepsplc.com.
For further information please visit the Company's website, www.cepsplc.com or
contact:
CEPS PLC
Peter Cook
Tel: 07788 752560
Dowgate Capital Advisers Limited
Aaron Smyth / Tony Rawlinson
Tel: 020 7492 4777
Friday, 10th January 2025
COMPANIES COVERED:
Latest directors dealings
- 1 day ago FRP Advisory Group
- 1 day ago Marks Electrical Group
- 1 day ago CLS Holdings
- 1 day ago QinetiQ Group
- 1 day ago Spectris