CEPS PLC CEM Group Update (6380V)
December 04 2019 - 4:21AM
UK Regulatory
TIDMCEPS
RNS Number : 6380V
CEPS PLC
04 December 2019
4 December 2019
CEPS PLC
("CEPS" or the "Company")
Update on CEPS' investment in the CEM group of companies
The Board of CEPS announces that, for the reasons explained
below, it expects to exit its investment in the CEM group of
companies ("the CEM Group") which comprises two operating
subsidiaries, CEM Press Limited ("CEM") and Travelfast Limited
(trading as Sampling International) ("Sampling"). CEM is 97.86%
owned by CemTeal with the remaining 2.14% being owned by a private
shareholder and Sampling is 100% owned by CemTeal.
CEPS owns 80% of CemTeal, the remaining 20% being owned by
management and external shareholders.
Sampling was acquired on 27 March 2019 for an aggregate
consideration of GBP1,200,009 payable in cash over three years
based on performance. However, due to the deferred and performance
related nature of the consideration, only GBP9 has been paid to
date. As explained in the announcement of its acquisition, the
decision to acquire Sampling was to introduce a complementary
business within the CEM Group with a view to creating one of the
largest individual pattern book and shade card makers in the UK
with two production facilities. Under a new management structure,
it was hoped that the CEM Group would continue to expand and grow
offering a breadth of services to customers.
Despite management's efforts and cash injections from CEPS since
March 2019 as stated below, it has not been possible to achieve the
envisaged savings and efficiencies from consolidating CEM's and
Sampling's operations and streamlining processes.
As at 31 December 2018, prior to the acquisition of Sampling,
the consolidated net liabilities of CemTeal were GBP2,960,000.
CemTeal's turnover in the year was GBP2,824,000 and the
consolidated operating loss was GBP495,000. Hence, if CemTeal had
been excluded from the 2018 results, CEPS consolidated revenue from
continuing operations would have reduced from GBP18,474,000 to
GBP15,606,000, but operating profit from continuing operations
would have increased from GBP391,000 to GBP886,000. In addition, in
the year ended 31 December 2018, the CEPS Board decided to
write-off completely the value of the intangibles in CemTeal.
Consequently, there was a customer list impairment exceptional item
of GBP588,000 which also impacted negatively on CEPS' overall
profitability. In the year to date, the loss before tax of CemTeal
and its subsidiaries, excluding Sampling, was GBP954,000 based on
management accounts to 31 October 2019.
From the date of acquisition to 31 October 2019, unaudited
management accounts show that Sampling made a loss before tax of
GBP236,000 and net liabilities were GBP636,000 as at this date.
The Company was owed, after impairment, GBP2,100,000 at 31
October 2019 by the CEM Group. This largely comprises the cash
injected into the CEM Group since the acquisition of Sampling of
GBP1,805,000.
Moorfields Advisory Limited ("Moorfields") has been engaged by
the CEM Group to provide advice and outline the options available
given its current financial position. Moorfields has recommended an
accelerated marketing process for the businesses with a view to
effecting their sale as going concerns if possible and has been
engaged to oversee this process.
Interested parties requiring further information on the sale
process itself should contact Moorfields as follows:
Moorfields Advisory Limited
88 Wood Street
London
EC2V 7QF
Principal Contact: Tom Straw
Direct Dial: +44 (0)207 186 1148
Switchboard: +44 (0)207 186 1144
Fax: +44 (0)207 186 1177
Email: tstraw@moorfieldscr.com
Since the sale process will necessarily be conducted over an
accelerated timescale, interested parties are encouraged to pursue
this opportunity as a matter of urgency.
Once the outcome of the sale process for the CEM Group is clear
a further announcement will be made.
CEPS' trading to date in 2019, excluding the CEM Group, is ahead
of the Board's expectations in all but one subsidiary.
The announcement contains inside information for the purposes of
Article 7 of EU Regulation 596/2014.
Enquiries
CEPS PLC
David Horner, Chairman +44 1225 483030
Cairn Financial Advisers LLP
Tony Rawlinson / James Caithie/Ludovico
Lazzaretti +44 20 7213 0880
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END
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