Annual Report 2019
CEPS PLC Company number 00507461
Contents
Chairman’s Statement
Strategic Report
Directors’ Report
Corporate Governance
Independent Auditor’s Report
Consolidated Statement
of Comprehensive Income
Consolidated and Company
Statements of Financial Position
Consolidated and Company
Statements of Cash Flows
Consolidated and Company
Statements of Changes in Equity
Notes to the Financial Statements
Supplementary Consolidated Statement
of Comprehensive Income
Supplementary Consolidated Statement
of Cash Flow
Group Information
Notice of Meeting
page
2
6
9
12
14
18
19
20
22
24
70
71
72
73
1
Financial review
CEPS PLC
Chairman’s Statement
I sincerely hope that all our shareholders, customers and suppliers are safe and bearing
up in these very difficult and exceptional times.
To our knowledge all our employees are safe and well during this period of Coronavirus
lockdown and it is important to stress that, however CEPS PLC (‘CEPS’) and our
subsidiaries move forward from this current position, it will only be done after full
consideration of people’s safety and welfare.
Writing this report now feels very strange as our plans and strategies have, literally, been
put on hold until a move to normalisation is commenced. However, it is also equally
important to stress that all steps that can be taken have been taken to ensure that when
that happens CEPS and its subsidiaries are ready to implement, as appropriate, our
plans and strategies.
The financial year being reported on epitomises the recent challenge with CEPS: most of
the companies doing well or very well with one subsidiary doing very badly and,
consequently, tainting the whole picture. This year we decided that we were unable to
continue supporting the merged CEM and Sampling International as the losses and cash
requirement grew to unacceptable levels. This grouping was placed into administration.
However, in order to maximise the chances of an employee led buy-out we delayed this
until early January 2020. The expectation is that in 2020 an exceptional gain on the
ultimate disposal will be recognised. Therefore, whilst our intention was to enter the new
year with a clear, trouble-free profile we were not able to achieve this before the current
circumstances have, effectively, put a clean set of accounts on hold until at least 2021.
Although the consolidated results for the year include CEM and Sampling International,
to get a better understanding of the results and the make-up of the Group from 2020
onwards we have included two supplementary pages (70 and 71) which analyse the
Consolidated Statement of Comprehensive Income and the Consolidated Statement of
Cash Flow between ‘continuing’ (made up of Aford Awards, Davies Odell, Friedman’s
and Hickton Consultants) and ‘to be discontinued’ (made up of CEM and Sampling
International) operations.
Total revenue for 2019 was £21.8m (2018: £21.6m; £18.5m from continuing operations),
of which £16.1m was generated from continuing operations and £5.7m from to be
discontinued operations.
The segmental result (EBITDA) before exceptional items of £971,000 (2018: £1.5m;
£1.7m from continuing operations) shows EBITDA of £2.5m from continuing operations.
For all companies within this category there was an improvement in performance when
compared to the previous year.
The operating loss for the year was £1.9m (2018: loss of £12,000; operating profit of
£391,000 from continuing operations), which includes the £3.5m losses from CEM and
Sampling International, part of which was the £1.2m exceptional cost resulting from the
write-down of assets to their net realisable value. If we exclude these amounts the
operating profits generated from continuing operations were £1.6m.
The loss for the year before taxation was £2.3m (2018: loss of £308,000; profits of
£137,000 from continuing operations), but the profits of the continuing businesses in
2019 amounted to £1.3m and the losses of to be discontinued operations totalled
£3.6m.
2
CEPS PLC
Chairman’s Statement continued
Financial review
continued
The loss for the year after taxation was £2.6m (2018: loss of £876,000; £431,000 from
continuing operations), but the profits from continuing operations in 2019 amounted to
£935,000 while the losses of to be discontinued operations totalled £3.6m.
Loss per share on a basic and diluted basis was 15.86p (2018: loss per share of 9.06p;
loss from continuing operations 6.26p) which can be analysed between earnings per
share of 1.47p from continuing operations and a loss per share of 17.33p from to be
discontinued operations.
From a cash perspective, the cash generated from operations was £365,000 in 2019
(2018: £1.7m; cash generated from continuing operations £1.4m), of which £1.4m cash
was generated by continuing operations and £1.1m was used by CEM and Sampling
International.
Net debt increased over the year from £1.4m at the end of 2018 to £4.3m at the end of
2019 and as a result the gearing ratio increased from 25% to 156% over the same
period. Borrowings by CEPS increased by £4.3m, part of which was used to finance
new acquisitions and part was used to support CEM and Sampling International, prior to
the decision to place the companies into administration.
On 1 January 2019, the Group implemented IFRS 16 Leases, which replaces IAS 17
Leases. The new standard brings most leases on to the Consolidated Statement of
Financial Position for lessees and eliminates the distinction between operating and
finance leases. Under IFRS 16 a lessee recognises a right-of-use asset and a lease
liability. The right-of-use asset is treated in a similar way to a non-financial asset and is
depreciated. The lease liability is initially measured at the present value of the stream of
lease payments over the lease term, discounted at the incremental borrowing rate.
The Group implemented IFRS 16 from 1 January 2019 by applying the modified
retrospective approach meaning that comparative figures in the financial statements for
the year ending 31 December 2019 are not restated to show the impact of IFRS 16.
The operating leases that are recorded for the first time relate to properties and
vehicles. The right-of-use asset in the Consolidated Statement of Financial Position at
31 December 2019 was £1.1m and the lease liabilities were £1.2m.
As stated in note 9 of notes to the financial statements the most recent valuation of the
Dinkie Heel Defined Benefit Pension Scheme at 1 July 2019 showed a surplus in the
scheme and, based on this result, no recovery plan is necessary at least until the next
triennial valuation in 2022. In real terms, this means a cash saving to CEPS of £81,000
per annum.
It is clear that, prior to the impact of the Coronavirus pandemic, the likelihood was that
the Group, made up of continuing operations as defined in 2019, would be profitable and
cash generative in 2020.
In the last quarter of 2019, anticipating that 2020 was going to be the start of a very
positive outcome for CEPS, we signed up with a third party research company who we
engaged to produce ‘independent’ research to inform potential investors about the
activities and financial performance of CEPS. Sadly, this has now had to be put on hold
for obvious reasons and will be resurrected in the latter part of this year if the UK emerges
from lockdown in a satisfactory manner.
3
CEPS PLC
Chairman’s Statement continued
Operational review
I will now report on the performance of the individual companies.
Aford Awards
Trading was in line with expectations. Steps were taken through the year to improve
efficiencies in the business in all areas and, consequently, the busy seasonal periods
were better managed than in the past. This encouraged the management team to scale
up marketing in the busy period of 2020 confident that it could manage and deliver more
late notice business.
The company continued to repay its outstanding loan notes and by the end of the year
had reduced these original acquisition loans to the shareholder loans, totalling £300,000,
of which CEPS’ share is 70%.
During the year the decision was taken to close C & M, the small shop-based operation
acquired in the previous year, and transfer as much recurring trade as possible back to
the Aford Awards base in Maidstone.
This has been successful and will be one of the business drivers for the company in the
future. The trophies/awards/engraving sector, despite the internet, remains very
fragmented and Aford Awards will, in the future, act as a consolidator. This is, of course,
a relatively low-risk method of expansion as the purchase price of these businesses is,
essentially, the stock and equipment and the work that can be transferred will make a
significant marginal contribution.
Davies Odell
The company remains marginally loss-making following the reduction in overheads in
2018. The process of rightsizing the business continues and, sadly, additional people
have left the company. The benefit of this overhead reduction was to have been felt in
2020, but its impact has been lessened by the effects of the Coronavirus on the
performance of the company.
Friedman’s
The business continued to make very good profits in 2019 and steps were taken to
increase the sales and marketing efforts in order to better utilise the increased capacity
put in place the previous year.
The management team was very busy and involved for a good part of the year on the
purchase of Milano International Limited (‘Milano’) on 4 October 2019. Milano, based in
Preston, is a supplier of gymnastic leotards made from Lycra, some of which is supplied
by Friedman’s.
Discussions had been off and on with the owners of Milano over a period of five years.
Signature Holdings, the holding company for Friedman’s, has acquired Milano financed
by £1m of loan stock from CEPS, vendor loans and funding from cash generated by
Friedman’s.
Since the purchase considerable work and investment has gone into expanding the
manufacturing capacity, revamping the sales and marketing efforts and broadening the
product range. Everything was planned to be launched in early April, but of course is
now on hold.
4
CEPS PLC
Chairman’s Statement continued
Operational review
continued
Hickton Consultants
Another excellent year from the company.
Trading in Hickton was ahead of expectations, although the performance of the much
smaller subsidiary, BRCS, continued to disappoint.
Partially to address this, post year end on 11 March 2020, a major transaction was
completed which had been in process from the end of 2018. This was the purchases of
Cook Brown Building Control Limited, a building control company like BRCS, and Cook
Brown Energy Limited (together ‘Cook Brown’). The transaction was completed by
forming a new company called Hickton Group Limited which acquired both Hickton
Consultants and Cook Brown.
As part of this exercise James Cook and Matthew Brown received shares in Hickton
Group and will work alongside Tony Mobbs, Chairman of Hickton Group, and Janet
Pryke, Finance Director.
CEPS ‘rolled over’ its entire investment into 55% of the equity of the Hickton Group with,
in addition, £2.24m of loan stock.
The Board is very excited about the future development of this specialist building services
group.
It is of course very difficult or even impossible at this stage to write anything about the
outlook that will possibly bear scrutiny in a month or two, never mind in 12 months’ time.
The management teams at each subsidiary are doing their utmost to protect their
companies from the current pressing issues, whilst ensuring that they will be ready to
emerge from our current lockdown state in strong operational positions ready to make a
significant recovery and then progress.
I believe that the restructuring of the Group over the last two years now leaves it with
subsidiaries that are well positioned to grow and to deliver attractive shareholder returns,
once the world returns to more normal conditions.
Outlook
David Horner
Chairman
21 May 2020
5
CEPS PLC
Strategic Report
Review of the business
The directors present their Strategic Report on the Group for the year ended
31 December 2019.
The principal activities of CEPS PLC are that of an industrial holding company, acquiring
majority stakes in stable, profitable and steadily growing entrepreneurial companies. The
activities of the Company’s trading subsidiaries are described in note 19 to the accounts.
Segmental analysis is given in note 4 to the accounts.
A review of the business and its prospects are set out in the Chairman’s Statement on
pages 2 to 5.
The Group’s internal reporting system enables the Board to assess the strategic direction
of the Group against agreed targets. The table below shows the most important key
performance indicators used by the Group:
2019)
2018)
Revenue
Segmental result (EBITDA) (pages 38 and 39)
Loss before tax
Loss after tax
Total equity
Net debt (total borrowings less cash) (page 34)
Gearing ratio (net debt/total equity)
£21,753,000)
£971,000)
(£2,287,000)
(£2,629,000)
£2,751,000)
£4,289,000)
156%)
£21,592,000)
£1,485,000)
(£308,000)
(£876,000)
£5,460,000)
£1,352,000)
25%)
The Chairman has commented on the main key performance indicators in his Statement
on pages 2 to 5.
The Board also monitors matters relating to health and safety and the environment and
reviews them at its regular meetings. The risks to the business arising from changes to
the trading environment and employee retention and training are also regularly monitored
and reviewed.
The Board operates a continuous process for identifying, evaluating and managing risk.
The internal controls seek to minimise the impact of identified risks, as explained in the
Corporate Governance statement on pages 12 and 13.
The key risks the Board seeks to mitigate are: competition, dependence on key personnel
and the supply chain.
Competition – while the Group’s trade is differentiated, there is still significant pricing
pressure and the barriers to entry are relatively low. As a result there is the risk that
competitors could emerge to challenge the products offered by the Group. This could
result, over time, in price competition and margin pressure. In order to mitigate this
pressure, local management seek to hold regular discussions with customers and
actively monitor the market for changes in competitors’ prices.
Dependence on key personnel – the Group’s performance is largely dependent on its
subsidiary staff and managers. The success of the Group will continue to be dependent
on the expertise and experience of the directors and the management team, and the loss
of personnel could still have an adverse effect on the Group. This risk is mitigated by
ensuring that key personnel are suitably incentivised and contractually bound.
Supply chain – the differentiated nature of the Group’s trade means that it is exposed to
a reliance on a small number of suppliers. The Group mitigates this risk through effective
supplier selection and procurement practices.
See note 2 for an assessment of the financial risks.
66
Directors’ duties
Coronavirus
CEPS PLC
Strategic Report continued
The directors of the Company are required to act in accordance with a set of general
duties. These duties are detailed in section 172 of the UK Companies Act 2006 which
is summarised as follows: ‘A director of a company must act in the way they consider, in
good faith, would be most likely to promote the success of the company for the benefit
of its shareholders as a whole’.
The directors are aware of their obligations with regards to the matters under section
172, namely:
a) the likely consequences of any decision in the long term;
b) the interest of the Company’s employees;
c) the need to foster the Company’s business relationships with suppliers, customers
and others;
d) the impact of the Company’s operations on the community and the environment:
e) the desirability of the Company maintaining a reputation for high standards of
business conduct; and
the need to act fairly between members of the Company.
f)
The Board regularly receives reports from management on issues in respect of
shareholders, suppliers, the community, the environment and regulators, which it takes
into account in its decision-making process. In addition to this, the Board seeks to
understand the interests and views of the organisations’ stakeholders by engaging with
them directly as appropriate.
At the date of signing these accounts, Coronavirus represents both a risk to the business
and its people. The Group is taking active measures to ensure its people remain safe
and healthy. Measures include additional education on cleanliness, self-isolation, social
distancing and the ability to work from home or in roster patterns where necessary.
There are daily business continuity and health and safety meetings to ensure compliance
with the measures introduced.
As with most businesses, there are some short-term practical difficulties that have had
to be managed. The severity and length of economic downturn is unknown due to the
social distancing methods currently in place by the UK Government. However, the
majority of the Group’s subsidiaries are continuing to trade by the virtue of being online
or in a construction related sector, albeit it at a reduced volume.
The pledges made by the UK Government provide further comfort to the directors that
they will have access to additional funding, should they require, from the various
measures that the Government has put in place to help protect employment and support
businesses through this period of uncertainty. All subsidiaries are currently accessing the
UK Government’s Job Retention Scheme and are pursuing other relevant schemes
available to them.
The directors have prepared Group cash flow projections for the period to 30 June 2021
based on latest subsidiary forecasts that show that the Group will be able to operate
within the Group’s current funding resources. The financial uncertainty created within the
economy as a result of Covid-19 is clearly difficult to forecast and predict, but the
directors have produced sensitised forecasts based on their best estimates of likely
outcomes and they believe that, for the 12 month period from the date of signing these
financial statements, the Group will be able to operate within the financial facilities
available to it. Post year end, the Group has secured an extension and additional funding
from existing debt providers to 30 June 2021 to enable the business to operate within
the financial facilities available to it.
7
CEPS PLC
Strategic Report continued
Coronavirus
continued
Furthermore, the directors are comforted by the clear sentiment from the UK
Government that they will support business during this difficult time with a range of
measures already outlined to protect jobs and business, with more to come.
On this basis, the directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future and for at least
12 months from the date of these financial statements. The directors, therefore, continue
to adopt the going concern basis in preparing the financial statements.
Further information around how the directors have assessed going concern is set out in
the notes to the financial statements on page 25.
Future developments
A review of the business and its prospects are set out in the Chairman’s Statement on
pages 2 to 5.
By order of the Board
V E Langford
Company Secretary
21 May 2020
8
Directors
CEPS PLC
Directors’ Report
The directors have pleasure in submitting their report and the audited consolidated
financial statements of the Group for the year ended 31 December 2019.
The directors of the Company who were in office during the year and up to the date of
signing the financial statements were as follows:
D A Horner (60) is an executive director and Chairman. He qualified as a Chartered
Accountant in 1985 with Touche Ross & Co. In 1986 he joined 3i Corporate Finance
Limited. In 1997 he set up Chelverton Asset Management Limited which specialises in
managing portfolios of investments in private companies and small to medium size public
companies. He set up and manages Chelverton Growth Trust Plc, manages the
Chelverton UK Dividend Trust Plc and is a director of a number of private companies. In
2013 he resigned his membership of the Institute of Chartered Accountants in England and
Wales, as his career is now fully involved in fund management.
V E Langford (58) is Group Finance Director. She is a Chartered Accountant and is also
the Company Secretary of CEPS PLC.
D E Johnson (60) is a non-executive director. He has worked in the investment sector
for a number of years. Between 2003 and 2013 he worked for Panmure Gordon as
Head of Sales from 2006 and then Head of Equities from 2009. More recently he has
acted as a consultant to Chelverton Asset Management and acted as a non-executive
director of both private and AIM quoted companies. He has recently been appointed as
Chairman of Diversified Gas & Oil PLC.
G C Martin (75) is a non-executive director. He is a Chartered Accountant who was
previously Finance Director and Company Secretary of the Group.
M D Pollard retired on 29 March 2019 and was replaced by D E Johnson.
The director retiring by rotation in accordance with Articles 71 and 72 is V E Langford
who, being eligible, offers herself for re-election.
The Company purchased and maintained throughout the financial year and up to the date
of this report, Directors’ and Officers’ liability insurance in respect of itself and its directors.
Significant shareholdings
The following shareholders held more than 3% of the Company’s ordinary shares at
12 May 2020:
Chelverton Growth Trust Plc
Charles Stanley & Co Ltd Rock (Nominees) Ltd*
D A Horner
Mrs M C Horner
Lawshare Nominees**
Shares
5,060,000
4,689,445
2,225,972
1,000,000
738,646
%
29.8
27.6
13.1
5.9
4.3
* Included within this holding are shares held on behalf of D A Horner and close family
members. Holdings are on behalf of D A Horner's SIPP (970,838 shares, 5.7%),
on behalf of D A Horner personally (84,500 shares, 0.5%) and on behalf of his mother,
Mrs E Horner (350,000 shares, 2.1%).
* Included within this holding are shares held by M E Thistlethwayte and his family.
M E Thistlethwayte holds personally and on behalf of his wife and children 2,410,000
shares, 14.2%. Mrs R Thistlethwayte holds 590,000 shares, 3.5%.
** Included within this holding are 522,709 shares of which M D Pollard is the beneficial
owner and a further 166,667 shares owned by his mother, Mrs C Pollard, over which he
has investment authority.
9
9
CEPS PLC
Directors’ Report continued
Financial and treasury policy The Group finances its operations by a combination of retained profits, management
of working capital, debtor backed working capital facilities and medium-term loans.
The disclosures for financial instruments are made in note 25a.
Disclosure of information
to auditor
For further details of Group financial risk and management thereof see note 2.
No dividend was paid in 2019 (2018: £nil).
So far as each director is aware, there is no relevant information of which the Company’s
auditor is unaware. Relevant information is defined as ‘information needed by the
Company’s auditor in connection with preparing their report’. Each director has taken all
the steps (such as making enquiries of other directors and the auditor and any other steps
required by the director’s duty to exercise due care, skill and diligence) that he/she ought
to have taken in his/her duty as a director in order to make himself/herself aware of any
relevant audit information and to establish that the Company’s auditor is aware of that
information.
Independent auditor
Cooper Parry Group Limited was appointed as auditor for CEPS PLC on 5 December
2018 and their re-appointment will be submitted to the Annual General Meeting.
Statement of directors’
responsibilities
The directors are responsible for preparing the Annual Report and financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year.
Under that law the directors have prepared the Group and parent company financial
statements in accordance with International Financial Reporting Standards (IFRSs) as
adopted by the European Union. Under company law the directors must not approve
the financial statements unless they are satisfied that they give a true and fair view of the
state of affairs of the Group and the Company and of the profit or loss of the Group for
that period. In preparing these financial statements, the directors are required to:
– select suitable accounting policies and then apply them consistently;
– make judgements and accounting estimates that are reasonable and prudent;
– state whether applicable IFRSs as adopted by the European Union have been
followed, subject to any material departures disclosed and explained in the financial
statements;
– prepare the financial statements on the going concern basis, unless it is inappropriate
to presume that the Company and the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient
to show and explain the Company’s transactions and disclose with reasonable accuracy
at any time the financial position of the Company and the Group and enable them to
ensure that the financial statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Company and the Group and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and
financial information on the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
The Company is compliant with the AIM Rule 26 regarding the Company’s website.
1010
CEPS PLC
Directors’ Report continued
Employees
The Group employed 321 (2018: 214) employees at the year end.
The Group’s policy is to actively involve its employees in the business to ensure that
matters of concern to them, including the Group’s aims and objectives and the financial
and economic factors which impact them are communicated in an open and regular
manner.
The directors are committed to delivering the highest standards of health and safety for
employees, customers and others that might be affected by the Group’s activities.
The Group is committed to employing the right people, training them well and promoting
from within wherever possible. Well trained and motivated employees are key to
delivering good service to the Group’s customers and are fundamental to the long-term
success of the business.
The Group operates an equal opportunities policy that aims to treat individuals fairly and
not to discriminate on the basis of sex, race, ethnic origin, disability or any other basis.
Applications for employment are fully considered on their merits, and employees are
given appropriate training and equal opportunities for career development and
promotion.
By order of the Board
V E Langford
Company Secretary
21 May 2020
11
CEPS PLC
Corporate Governance
It is the Board’s intention to comply with the QCA Corporate Governance Code for Small
and Mid-Size Quoted Companies, as far as is reasonably practicable for a company of
its size.
The Board is committed to high standards of corporate governance and recognises that
it is accountable to shareholders for good governance. The Company’s corporate
governance procedures define the duties and constitution of the Board and the various
Board committees and, as appropriate, specify responsibilities and level of responsibility.
For details around how the Group applies specific principles of the Code please refer to
the Company’s website www.cepsplc.com. The principal procedures are summarised
below:
The Board comprises the Chairman, the Finance Director and two Non-Executive
Directors. Further details of the Board members are given in the Directors’ Report on
pages 9 to 11.
All directors are subject to retirement by rotation and re-election by the shareholders in
accordance with the Articles of Association.
The Board meets regularly, at least six times a year and with additional meetings being
arranged when necessary.
The Company seeks constructive dialogue with institutional and private shareholders
through direct contact and through the opportunity for all shareholders to attend and ask
questions at the Annual General Meeting.
This committee comprises G C Martin (Chair) and D E Johnson. The audit committee is
responsible for the appointment of the external auditor, agreeing the nature and scope of
the audit and reviewing and making recommendations to the Board on matters related
to the issue of financial information to the public. It assists all directors in discharging
their responsibility to ensure that accounting records are adequate and that the financial
statements give a true and fair view.
The Board
Audit committee
Nomination committee
This committee is comprised of D E Johnson (Chair) and D A Horner. It is responsible
for making recommendations to the Board on any appointment to the Board.
Remuneration committee
This committee is comprised of D E Johnson (Chair) and G C Martin. The remuneration
committee sets the remuneration and other terms of employment of executive directors.
Remuneration levels are set by reference to individual performance, experience and
market conditions with a view to providing a package appropriate for the responsibilities
involved.
Directors’ contracts are designed to provide the assurance of continuity which the Company
desires. There are no provisions for pre-determined compensation on termination.
Pensions for directors were based on salary alone and were provided by the Company
defined contribution scheme and defined benefits scheme. Contributions were paid to
these schemes in accordance with independent actuarial recommendations or funding
rates determined by the remuneration committee as appropriate to the type of scheme.
From 2010 no benefits have accrued to directors under these schemes. Non-executive
directors have no service contracts and no pension contributions are made on their
behalf.
12
12
CEPS PLC
Corporate Governance continued
AIM committee
Internal financial control
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.
To ensure that these obligations are being discharged, the Board has established a
committee of the Board (the ‘AIM committee’), chaired by V E Langford. 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.
The Board has overall responsibility for the system of internal financial control which is
designed with regard to the size of the Company to provide reasonable, but not absolute,
assurance against material misstatement or loss. The Board reviews the effectiveness of the
internal controls and has concluded that the internal financial control environment is
appropriate, with no significant matters noted. The organisational structure of the Group
gives clear management responsibilities in relation to internal financial control. Financial risks
are controlled through clearly laid down authorisation levels. There is an annual budget
which is approved by the directors. The results are reported monthly and compared to the
budget. The audit committee receives a report from the external auditors annually.
Going concern
The directors continue to adopt the going concern basis in preparing the financial
statements for the reasons explained in the Strategic Report on pages 7 and 8.
1313
CEPS PLC
Independent Auditor’s Report
to the members of CEPS PLC
Opinion
Basis for opinion
We have audited the financial statements of CEPS plc (the ‘parent company’) and its
subsidiaries (the ‘Group’) for the year ended 31 December 2019 which comprise the
Consolidated Income Statement and Statement of Comprehensive Income, the
Consolidated and Company Statements of Changes in Equity, the Consolidated and
Company Statements of Financial Position, the Consolidated and Company Cash Flow
Statements and the notes to the financial statements, including a summary of significant
accounting policies. The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union.
In our opinion, the financial statements:
– give a true and fair view of the state of the Group’s and the parent company’s affairs
as at 31 December 2019 and of the Group’s loss for the year then ended;
– the Group and parent company financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union; and
– the financial statements have been prepared in accordance with the requirements of
the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK)
(ISAs (UK)) and applicable law. Our responsibilities under those standards are further
described in the auditor’s responsibilities for the audit of the financial statements section
of our report. We are independent of the Group and the parent company in accordance
with the ethical requirements that are relevant to our audit of the financial statements in
the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Material uncertainty related
to going concern
We draw attention to note 1 in the financial statements, which indicates that the impact
of Coronavirus creates material uncertainty in relation to the Group’s ability to continue
as a going concern. Our opinion is not modified in respect of this matter.
14
14
CEPS PLC
Independent Auditor’s Report
to the members of CEPS PLC continued
Key audit matters
Materiality
We identified the key audit matters described below as those which were most significant
in the audit of the financial statements of the current period. Key audit matters include
the most significant assessed risks of material misstatement, including those risks that
had the greatest effect on our overall audit strategy, the allocation of resources in the
audit and the direction of the efforts of the audit team.
In addressing these matters, we have performed the procedures below which were
designed to address the matter in the context of the financial statements as a whole and
in forming our opinion thereon. Consequently, we do not provide a separate opinion on
these individual matters.
Carrying value and impairment of goodwill
The Group has a significant goodwill balance in relation to acquisitions made by
management. The Group’s assessment of carrying value requires significant judgement,
in particular regarding cash flows, growth rates, discount rates and sensitivity
assumptions.
Our response to the risk
We challenged the assumptions used in the impairment model for goodwill,
which is described in note 18.
We considered historical trading performance by comparing recent growth rates of
both revenue and operating profit.
We assessed the appropriateness of the assumptions concerning growth rates and
inputs to the discount rates against latest market expectations.
We performed sensitivity analysis to determine whether an impairment would be
required if costs increase at a higher than forecast rate.
Impact of Covid-19 on going concern
Subsequent to the year end, there has been an outbreak of Coronavirus which has
developed into a global pandemic. At this stage the directors are assessing what impact
this may have on the Group as there is a high level of uncertainty about the extent and
the timeframe of the virus on the global economy.
Our response to the risk
We have reviewed the financial forecasts prepared for the Group and challenged the
assumptions used in these forecasts whilst considering the impacts of Coronavirus.
We considered performance of the Group post year end and the finances that are
available to the Group and when these are expected to be repaid.
We considered adequacy of disclosures made in respect of going concern in the
financial statements.
The materiality for the Group financial statements as a whole was set at £326,000. This
has been determined with reference to the benchmark of the Group’s revenue which we
consider to be an appropriate measure for a group of companies such as these.
Materiality represents 1.5% of Group revenue as presented in the Group Income
Statement.
The materiality for the parent company financial statements as a whole was set at
£212,000. This has been determined with reference to the parent company’s gross
assets, which we consider to be an appropriate measure for a holding company with
investments in trading subsidiaries. Materiality represents 10% of gross assets as
presented on the face of the parent company’s Statement of Financial Position.
1515
CEPS PLC
Independent Auditor’s Report
to the members of CEPS PLC continued
An overview of the scope
of our audit
We adopted a risk-based audit approach. We gained a detailed understanding of the
Group’s business, the environment it operates in and the risks it faces. The key elements
of our audit approach were as follows:
The audit team evaluated each component of the Group by assessing its materiality to
the Group as a whole. This was done by considering the percentage of total Group
assets, liabilities, revenues and profit before taxes which each component represented.
From this, we determined the significance of the component to the Group as a whole,
and devised our planned audit response. In order to address the audit risks described
in the Key audit matters section which were identified during our planning process, we
performed a full-scope audit of the financial statements of the parent company,
CEPS PLC, and all of the Group’s trading subsidiaries, providing 100% coverage of
revenues and profit before tax for these components. The operations that were subject
to full-scope audit procedures made up 100% of consolidated revenues and profit before
tax.
The directors are responsible for the other information. The other information comprises
the information included in the Annual Report, other than the financial statements and our
Auditor’s Report. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the Chairman's Statement, the Strategic Report and the
Directors’ Report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
– the Chairman's Statement, the Strategic Report and the Directors’ Report have been
prepared in accordance with applicable legal requirements.
Other information
Opinions on other matters
prescribed by the
Companies Act 2006
Matters on which we are
required to report by
exception
In the light of our knowledge and understanding of the parent company and its
environment obtained in the course of the audit, we have not identified material
misstatements in the Chairman's Statement, the Strategic Report or the Directors’
Report.
We have nothing to report in respect of the following matters in relation to which the
Companies Act 2006 requires us to report to you if, in our opinion:
– adequate accounting records have not been kept by the parent company, or returns
adequate for our audit have not been received from branches not visited by us; or
– the financial statements are not in agreement with the accounting records and returns; or
– certain disclosures of directors’ remuneration specified by law are not made; or
– we have not received all the information and explanations we require for our audit.
1616
CEPS PLC
Independent Auditor’s Report
to the members of CEPS PLC continued
Responsibilities of directors
Auditor’s responsibilities
for the audit of the financial
statements
As explained more fully in the Directors’ Responsibilities Statement set out on page 10,
the directors are responsible for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Company or to cease operations, or have no
realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an Auditor’s Report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these financial statements.
further description of our responsibilities
financial
A
statements
the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor’s
Report.
for the audit of the
located on
is
Use of our report
This report is made solely to the parent company’s members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the parent company’s members those matters we
are required to state to them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than
the parent company and the parent company’s members as a body, for our audit work,
for this report, or for the opinions we have formed.
Katharine Warrington (Senior Statutory Auditor)
for and on behalf of Cooper Parry Group Limited
Chartered Accountants
Statutory Auditor
Sky View, Argosy Road, East Midlands Airport, Castle Donington, Derby DE74 2SA
21 May 2020
1717
CEPS PLC Year ended 31 December 2019
Consolidated Statement of Comprehensive Income
Revenue)
Cost of sales)
Gross profit/(loss))
Administration expenses
Adjusted operating (loss)/profit
Exceptional item
Customer list impairment
Operating (loss)/profit
Analysis of operating (loss)/profit
CCTrading
CCExceptional item
CCCustomer list impairment
CCGroup costs
Finance income
Finance costs
(Loss)/profit before tax
Taxation
Loss for the year
6
18
5
10
10
11
Other comprehensive loss:
Items that will not be reclassified
to profit or loss
Actuarial loss on defined benefit
pension plans
9
Other comprehensive loss
for the year, net of tax
Total comprehensive loss for the year
(Loss)/income attributable to:
Owners of the parent
Non-controlling interest
Total comprehensive (loss)/income
attributable to:
Owners of the parent
Non-controlling interest
Notes
4
2019)
£’000)
21,753)
(15,588)
)
6,165)
Continuing) Discontinued)
operations)
operations)
2018)
2018)
£’000)
£’000)
18,474)
(12,469)
)
6,005)
(5,026)
)
979)
–)
(588)
)
391)
1,365)
–)
(588)
(386)
)
391)
15)
(269)
)
137)
(568)
)
(431)
)
(88)
)
(88)
)
(519)
)
(946)
515)
)
(431)
)
(1,034)
515)
)
(519)
)
(6.26p)
)
3,118)
(3,172)
)
(54)
(296)
)
(350)
(53)
–)
)
(403)
(350)
(53)
–)
–)
)
(403)
–)
(42)
)
(445)
–)
)
(445)
)
–)
)
–)
)
(445)
)
(423)
(22)
)
(445)
)
(423)
(22)
)
(445)
)
(2.80p)
)
2018)
£’000)
21,592)
(15,641)
)
5,951)
(5,322)
)
629)
(53)
(588)
)
(12)
1,015)
(53)
(588)
(386)
)
(12)
15)
(311)
)
(308)
(568)
)
(876)
)
(88)
)
(88)
)
(964)
)
(1,369)
493)
)
(876)
)
(1,457)
493)
)
(964)
)
(9.06p)
)
(6,203)
)
(38)
(1,836)
–)
)
(1,874)
338)
(1,836)
–)
(376)
)
(1,874)
28)
(441)
)
(2,287)
(342)
)
(2,629)
)
(99)
)
(99)
)
(2,728)
)
(2,696)
67)
)
(2,629)
)
(2,795)
67)
)
(2,728)
)
Earnings per share
CCbasic and diluted
13
(15.86p)
)
The notes on pages 24 to 69 form part of the financial statements.
1818
CEPS PLC Year ended 31 December 2019
Consolidated and Company Statements of Financial Position
Company number 00507461
Assets
Equity
Liabilities
Group
2019)
£’000)
2018)
£’000)
Company
2019)
£’000)
2018)
£’000)
Notes
Non-current assets
Property, plant and equipment 15
16
Right-of-use assets
18
Intangible assets
19
Investments in subsidiaries
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
CC(excluding bank overdrafts) 31
20
21
Total assets
Capital and reserves attributable
to owners of the parent
Called up share capital
Share premium
Retained earnings
28
28
Non-controlling interest in equity
Total equity
Non-current liabilities
Borrowings
IFRS lease liability
Deferred tax liability
Current liabilities
Borrowings
IFRS lease liability
Trade and other payables
Current tax liabilities
Total liabilities
Total equity and liabilities
24
24
26
24
24
22
23
1,099)
1,072)
6,360)
–)
)
8,531)
)
2,254)
3,366)
1,958)
)
7,578)
)
16,109)
)
1,700)
5,841)
(6,808)
)
733)
2,018)
)
2,751)
)
5,152)
982)
109)
)
6,243)
)
2,174)
201)
3,544)
1,196)
)
7,115)
)
13,358)
)
16,109)
)
991)
–)
4,741)
–)
)
5,732))
)
1,815)
3,331)
1,705)
)
6,851)
)
12,583)
)
1,700)
5,841)
(4,013)
)
3,528)
1,932)
)
5,460)
)
1,128)
–)
88)
)
1,216)
)
2,734)
–)
2,180)
993)
)
5,907)
)
7,123)
)
12,583)
)
–)
–)
–)
1,023)
)
1,023)
)
–)
1,070)
21)
)
1,091)
)
12,114)
)
1,700)
5,841)
(10,467)
)
(2,926)
–)
)
4(2,926)
)
4,730)
–)
–)
)
4,730)
)
–)
–)
306)
4)
)
310)
)
5,040)
)
2,114)
)
–)
–)
–)
1,350)
)
1,350)
)
–)
553)
48)
)
601)
)
1,951)
)
1,700)
5,841)
(7,213)
)
328)
–)
)
328)
)
–)
–)
–)
)
–)
)
1,310)
–)
311)
2)
)
1,623)
)
1,623)
)
1,951)
)
The loss within the parent company financial statements for the year was £3,254,000
(2018: loss of £5,808,000).
The notes on pages 24 to 69 form part of the financial statements.
The financial statements on pages 18 to 69 were approved by the Board of Directors on
21 May 2020 and signed on its behalf by
D A Horner
Director
1919
CEPS PLC Year ended 31 December 2019
Consolidated and Company Statements of Cash Flows
Cash flows from operating activities (Loss)/profit for the financial year
(2,629)
Group
2019)
£’000)
Adjustments for:
CCDepreciation and amortisation
CCProfit on disposal of a subsidiary
CCAmounts written-off in relation
CCCCto subsidiary undertakings
CCCustomer list impairment
CCImpairment of goodwill
CCWrite-down of fixed assets
CCLoss on disposal of property,
CCCCplant and equipment
CCExceptional item
CCNet finance costs/(income)
CCDividends received
CCTaxation charge
Changes in working capital:
CCMovement in inventories
CCMovement in trade and other
CCCCreceivables
CCMovement in trade and other
CCCCpayables
CCMovement in Group undertakings
CCMovement in provisions
Cash generated from/(used in)
CCoperations
Corporation tax paid
Net cash generated from/(used in)
CCoperations
Cash flows from investing activities Interest received
Acquisition of subsidiary net
CCof cash acquired
Dividends received
Purchase of property, plant and
CCequipment
Proceeds from sale of assets
Purchase of intangibles
Repayment of loan stock
Loans to subsidiary companies
Net cash used in investing activities
Cash flows from financing activities Proceeds from/(repayment of) borrowings
Proceeds from share issue net of
CCissue costs
Dividend paid to non-controlling interest
Interest paid
Repayment of finance leases/IFRS 16
CCleases
Net cash generated from
CCfinancing activities
Net increase in cash and cash
CCequivalents
Cash and cash equivalents at the
CCbeginning of the year
Cash and cash equivalents
CCat the end of the year (note 31)
633)
–)
–)
–)
395)
229)
–)
–)
413)
–)
342)
172)
928)
(118)
–)
–)
)
365)
(341)
)
24)
)
28)
(1,790)
–)
(241)
–)
–)
–)
–)
)
(2,003)
)
2,885)
–)
–)
(310)
(343)
)
2,232)
)
253)
1,705)
)
1,958)
)
2018)
£’000)
(308)
470)
(147)
–)
588)
–)
–)
29)
–)
296)
–)
–)
(86)
(773)
1,682)
–)
(100)
)
1,651)
(258)
)
1,393)
)
–)
–)
–)
(859)
1)
(150)
–)
–)
)
(1,008)
)
(267)
1,326)
(45)
(311)
(234)
)
469)
)
854)
851)
)
1,705)
)
Company
2019)
£’000)
2018)
£’000)
(3,155)
(5,718)
–)
–)
–)
–)
–)
–)
–)
–)
5,421)
–)
–)
–)
–)
2,749)
20)
–)
–)
–)
(19)
(2)
(2,921)
(99)
)
(3,427)
–)
)
(3,427)
)
151)
–)
–)
–)
–)
–)
–)
–)
)
151)
)
3,420)
–)
–)
(171)
–)
)
–)
–)
(143)
(55)
–)
–)
(7)
104)
–)
–)
)
(398)
–)
)
(398)
)
100)
–)
55)
–)
–)
–)
163)
(1,465)
)
(1,147)
)
310)
1,326)
–)
(79)
–)
)
3,249)
)
1,557)
)
(27)
48)
)
21)
)
12)
36)
)
48)
)
The notes on pages 24 to 69 form part of the financial statements.
2020
CEPS PLC Year ended 31 December 2019
Group Statements of Cash Flows (prior year)
Cash flows from operating activities Profit/(loss) for the financial year
Adjustments for:
CCDepreciation and amortisation
CCProfit on disposal of a subsidiary
CCCustomer list impairment
CCLoss on disposal of property, plant and
CCCCequipment
CCNet finance costs
CCChanges in working capital:
CCMovement in inventories
CCMovement in trade and other receivables
CCMovement in trade and other payables
CCMovement in provisions
Cash generated from operations
Income tax paid
Net cash generated from operations
Cash flows from investing activities Purchase of property, plant and equipment
Proceeds from sale of assets
Purchase of intangibles
Net cash used in investing activities
Cash flows from financing activities Repayment of borrowings
Proceeds from share issue net of issue costs
Dividend paid to non-controlling interest
Interest paid
Repayment of capital element of finance leases
Net cash generated from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning
CCof the year
Cash and cash equivalents at the end
CCof the year (note 31)
Continuing)
operations)
2018)
£’000)
Discontinued)
operations)
2018)
£’000)
137)
324)
–)
588)
29)
254)
(90)
(731)
939)
(50)
)
1,400)
(258)
)
1,142)
)
(769)
1)
(150)
)
(918)
)
(267)
1,326)
(45)
(269)
(115)
)
630)
)
854)
851)
)
1,705)
)
(445)
146)
(147)
–)
–)
42)
4)
(42)
743)
(50)
)
251)
–)
)
251)
)
(90)
–)
–)
)
(90)
)
–)
–)
–)
(42)
(119)
)
(161)
)
–)
–)
)
–)
)
2018)
£’000)
(308)
470)
(147)
588)
29)
296)
(86)
(773)
1,682)
(100)
)
1,651)
(258)
)
1,393)
)
(859)
1)
(150)
)
(1,008)
)
(267)
1,326)
(45)
(311)
(234)
)
469)
)
854)
851)
)
1,705)
)
The notes on pages 24 to 69 form part of the financial statements.
21
CEPS PLC Year ended 31 December 2019
Consolidated and Company Statements of Changes in Equity
Attributable
to owners)
)
Share) Retained)
Share capital) premium) earnings)
£'000)
£'000)
£'000)
Non-)
of the) controlling)
interest)
parent)
£'000)
£'000)
Total)
equity)
£'000)
Group
At 1 January 2018
1,320)
)
4,843)
)
Actuarial loss
(Loss)/profit for the year
Total comprehensive
CC(loss)/income for the year
Changes in ownership
CCinterest in a subsidiary
Dividend paid to
CCnon-controlling interest
Total distributions recognised
CCdirectly in equity
Correction of opening position
Proceeds from shares issued
CCnet of costs
At 31 December 2018
Actuarial loss
(Loss)/profit for the year
Total comprehensive (loss)/
CCincome for the year
Acquisition of Milano group
)At 31 December 2019
(2,556)
)
(88)
(1,369)
)
3,607)
)
(88)
(1,369)
)
(1,457)
)
(1,457)
)
–)
–)
)
–)
)
–)
–)
)
–)
–)
)
–)
)
52)
1,326)
)
3,528)
)
(99)
(2,696)
)
(2,795)
)
–)
)
733)
)
1,347)
)
4,954)
)
–)
493)
)
493)
)
(88)
(876)
)
(964)
)
137)
137)
(45)
)
92)
)
–)
–)
)
1,932)
)
(45)
)
92)
)
52)
1,326)
)
5,460)
)
–)
67)
)
(99)
(2,629)
)
67)
)
19)
)
2,018)
)
(2,728)
)
19)
2,751)
)
–)
–)
)
–)
)
–)
–)
)
–)
)
–)
380)
)
–)
–)
)
–)
)
–)
–)
)
–)
)
52)
946)
)
1,700)
)
5,841)
)
–)
–)
)
–)
–)
)
–)
)
–)
)
1,700)
)
–)
)
–)
)
5,841)
)
(4,013)
)
(99)
(2,696)
)
(2,795)
)
–)
)
(6,808)
)
Share capital comprises the nominal value of shares subscribed for.
Share premium represents the amount above nominal value received for shares issued,
less transaction costs.
Retained earnings comprise accumulated comprehensive income for one year and prior
periods attributable to the parent, less dividends paid.
Non-controlling interest represents the element of retained earnings which are not
attributable to the owners of the parent.
The notes on pages 24 to 69 form part of the financial statements.
2222
CEPS PLC Year ended 31 December 2019
Consolidated and Company Statements of Changes in Equity
continued
Company
)
At 1 January 2018
Actuarial loss
Loss for the year
Total comprehensive loss
CCfor the year
Proceeds from shares issued
CCnet of costs
At 31 December 2018
Actuarial loss
Loss for the year
Total comprehensive loss
CCfor the year
At 31 December 2019
Share capital)
£'000)
1,320)
)
–)
–)
)
–)
380)
)
1,700)
)
–)
–)
)
–)
)
Share)
premium)
£'000)
4,895)
)
–)
–)
)
Retained)
earnings)
£'000)
(1,405)
)
(88)
(5,720)
)
Total)
equity)
£'000)
4,810)
)
(88)
(5,720)
)
–)
(5,808)
(5,808)
946)
)
5,841)
)
–)
–)
)
–)
)
–)
)
(7,213)
)
(99)
(3,155)
)
(3,254)
)
1,326)
)
328)
)
(99)
(3,155)
)
(3,254)
)
(2,926)
)
1,700)
)
5,841)
)
(10,467)
)
The notes on pages 24 to 69 form part of the financial statements.
2323
1. Accounting policies
CEPS PLC 31 December 2019
Notes to the Financial Statements
CEPS PLC (the ‘Company’) is a company incorporated and domiciled in England and
Wales. The Company is a public company limited by shares, which is listed on the AIM
market of the London Stock Exchange. The address of the registered office is 11 Laura
Place, Bath BA2 4BL.
The principal activities of the Company are that of an industrial holding company,
acquiring stakes in stable, profitable and steadily growing entrepreneurial companies. The
activities of the Company’s trading subsidiaries are described in note 19. Segmental
analysis is given in note 4.
The financial statements are presented in British Pounds Sterling (£), the currency of the
primary economic environment in which the Group’s activities are operated and are
reported in £’000. The Group comprises CEPS PLC and its subsidiary companies as set
out in note 19. The financial statements are to the year ended 31 December 2019
(2018: year ended 31 December 2018).
The registered number of the Company is 00507461.
The principal accounting policies applied in the preparation of these consolidated
financial statements are set out below. These policies have been consistently applied
throughout the year, unless otherwise stated.
Basis of preparation
These financial statements have been prepared on a going concern basis under the
historical cost convention in accordance with the International Financial Reporting
Standards as adopted by the European Union (‘IFRS’), IFRIC interpretations and the
Companies Act 2006 as applicable to companies reporting under IFRS.
The consolidated financial statements have been prepared on a going concern basis and
under the historical cost convention. The Group’s business activities and financial
position likely to affect its future development, performance and position are set out in
the front end of the report.
The preparation of financial statements in conformity with IFRS requires the use of certain
critical accounting estimates. It also requires management to exercise its judgement in
the process of applying the Group’s accounting policies. The areas involving a higher
degree of judgement or complexity, or areas where assumptions and estimates are
significant to the consolidated financial statements are disclosed in note 3.
The Company has taken advantage of the exemption under the Companies Act 2006 not
to present its own Statement of Comprehensive Income. Information about the Company
result for the year is given on page 19.
2424
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
1. Accounting policies
1. continued
Going concern
The lack of certainty over trading and the ability of the subsidiaries to generate cash in
a socially distanced environment over the next 12 months created by the Coronavirus
pandemic represents a material uncertainty over going concern. No adjustments have
been made to the financial statements in respect of amounts should the going concern
basis not be appropriate.
The directors consider that it is appropriate for the financial statements to be prepared
on a going concern basis due to the additional funding from existing debt providers in
place post year end which provides confidence to the directors that the Group will be
able to operate within its current funding facilities to 30 June 2021.
As set out in the Strategic Report on pages 7 and 8, the directors have carried out a
detailed assessment of going concern as part of the financial reporting process and,
having conducted a full review of the updated business plan, budgets and associated
commitments at the year end, have concluded that the Group has adequate financial
resources to continue in operational existence for at least 12 months from the date of the
signing of these financial statements. The directors, therefore, continue to adopt the
going concern basis in the preparation of these accounts.
Standards and interpretations
The Group has adopted the following new standards and amendments for the first time
for their annual reporting period commencing 1 January 2019:
IFRS 16, Leases;
Amendments to IFRS 9, Prepayment Features with Negative Compensation;
Amendments to IAS 28, Long-term Interests in Associates and Joint Ventures;
Annual improvements to IFRS Standards 2015-2017 Cycle;
Amendments to IAS 19, Plan Amendment, Curtailment or Settlement;
Interpretation 23, Uncertainty over Income Tax Treatments.
The Group had to change its accounting policies as a result of adopting IFRS 16.
The Group elected to adopt the new rules on a modified retrospective basis from
1 January 2019. This is disclosed in note 29.
The other amendments listed above did not have any impact on the amounts recognised
in prior periods and are not expected to significantly affect the current or future periods.
Certain new accounting standards and interpretations have been published that are not
mandatory for 31 December 2019 reporting periods and have not been early adopted by
the Group. These standards are not expected to have a material impact on the entity in
the current or future reporting periods and on foreseeable future transactions.
2525
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
1. Accounting policies
1. continued
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the
Company and its subsidiaries (the ‘Group’).
The financial statements of the subsidiaries are prepared for the same reporting year as
the parent company using consistent accounting policies. Control is achieved where the
Group is exposed, or has rights, to variable returns from its involvement with the investee
entity and has the ability to affect these returns through its power over the investee.
Control is lost when the Group no longer has rights to variable returns from its
involvement with an investee entity and no longer has the ability to affect those returns
as it no longer has power over the investee. When control is lost the subsidiaries are
de-recognised and no longer consolidated.
The results of subsidiaries acquired or disposed of during the year are included in the
Consolidated Statement of Comprehensive Income from the effective date of acquisition
or up to the effective date of disposal, as appropriate. For subsidiaries entering
administration the disposal date is taken to be the date the administrator is appointed.
The Group uses the acquisition method of accounting to account for business
combinations. The consideration transferred for the acquisition of a subsidiary is the fair
values of the assets transferred, the liabilities incurred and the equity interests issued by
the Group. The consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration agreement. Acquisition related costs are
expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair values at the
acquisition date. On an acquisition by acquisition basis, the Group recognises any non-
controlling interest in the acquiree either at fair value or at the non-controlling interest’s
proportionate share of the acquiree’s net assets.
The excess of the consideration transferred, the amount of any non-controlling interest
in the acquiree and the acquisition date fair value of any previous equity interest in the
acquiree over the fair value of the Group’s share of the identifiable net assets acquired is
recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary
acquired in the case of a bargain purchase, the difference is recognised directly in the
Consolidated Statement of Comprehensive Income.
Investments in subsidiaries are accounted for at cost less impairment. Acquisition related
costs are expensed as incurred. Cost is adjusted to reflect changes in consideration
arising from contingent consideration amendments within the relevant adjustment period.
Inter-company transactions, balances and unrealised gains on transactions between
Group companies are eliminated. Unrealised losses are also eliminated. Accounting
policies of subsidiaries have been changed where necessary to ensure consistency with
the policies adopted by the Group.
Changes in ownership interests in subsidiaries without change of control
Transactions with non-controlling interests that do not result in loss of control are
accounted for as equity transactions; that is, as transactions with owners in their capacity
as owners. The difference between fair value of any consideration paid and the relevant
share acquired of the carrying value of net assets of the subsidiary is recorded in equity.
Gains or losses on disposals to non-controlling interests are also recorded in equity.
Segmental reporting
A business segment is a group of assets and operations engaged in providing products
or services that are subject to risks and returns that are different from those of other
business segments. A geographical segment is engaged in providing products or
services within a particular economic environment that are subject to risks and returns
that are different from those of segments operating in other economic environments.
2626
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
1. Accounting policies
1. continued
Operating segments are reported in a manner consistent with the internal reporting
provided to the chief operating decision-maker, the Board, and used to assess
performance. Information is given for all operating segments where discrete financial
information is available.
Revenue recognition
Revenue is recognised when the amount of revenue can be reliably measured; when it is
probable that future economic benefits will flow to the entity; and when specific
performance obligations have been met. The Company bases its estimate of return on
historical results, taking into account the customer type, transaction type and the
specifics of each arrangement.
The revenues of Aford Awards, Davies Odell, Friedman’s and Milano Pro-Sport arise from
the fair values received or receivable for goods sold which are recognised on despatch
and exclude VAT.
The revenues of CEM Press, Hickton and Sunline are recognised in the accounting
period in which the services are provided by reference to the performance obligations
satisfied by the year end date. Performance obligations are clearly defined within each
customer contract.
Property, plant and equipment
Property, plant and equipment is stated at initial cost, less accumulated depreciation and
impairment losses. Cost includes the original price of the asset and the costs attributable
to bringing the asset to its working condition for its intended use.
Depreciation is calculated on an appropriate basis over the deemed useful economic life
of an asset and is applied to the cost less any residual value. The asset classes are
depreciated over the following periods (the useful life, the residual value and the
depreciation method are assessed annually):
Plant and machinery, tools and moulds: Between five and 10 years, over the period
of the contract, or between 15% to 33% on a
reducing balance basis
Motor vehicles:
Leasehold property improvements:
Between three and five years straight line, or
25% reducing balance
Over the term of the lease on a straight line
basis
The residual values and useful lives are reviewed and adjusted if appropriate at each date
of the Statement of Financial Position.
Gains and losses on disposals are determined by comparing the proceeds with the
carrying amount and are recognised within administration expenses in the Consolidated
Statement of Comprehensive Income.
Repairs and maintenance are charged to the Consolidated Statement of Comprehensive
Income during the period in which they are incurred.
Depreciation on right-of-use assets is charged over the life of the lease.
Intangible assets
a) Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of the
consideration transferred, the amount of any non-controlling interest in the acquiree over
the fair value of any previous equity interest in the acquiree over the fair value of the
identifiable net assets acquired. If the total consideration transferred, non-controlling
2727
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
1. Accounting policies
1. continued
interest recognised and previously held interest measured at fair value is less than the fair
value of the net assets acquired, the difference is recognised directly in equity.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated
to appropriate cash generating units (those expected to benefit from the business
combination) and is not amortised, but is tested for impairment at the operating segment
level.
b) Customer lists
Customer lists acquired in a business combination are recognised at fair value at the
acquisition date. Customer lists are assessed to have indefinite life. When a decision is
taken to terminate a product or a service, the related customer lists are amortised over
the remaining life of the product or service. Impairment reviews are undertaken annually
or if changes in circumstances indicate a potential impairment.
c) Computer software and websites
Computer software and costs incurred in the development of websites are stated at
cost less accumulated amortisation. Non-integral computer software purchases are
capitalised at cost. These costs are amortised over their estimated useful lives (between
three and 10 years). Costs associated with implementing or maintaining computer
software programmes are recognised as an expense as incurred.
Costs incurred in the development of new websites are capitalised only where the cost
can be directly attributed to developing the website to operate in the manner intended
by management and only to the extent of the future economic benefits expected from its
use. These costs are amortised over their useful lives (between three and five years).
Costs associated with maintaining websites are recognised as an expense as incurred.
d) Licences for the distribution of certain products
Licences for the distribution of certain products are amortised evenly over three years.
Impairment of intangible assets and property, plant and equipment
Intangible assets that have an indefinite useful life are not subject to amortisation, but are
reviewed for impairment annually or whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. Assets that are subject to
amortisation or depreciation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment
loss is recognised for the amount by which the carrying amount of the asset exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less
costs to sell and value in use. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash flows (cash-
generating units). Any impairment losses relating to goodwill are not reversed.
Investments
Investments in subsidiaries and associates are stated at cost, which reflects the fair value
of the consideration paid. The investments are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount may not be recoverable.
Inventories
Inventories are valued at the lower of cost and net realisable value. Raw materials are
valued on a first in first out basis at net invoice values charged by suppliers. The value
of work in progress and finished goods includes the direct cost of materials and labour
together with an appropriate proportion of factory overheads, where applicable.
Provision is made against the value of inventory, where relevant, to reduce the carrying
value of slow moving, obsolete and defective inventory to its net realisable value.
2828
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
1. Accounting policies
1. continued
Current and deferred taxation
The tax charge for the year comprises current and deferred tax. The current income tax
charge is calculated on the basis of the tax laws enacted or substantively enacted at the
date of the Statement of Financial Position in the countries where the Company’s
subsidiaries and associates operate and generate taxable income. Management
periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation and establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their carrying
amounts in the consolidated financial statements. However, the deferred income tax is
not accounted for if it arises from initial recognition of an asset or liability in a transaction
other than a business combination that at the time of the transaction affects neither
accounting nor taxable profit or loss. Deferred income tax is determined using tax rates
(and laws) that have been enacted or substantively enacted by the date of the Statement
of Financial Position and are expected to apply when the related deferred income tax
asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future taxable
profits will be generated enabling the utilisation of the temporary timing differences.
Foreign currencies
The results are recorded in British Pounds Sterling which is deemed to be the functional
currency of the Group, the Company and all its subsidiaries.
Foreign currency transactions are expressed in Sterling at the rates of exchange ruling at
the date of the transaction. Monetary assets and liabilities denominated in foreign
currencies at the year end are translated at the rates of exchange ruling at the date of
the Statement of Financial Position. Differences arising from changes in exchange rates
during the year are taken to the Consolidated Statement of Comprehensive Income.
Pensions
The Group operates a defined benefit pension scheme for the benefit of some of its
former employees, the assets of which are held separately from those of the Group in
independently administered funds.
Pension scheme assets are measured using market value. Pension scheme liabilities are
measured using the projected unit actuarial method and are discounted at the current
rate of return on a high quality corporate bond of equivalent terms and currency to the
liability. The increase in the present value of the liabilities of the Group’s defined benefit
pension schemes expected to arise from employee service in the period is charged to
operating profit. Actuarial gains and losses arising from experience adjustments and
changes in actuarial assumptions are recognised in the Consolidated Statement of
Comprehensive Income.
Pension schemes’ surpluses are not recognised in the Statement of Financial Position as
the Group does not have an unconditional right to the refund of surpluses under the
scheme.
Defined benefit pension costs are recognised in the Consolidated Statement of
Comprehensive Income. Contributions to the defined contribution schemes are charged
to the Consolidated Statement of Comprehensive Income as incurred. The Group has
no further payment obligations once contributions have been paid.
Exceptional items
Exceptional items are transactions that fall within the ordinary activities of the Company,
but are presented separately due to their size or incidence.
2929
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
1. Accounting policies
1. continued
Leasing
Prior to 1 January 2019 leases of property, plant and equipment and motor vehicles were
classified as either finance or operating leases under IAS 17. Payments made under
operating leases (net of any incentives received from the lessor) were charged to the
Consolidated Statement of Comprehensive Income on a straight-line basis over the
period of the lease. The impact of the change is disclosed in note 29. Under IFRS 16,
which the Group has adopted effective for the period starting 1 January 2019, leases are
recognised as a right-of-use asset and a corresponding liability at the date at which the
leased asset is available for use by the Company. Each lease payment is allocated
between the liability and the finance cost. The finance cost is charged to the
Consolidated Statement of Comprehensive Income over the lease period so as to
produce a constant periodic rate of interest on the remaining balance of the liability for
each period. The right-of-use asset is depreciated over the shorter of the asset’s useful
life and the lease term on a straight-line basis.
In adopting this approach, the Group has applied the expedient to expense long-term
leases with a remaining lease term of 12 months or less or short-term leases (less than
12 months). These leases are disclosed as operating leases. Rentals payable under
operating leases are charged in the Consolidated Statement of Comprehensive Income
on a straight-line basis over the lease term.
Non-controlling interest
Non-controlling interests represent the interest of shareholders in subsidiaries which are
not wholly owned by the Group.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation
as a result of past events, it is probable that an outflow of resources will be required to
settle the obligation and the amount has been reliably estimated. Provisions are not
recognised for future operating losses.
Provisions are measured at the present value of the expenditures expected to be
required to settle the obligation using a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the obligation. The
increase in the provision due to passage of time is recognised as interest expense.
Further details on provisions recognised are disclosed in note 27.
Share capital
Ordinary shares are classified as equity while redeemable preference shares are classified
as liabilities (see note 28).
Financial instruments
The Group and Company classifies financial instruments, or their component parts, on
initial recognition as a financial asset, a financial liability or an equity instrument in
accordance with the substance of the contractual arrangement.
Financial instruments are recognised on the Statement of Financial Position at fair value
when the Group and Company becomes a party to the contractual provisions of the
instrument.
a) Loans and receivables
Trade receivables are amounts due from customers for merchandise sold or services
performed in the ordinary course of business. If collection is expected in one year or less
(or in the normal operating cycle of the business if longer), they are classified as current
assets. If not, they are presented as non-current assets.
3030
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
1. Accounting policies
1. continued
Trade and other receivables are recognised initially at fair value and subsequently
measured at amortised cost. A provision for impairment of trade receivables is
established when there is objective evidence that the Group will not be able to collect all
amounts due according to the original terms of the receivables. Significant financial
difficulties of the debtor, probability that the debtor will enter bankruptcy or financial
reorganisation, and default or delinquency in payments (more than 30 days overdue) are
considered indicators that the trade receivable is impaired. The amount of the provision
is the difference between the carrying amount of the asset and its estimated future cash
flow. The carrying amount of the asset is reduced through the use of a bad debt
provision and the amount of the loss is recognised in the Consolidated Statement of
Comprehensive Income within administration expenses. When a trade receivable is
uncollectible it is written off against the bad debt provision. Subsequent recoveries of
amounts previously written off are credited against cost of sales in the Consolidated
Statement of Comprehensive Income.
b) Cash and cash equivalents
Cash and cash equivalents include cash in hand, short-term bank deposits held at call
and bank overdrafts. Bank overdrafts are shown in current liabilities as borrowings. All
are carried at cost in the Statement of Financial Position.
c) Trade payables
Trade payables are obligations to pay for goods and services that have been acquired in
the ordinary course of business. Accounts payable are classified as current liabilities if
payment is due within one year or less (or in the normal operating cycle of the business
if longer). If not, they are presented as non-current liabilities.
Trade and other payables are initially recognised at fair value and subsequently measured
at amortised cost using the effective interest method. Trade payables includes trade
payables, other payables and accruals.
d) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred, and
subsequently stated at amortised cost using the effective interest method. Borrowings
include bank overdrafts, bank loans, other loans, trade receivables backed working
capital facilities and hire purchase obligations.
Borrowings are classified as current liabilities unless the Group has an unconditional right
to defer settlement of the liability for at least 12 months after the date of the Statement
of Financial Position.
e) Borrowing costs
The Group has no borrowing costs with respect to the acquisition or construction of
qualifying assets. All other borrowing costs are recognised as an expense as incurred
and in accordance with the effective interest rate methods.
3131
2. Financial risk
2. management
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
2.1 Financial risk factors
The Group and Company’s activities expose it to a variety of financial risks: market risk
(including foreign exchange risk and cash flow and fair value interest rate risk), credit risk
and liquidity risk. The Group and Company’s overall risk management programme
focuses on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the Group’s financial performance.
Risk management is carried out by local management under policies approved by the
Board of Directors.
a) Market risk
i) Foreign exchange risk
The Group undertakes transactions internationally and is exposed to foreign exchange
risk arising from various currency exposures, primarily with respect to the Euro and US
Dollar and Sterling. Foreign exchange risk arises from future commercial transactions
and recognised assets and liabilities.
Management has a policy to require Group companies to manage their foreign exchange
risk against their functional currency. The policy is to match as far as possible through
the normal course of trade the level of sales and purchases in foreign currencies and,
where applicable, to enter forward foreign exchange contracts as hedges of foreign
exchange risk on specific assets, liabilities or future transactions.
ii) Cash flow and fair value interest rate risk
As the Group has no significant interest-bearing assets, the Group’s income and
operating cash flows are substantially independent of changes in market interest rates.
The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at
variable rates expose the Group to cash flow interest rate risk. Borrowings issued at
fixed rates expose the Group to fair value interest rate risk.
Group policy is to maintain an appropriate balance between borrowings expressed in
fixed rates and those at variable rates. All of the Group’s borrowings are denominated in
Sterling. The strategy of CEPS PLC is as far as possible to use the assets of businesses
in which it makes investments to secure the necessary borrowings for those investments.
2019)
£’000)
6,202)
)
6,202)
)
2019)
£’000)
1,124)
)
1,124)
)
2018)
£’000)
2,896)
)
2,896)
)
2018)
£’000)
966)
)
966)
)
Fixed rate instruments
Liabilities
Floating rate instruments
Liabilities
3232
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
2. Financial risk
2. management continued
2.1 Financial risk factors continued
b) Credit risk
The Group is exposed to the credit risk inherent in non-payment by either its customers
or the counterparties of its financial instruments. The Group utilises credit insurance
policies to mitigate its risk from some of its trading exposure, especially in overseas
markets, and in all cases seeks satisfactory references and the best possible terms of
payment. It mitigates its exposure on financial instruments by only using instruments
from banks and financial institutions with a minimum rating of ‘A-1+’.
c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and having
available an adequate amount of committed credit facilities.
Management monitors rolling forecasts of the Group’s available liquidity on the basis of
expected future cash flows. Forecasts are generated in the first instance at local level in
the operating subsidiaries of the Group.
The table below analyses the Group’s financial liabilities into relevant maturity groupings
based on the remaining period at the date of the statement of financial position to the
contractual maturity date. The amounts disclosed in the table are the contractual
undiscounted cash flows. Balances due in greater than 12 months equal their carrying
balances as the impact of discounting is not significant.
Less than
1 year
£’000
Between
1 and 2 years
£’000
Between
2 and 5 years
£’000
Over 5 years
£’000
At 31 December 2019
Trade and other payables
Other loans
Bank overdraft
Bank loans
Trade receivables backed
CCworking capital facilities
Hire purchase obligations
IFRS 16 lease liability
At 31 December 2018
Trade and other payables
Other loans
Bank loans
Trade receivables backed
CCworking capital facilities
Hire purchase obligations
2,423
766
75
206
1,030
97
200
4,797
1,271
1,340
513
796
85
4,005
–
4,999
–
–
–
–
207
5,206
–
272
112
–
110
494
–
153
–
–
–
–
414
567
–
292
–
–
11
303
–
–
–
–
–
–
362
362
–
331
–
–
–
331
3333
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
2. Financial risk
2. management continued
2.2 Capital risk management
The Group’s objectives when managing capital (being the equity and reserves of the
Group) are to safeguard the Group’s ability to continue as a going concern in order to
provide returns for shareholders and benefits for other stakeholders and to maintain an
optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may pay dividends to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce
debt.
The Group monitors capital on the basis of the gearing ratio. This ratio measures net
debt as a proportion of total equity as shown in the Statement of Financial Position.
Net debt is calculated as total borrowings less cash and cash equivalents.
The gearing ratios at 31 December 2019 and 2018 were as follows:
Total borrowings
Less: cash
Net debt
Total equity
Gearing ratio
2019)
£’000)
6,247)
(1,958)
)
4,289)
)
2,751)
)
156%)
2018)
£’000)
3,057)
(1,705)
)
1,352)
)
5,460)
)
25%)
In order to provide a more meaningful gearing ratio, total borrowings have been revised
to be the sum of bank borrowings, hire purchase obligations, excluding IFRS 16 lease
liability, and third party debt, excluding loan notes used to finance the Group’s
acquisitions. The prior year comparatives are also calculated on this basis.
2.3 Fair value estimation
The carrying value less impairment provision of trade receivables and payables are
assumed to approximate their fair values. The fair value of the financial liabilities for
disclosure purposes is estimated by discounting the future contractual cash flows at the
current interest rate.
The fair values of all financial assets and liabilities approximate to their carrying values.
3434
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
3. Critical accounting
3. assumptions, judgements
3. and estimates
The directors make estimates and assumptions concerning the future. They are also
required to exercise judgement in the process of applying the Company’s accounting
policies. Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are believed to
be reasonable under the circumstances.
The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year
are assessed below:
a) Impairment of intangible assets (including goodwill)
The Group tests annually whether intangible assets (including goodwill) have suffered any
impairment, in accordance with the accounting policy stated in note 1. The recoverable
amounts of the cash-generating units have been determined based on value-in-use
calculations. The calculations require the use of estimates (note 18).
b) Impairment of non-current assets
The Company assesses the impairment of tangible fixed assets subject to depreciation
whenever events or changes in circumstances indicate that the carrying value may not
be recoverable. Factors considered important that could trigger an impairment review
include the following:
– significant underperformance relative to historical or projected future operating results;
– significant changes in the manner of the use of the acquired assets or the strategy for
the overall business; and
– significant negative industry or economic trends.
c) Depreciation and residual values
The directors have reviewed the asset lives and associated residual values of all fixed
asset classes and have concluded that asset lives and residual values are appropriate.
The actual lives of the assets and residual values are assessed annually and may vary
depending on a number of factors. In re-assessing asset lives, factors such as
technological innovation, product life cycles and maintenance programmes are taken into
account. Residual value assessments consider issues such as future market conditions,
the remaining life of the asset and projects’ disposal values.
d) Carrying value of stocks
Management reviews the market value of and demand for its stocks on a periodic basis
to ensure stock is recorded in the financial statements at the lower of cost and net
realisable value. Any provision for impairment is recorded against the carrying value of
stocks. Management uses its knowledge of market conditions, historical experiences
and estimates of future events to assess future demand for the Company’s products and
achievable selling prices.
e) Recoverability of trade debtors
Trade and other debtors are recognised to the extent that they are judged recoverable.
Management reviews are performed to estimate the level of reserves required for
irrecoverable debt. Provisions are made specifically against invoices where recoverability
is uncertain.
Management makes allowance for doubtful debts based on an assessment of the
recoverability of debtors. Allowances are applied to debtors where events or changes in
circumstances indicate that the carrying amounts may not be recoverable. Management
specifically analyses historical bad debts, customer creditworthiness, current economic
trends and changes in customer payment terms when making a judgement to evaluate
the adequacy of the provision for doubtful debts. Where the expectation is different from
the original estimate, such difference will impact the carrying value of debtors and the
charge in the Consolidated Statement of Comprehensive Income.
3535
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
3. Critical accounting
3. assumptions, judgements
3. and estimates continued
f) Leases
Where the Group has an option to extend or terminate a lease, management uses its
judgement to determine whether such an option would be reasonably certain to be
exercised. Management considers all facts and circumstances, including past practice
and costs that would be incurred if an option were to be exercised, to help it determine
the lease term. Management has also applied judgements in assessing the discount
rate, which is based on the incremental borrowing rate. Such judgements could impact
lease terms and associated lease liabilities. The Group has availed itself of the practical
expedient available on transition to IFRS 16 not to reassess whether a contract is or
contains a lease. Consequently, the definition of a lease, in accordance with IAS 17 and
the guidance in IFRIC 4, will continue to be applied to those leases entered into or
modified before 1 January 2019.
g) Taxation
There are many transactions and calculations for which the ultimate tax determination is
uncertain. The Company recognises liabilities for anticipated tax issues based on
estimates of whether additional taxes will be due.
h) Retirement benefit liabilities
The Group operates a defined benefits pension scheme. The scheme is subject to
triennial actuarial valuation and the Group commissions an independent qualified actuary
to update to each financial year end the previous triennial result. The results of this
update are included in the financial statements. In reaching the annually updated results
management makes assumptions and estimates. These assumptions and estimates are
made advisedly, but are not any guarantee of the performance of the scheme or of the
outcome of each triennial review. See note 9 for further details.
36
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
4. Segmental analysis
The Chief Operating Decision-Maker (‘CODM’) 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.
The operating segments set out below are the only level for which discrete information is
available or utilised by the CODM.
Operating segments and their principal activities are as follows:
Aford Awards, a sports trophy and engraving company;
CEM Press, including Travelfast (trading as Sampling International), a manufacturer of
fabric, carpet 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, including Milano International
(trading as Milano Pro-Sport), a designer and manufacturer of leotards;
Hickton, including BRCS, a provider of services to the construction industry;
Sunline, a supplier of services to the direct mail market. The company entered
administration on 13 June 2018 and is therefore shown as a discontinued operation in
these financial statements.
Group costs, costs incurred at Head Office level to support the activities of the Group.
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 and liabilities of
the Group. All Group revenue is recognised at a point in time, rather than over a period
in time, in line with the requirements of IFRS 15.
37
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
4. Segmental analysis
2. continued
The Board assesses the performance of each operating segment by a measure of
adjusted earnings before interest, tax, Group costs, depreciation and amortisation
(EBITDA) before exceptional costs. Other information provided to the Board is measured
in a manner consistent with that in the financial statements.
i) Results by segment
Revenue
Expenses
Segmental result
(EBITDA) before
exceptional items
Depreciation and
CCamortisation
CCcharge
IFRS 16 depreciation
Exceptional items
Group costs
Net finance costs
CC(including IFRS 16)
Profit/(loss) before
CCtaxation
Taxation
Profit/(loss) for the year
To be)
discontinued)
Continuing) operations)
Fried-)
man’s) Hickton) operations) CEM Press)
2019)
2019)
£’000)
£’000)
2019)
£’000)
2019)
£’000)
Davies)
Odell)
2019)
£’000)
Total)
2019)
£’000)
3,563)
)
(3,590)
5,791)
)
(4,547)
4,741) 16,064)
)
(13,586)
)
(3,891)
5,689) 21,753)
)
(20,782)
)
(7,196)
Aford)
Awards)
2019)
£’000)
1,969)
)
(1,558)
411)
)
(27)
)
1,244)
)
850)
)
2,478)
)
(1,507)
)
971)
)
(9)
(43)
(54)
(37)
(208)
(102)
(12)
(19)
(283)
(201)
–)
(376)
(341)
)
(149)
–)
(1,836)
–)
(432)
(201)
(1,836)
(376)
(72)
)
(413)
)
1,277)
(342)
)
935)
)
(3,564)
–)
)
(3,564)
)
(2,287)
(342)
)
(2,629)
)
‘To be discontinued’ is defined as operations to be discontinued post year end as per
the post balance sheet events note 33.
3838
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
4. Segmental analysis
2. continued
i) Results by segment continued
Aford)
Awards)
2018)
£’000)
CEM)
Press)
2018)
£’000)
Davies)
Odell)
2018)
£’000)
Discont-)
inued)
Fried-)
Continuing) operations)
man’s) Hickton) operations) Sunline)
2018)
2018)
£’000)
£’000)
2018)
£’000)
2018)
£’000)
Total)
2018)
£’000)
Revenue
Expenses
Segmental result
(EBITDA) before
exceptional items
Depreciation and
CCamortisation
CCcharge
Exceptional items
Customer lists
CCimpairment
Group costs
Net finance costs
Profit/(loss) before
CCtaxation
Taxation
Loss for the year
1,902) 2,824) 3,919) 5,345) 4,484) 18,474) 3,118) 21,592)
)
(3,322) (20,107)
)
(3,771) (16,785)
)
(4,026)
)
(4,173)
)
(3,251)
)
(1,564)
)
)
338)
)
(427)
)
(107) 1,172)
)
)
713) 1,689)
)
)
(204) 1,485)
)
)
(13)
(68)
(58)
(179)
(6)
)
(324)
–)
(588)
(386)
(254)
)
137)
(568)
)
(431)
)
(146)
(53)
–)
–)
(42)
)
(445)
–)
)
(445)
)
(470)
(53)
(588)
(386)
(296)
)
(308)
(568)
)
(876)
)
ii) Assets and liabilities by segment as at 31 December
Segment assets Segment liabilities Segment net assets
2018)
£’000)
2019)
£’000)
2019)
£’000)
2019)
£’000)
2018)
£’000)
2018)
£’000)
52)
1,576)
1,386)
1,509)
7,923)
3,663)
)
59)
1,762)
1,090)
1,426)
4,759)
3,487)
)
16,109) 12,583)
)
)
(5,041)
(407)
(3,177)
(964)
(2,490)
(1,279)
)
(13,358)
)
(1,623)
(494)
(1,410)
(966)
(1,017)
(1,613)
)
(7,123)
)
(4,989)
1,169)
(1,791)
545)
5,433)
2,384)
)
2,751)
)
(1,564)
1,268)
(320)
460)
3,742)
1,874)
)
5,460)
)
CEPS Group
Aford Awards
CEM Press
Davies Odell
Friedman’s
Hickton
Total – Group
3939
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
5. Operating profit
Operating profit is stated after charging/(crediting):
Loss on disposal of property, plant and equipment
Exchange loss
Other operating lease rentals on land and buildings and
CCon plant and machinery
Fees payable to the Company’s auditor
Fees payable to the Company’s auditor for the audit of the
CCCompany’s annual accounts
Fees payable to the Company’s auditor and its associates
CCfor other services:
CCAudit of the accounts of subsidiaries
CCOther non-audit services
Taxation compliance services
Taxation advisory services
Total fees
)
Expenses by nature
Raw materials and consumables
Employee benefit expenses
Depreciation on owned assets
Depreciation on right-of-use assets
Amortisation
Operating lease payments
Other expenses
6. Exceptional items
)
Exceptional loss
Goodwill write-off
Write-down of subsidiary assets
Costs associated with the administration of a subsidiary
Onerous lease provision
Profit on disposal of subsidiary
2019)
£’000)
–)
38)
187)
2019)
£’000)
31)
54)
16)
)
101)
18)
–)
)
119)
)
2019)
£’000)
6,364)
7,177)
367)
201)
65)
187)
7,430)
)
21,791)
)
2019)
£’000)
395)
1,455)
78)
(92)
–)
)
1,836)
)
2018)
£’000)
29)
58)
640)
2018)
£’000)
27)
42)
–)
)
69)
17)
2)
)
88)
)
2018)
£’000)
7,528)
6,489)
412)
–)
58)
640)
5,836)
)
20,963)
)
2018)
£’000)
–)
–)
–)
200)
(147)
)
53)
)
In January 2020, CEM Press Limited and Travelfast Limited (trading as Sampling
International) went into administration. The goodwill write-off relates to Travelfast Limited
which was purchased for £9 in March 2020. The write-down of subsidiary assets relates
to CEM Press Limited (£469,000) and Travelfast Limited (£986,000).
The onerous lease provision arose on the disposal of Sunline Direct Mail Limited in 2018,
with CEPS PLC being the guarantor of the remaining lease payments. A final sum was
agreed in 2019 which reduced the provision to £108,000.
4040
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
7. Employees
The average monthly number of persons employed by the Group during the year was:
Management and administration
Production and sales
The aggregate costs of these persons were:
Wages and salaries
Social security costs
Other pension costs (note 8)
2019)
Number)
2018)
Number)
108)
213)
)
321)
)
2019)
£’000)
6,539)
476)
162)
)
7,177)
)
53)
161)
)
214)
)
2018)
£’000)
5,839)
537)
113)
)
6,489)
)
Key management personnel are deemed to be members of the Board and local
management and their compensation is shown in note 8.
The average monthly number of persons employed by the Company during the year was:
Management and administration
The aggregate costs of these persons were:
Wages and salaries
Social security costs
2019)
Number)
2018)
Number)
4)
)
2019)
£’000)
140)
11)
)
151)
)
4)
)
2018)
£’000)
136)
21)
)
157)
)
4141
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
8. Directors’ emoluments
7. and interests
The aggregate remuneration of the directors was:
Short-term employee benefits
2019)
£’000)
140)
)
2018)
£’000)
136)
)
The remuneration of the Chairman, D A Horner, and of the other directors who served
during the year was:
Salaries and fees
2018)
2019)
£’000)
£’000)
D A Horner
V E Langford
G C Martin
M D Pollard
D E Johnson
24)
80)
18)
5)
13)
)
140)
)
24)
76)
18)
18)
–)
)
136)
)
G C Martin has a pension secured in the Group defined benefits scheme from which he
is currently drawing. He is not accruing any further additional benefit under this pension
scheme.
Of those directors who remain in office at the year end, their beneficial interests, including
those of their families, in shares of the Group were:
D A Horner (and close family)
V E Langford
G C Martin
D E Johnson
at 31 December 2019
shares
at 31 December 2018
shares
4,831,310)
41,667)
10,000)
95,000)
4,831,310)
41,667)
10,000)
95,000)
D A Horner's (and close family) shareholding is made up as follows:
D A Horner
Held by Charles Stanley & Co Rock
CC(Nominees) Ltd on behalf of
CCD A Horner's SIPP
Held by Charles Stanley & Co Rock
CC(Nominees) Ltd on behalf of D A Horner
Mrs M C Horner (wife)
H R Horner (son)
T A Horner (son)
Held by Charles Stanley & Co Rock
CC(Nominees) Ltd on behalf of
CCMrs E Horner (mother)
CC
at 31 December 2019
shares
at 31 December 2018
shares
2,225,972)
2,225,972)
970,838)
970,838)
84,500)
1,000,000)
100,000)
100,000)
84,500)
1,000,000)
100,000)
100,000)
350,000)
)
350,000)
)
4,831,310) 28.4% 4,831,310) 28.4%
)
)
The register of directors’ interests, which is open to inspection, contains full details of
directors’ shareholdings.
4242
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
9. Pension costs
The Group operates a number of defined contribution schemes. The assets of the
schemes are held in independently administered funds. The pension cost charge
represents contributions payable to the funds and amounted to £162,000
(2018: £113,000). At 31 December 2019 £24,412 (2018: £14,702) of pension
contributions remain outstanding.
The Group also operates a defined benefits scheme (Dinkie Heel Defined Benefit Pension
Scheme). The scheme was closed to new members in 1988. The assets of the scheme
are held separately from those of the Group in a deposit administration contract
underwritten by an insurance company. Contributions to the scheme are determined by
a qualified external actuary on the basis of triennial valuations using, for accrued service,
the ‘projected unit’ method and, for future service, the ‘attained age’ method. The most
recent actuarial valuation was at 1 July 2019 and the main actuarial assumptions were
investment returns of 2.0% before retirement and 2.0% after retirement. The valuation
showed that the total value of the scheme assets was £5,353,000 and that the level of
funding on an ongoing basis is 117%. The preliminary assessment reveals a surplus in
the scheme and, based on these results, no recovery plan is necessary.
With effect from 28 July 2017 CEPS PLC transferred the Dinkie Heel Defined Benefit
Pension Scheme from Davies Odell Limited to CEPS PLC. This was an intra-Group
transfer and there was no change in the overall liability of the CEPS Group. CEPS PLC
was the existing guarantor of the scheme.
The Group commissioned an independent qualified actuary to update to 31 December
2019 the results of the actuarial valuation at 1 July 2019. The results of the update are
as follows:
Assumptions at 31 December
Interest rate for discounting liabilities
Expected return on plan assets
RPI price inflation
CPI price inflation
Pensions increase
Mortality
Current and future pensioners
Life expectancies (years)
For a 65 year old male
For a 65 year old female
For a 65 year old male, currently aged 45
For a 65 year old female, currently aged 45
2019))
2018))
1.80%)
1.80%)
3.20%)
2.50%)
3.10%)
2.60%)
2.60%)
3.30%)
2.60%)
3.20%)
PCA00)
year of birth)
long cohort)
PCA00)
year of birth)
long cohort)
21.8)
24.1)
23.1)
25.5)
22.8)
24.5)
24.1)
25.2)
The independent actuary estimates that a 0.1% decrease in the discount rate before and
after retirement would change the value of scheme liabilities by approximately £49,000.
The expected return on plan assets has been determined by the current rate of return on
the plan, less allowances for future uncertainties on the plan and an allowance for costs
to be incurred in administering the plan.
4343
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
9. Pension costs continued
The following amounts were measured in accordance with the requirements of IAS 19:
Amounts recognised in the Statement of Financial Position
are as follows:
2019)
£’000)
2018)
£’000)
Fair value of plan assets
Present value of defined benefit obligation
Actuarial surplus not recognised
4,762)
(3,725)
(1,037)
)
–)
)
The actuarial surplus arising on the defined benefit pension scheme has not been
recognised as the Group does not have an unconditional right to refunds of surpluses
arising in the scheme.
4,991)
(3,754)
(1,237)
)
–)
)
Net surplus
2018)
£’000)
(91)
105)
)
14)
)
(11)
)
(11)
334)
(411)
)
(88)
)
–)
8)
(88)
80)
)
–)
)
3,819)
91)
11)
(196)
)
3,725)
)
2019)
£’000)
Pension scheme finance income recognised in the
Consolidated Statement of Comprehensive Income
Interest on obligation
Interest income on plan assets
Consolidated Statement of Comprehensive Income
Financial assumption (loss)/gain
Actuarial (loss)/gain
Experience gains on assets
Movement in actuarial surplus not recognised
Total loss
Movement in Statement of Financial Position for the year
Net pension liability at the start of the year
Employer’s pension cost
Consolidated Statement of Comprehensive Income
Employer contributions
Net pension liability at the end of the year
Reconciliation of the defined benefit obligation
Defined benefit obligation at the start of the year
Interest cost
Actuarial loss
Benefits paid
Defined benefit obligation at the end of the year
(94)
122)
)
28)
)
(155)
)
(155)
256)
(200)
)
(99)
)
–)
18)
(99)
81)
)
–)
)
3,725)
94)
155)
(220)
)
3,754)
)
4444
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
9. Pension costs continued
Reconciliation of plan assets
Fair value of plan assets at the start of the year
Expected return on plan assets
Experience gains on assets
Employer contributions
Non investment expenses
Benefits and expenses paid
Fair value of plan assets at the end of the year
Asset categories at the end of the year
Equities
Bonds
Property
Cash
2019)
£’000)
4,762)
122)
256)
81)
(9)
(221)
)
4,991)
)
2018)
£’000)
4,445)
105)
334)
80)
(6)
(196)
)
4,762)
)
2019)
2018)
41.6%)
47.8%)
9.2%)
1.4%)
39.0%)
49.0%)
11.1%)
0.9%)
Amounts for the current and
previous four years are as follows:
Plan assets
Defined benefit obligation
Actuarial surplus not recognised
Deficit in scheme
Actuarial (loss)/gain on
CCliabilities due to assumptions
Experience gains on assets
Movement in actuarial surplus
CCnot recognised
Total losses recognised
CCfor the year
Cumulative amount of gains
CCand losses recognised in the
CCConsolidated Statement of
CCComprehensive Income
2019)
£’000)
2018)
£’000)
2017)
£’000)
2016)
£’000)
2015)
£’000)
4,991)
(3,754)
(1,237)
)
–)
)
4,762)
(3,725)
(1,037)
)
–)
)
4,445)
(3,819)
(626)
)
–)
)
4,065)
(3,894)
(171)
)
–)
)
3,740)
(3,053)
(687)
)
–)
)
(155)
256)
(200)
)
(99)
)
(11)
334)
(411)
)
(88)
)
72)
317)
(455)
)
(66)
)
(789)
193)
516)
)
(80)
)
150)
278)
(496)
)
(68)
)
(463)
)
(364)
)
(276)
)
(210)
)
(130)
)
4545
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
10. Net finance costs
Bank interest receivable
Pension scheme finance income (note 9)
Total finance income
Interest payable on bank loans and overdrafts
Interest payable on other loans
Other interest payable
Amortisation of finance cost
Lease liability
Finance lease costs
Total finance costs
Net finance costs
2019)
£’000)
2018)
£’000)
–)
28)
)
28)
)
40)
250)
21)
15)
103)
12)
)
441)
)
413)
)
1)
14)
)
15)
)
56)
198)
–)
15)
–)
42)
)
311)
)
296)
)
4646
11. Taxation
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
Analysis of taxation in the year:
Current tax
Tax on profits of the year
Tax in respect of prior years
Total current tax
Deferred tax
Current year deferred tax movement
Tax in respect of prior years
Total deferred tax
Total tax charge
2019)
£’000)
2018)
£’000)
340)
(7)
)
333)
)
2)
7)
)
9)
)
342)
)
323)
2)
)
325)
)
237)
6)
)
243)
)
568)
)
The tax assessed for the year is higher (2018: higher) than the standard rate of
corporation tax in the UK (19%) (2018: 19%).
Factors affecting current tax:
Loss before taxation
Loss multiplied by the standard rate of UK tax
CCof 19% (2018: 19%)
Effects of:
Expenses not deductible
Expenses not deductible goodwill impairment
Adjustments to brought-forward values
Amounts credited directly to Other Comprehensive Income
Capital allowances in excess of depreciation
Adjustments to tax in prior periods
Adjustments to deferred tax in prior periods
Transfer pricing adjustment
Other timing differences
Deferred tax write-off
Adjustments to deferred tax rate
Deferred tax not recognised
Total tax charge
(2,287)
)
(435)
613)
75)
21)
19)
3)
(7)
7)
(15)
–)
–)
3)
58)
)
342)
)
(308)
)
(59)
16)
112)
–)
–)
4)
2)
6)
–)
(5)
220)
–)
272)
)
568)
)
The standard rate of corporation tax in the UK changed to 19% with effect from 1 April
2017. Accordingly, the Group’s profits for the previous accounting year are taxed at an
effective rate of 19%. Current year profits have been taxed at the actual rate of 19%.
As at 31 December 2019 the substantively enacted rate for deferred tax calculation
purposes was 17% and deferred taxation has been calculated at this rate.
On 11 March 2020 the Chancellor of the Exchequer announced that the tax rate reduction
from 19% to 17% was no longer going to be implemented.
There are unused trading losses within various subsidiaries. Please refer to the
subsidiary accounts for further information.
4747
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
12. Dividends
No dividends were paid during the year (2018: £nil).
13. Earnings per share
Basic earnings per share is calculated on the loss for the year after taxation attributable
to the owners of the parent of £2,696,000 (2018: loss £1,369,000) and on 17,000,000
(2018: 15,105,176) ordinary shares, being the weighted number in issue during the year.
Basic earnings per share for continuing operations is calculated on the profit for the year
after taxation attributable to owners of the parent of £250,000 (2018: loss £946,000)
and on 17,000,000 (2018: 15,105,176) ordinary shares, being the weighted number in
issue during the year. Basic earnings per share for discontinued operations is calculated
on the loss for the year after taxation attributable to owners of the parent of £2,946,000
(2018: loss £423,000) and on 17,000,000 (2018: 15,105,176) ordinary shares, being the
weighted number in issue during the year.
14. Profit of the holding
13. company
Of the Group loss for the year a loss of £3,254,000 (2018: loss of £5,808,000) is dealt
with in the financial statement of CEPS PLC. The directors have taken advantage of the
exemption available under section 408 of the Companies Act 2006 and not presented
the results for the Company alone.
4848
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
15. Property, plant and
14. equipment
14. Group
Cost
at 1 January 2018
Additions at cost
Disposals
at 31 December 2018
Assets acquired on purchase
CCof a subsidiary
Additions at cost
Transfers
Disposals
at 31 December 2019
Accumulated depreciation
at 1 January 2018
Charge for the year
Disposals
at 31 December 2018
Accumulated depreciation acquired
CCon purchase of a subsidiary
Charge for the year
Transfers
Disposals
Impairment
at 31 December 2019
Net book amount
at 31 December 2019
at 31 December 2018
Plant,)
Leasehold) machinery,)
tools and)
moulds)
£’000)
property)
improvements)
£’000)
Motor)
vehicles)
£’000)
)
Total)
£’000)
214)
316)
(146)
)
384)
255)
38)
–)
–)
)
677)
)
155)
32)
(108)
)
79)
199)
62)
–)
–)
–)
)
340)
)
337)
)
305)
)
6,827)
581)
(4,648)
)
2,760)
1,313)
203)
(3)
(224)
)
4,049)
)
4,614)
340)
(2,867)
)
2,087)
904)
295)
(3)
(214)
229)
)
3,298)
)
751)
)
673)
)
148)
32)
(142)
)
38)
8)
–)
–)
–)
)
46)
)
100)
40)
(115)
)
25)
–)
10)
–)
–)
–)
)
35)
)
11)
)
13)
)
7,189)
929)
(4,936)
)
3,182)
1,576)
241)
(3))
(224)
)
4,772)
)
4,869)
412)
(3,090)
)
2,191)
1,103)
367)
(3)
(214)
229)
)
3,673)
)
1,099)
)
991)
)
At the year end, assets held under hire purchase contracts and capitalised as plant,
machinery, tools and moulds have a net book value of £nil (2018: £290,000) and an
accumulated depreciation balance of £nil (2018: £2,410,000).
The depreciation has been charged to cost of sales in the Consolidated Statement of
Comprehensive Income.
14. Company
Throughout 2018 and 2019 the Company held no property, plant and equipment.
4949
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
16. Right-of-use assets
16. Group
Cost
At 1 January 2019
Additions at cost
At 31 December 2019
Accumulated depreciation
At 1 January 2019
Charge for the year
At 31 December 2019
Net book amount
At 31 December 2019
At 31 December 2018
Leasehold)
property)
improvements)
£’000)
Motor)
vehicles)
£’000)
1,238)
83)
)
1,321)
)
160)
160)
)
320)
)
1,001)
)
1,078)
)
99)
50)
)
149)
)
37)
41)
)
78)
)
71)
)
62)
)
Total)
£’000)
1,337)
133)
)
1,470)
)
197)
201)
)
398)
)
1,072)
)
1,140)
)
Right-of-use assets relating to CEM Press and Travelfast have been excluded from the
above analysis as their fair value is considered to be £nil as they entered into
administration post year-end as detailed in note 33.
16. Company
Throughout 2018 and 2019 the Company held no right-of-use assets.
50
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
17. Business combinations
i) Acquisition in 2019 of Travelfast Limited (trading as Sampling International)
On 27 March 2019 CEMTeal Limited acquired 100 per cent of the issued share capital
of Travelfast Limited, trading as Sampling International, for an initial consideration of £9
with up to a further £1.2m payable in cash over three years based on financial
performance over the period.
The acquisition has been accounted for using the acquisition method of accounting.
After the alignment of accounting policies and other adjustments to the valuation of
assets and liabilities to reflect their fair value at acquisition, the fair value of net liabilities
acquired was £395,000.
Goodwill of £395,000 arose from the acquisition.
The following table shows the fair value of assets and liabilities included in the
consolidated statements at the date of acquisition:
Identifiable liabilities
Cash and cash equivalents
Property, plant and equipment
Inventories
Trade and other receivables
Trade and other payables
Consideration calculation)
Purchase price consideration
Goodwill
Analysis of cash flows on acquisition)
Cash paid
Less: net cash acquired with the subsidiary
Net cash inflow on acquisition
Fair value)
£’000)
28)
380)
300)
935)
(2,038)
)
(395)
)
–)
)
395)
)
–)
28)
)
28)
)
From the date of acquisition Travelfast Limited contributed £3,808,000 of revenue and
£1,574,000 loss before tax. If the combination had taken place at the beginning of the
year, revenue would have been £5,047,000 and the loss before tax would have been
£1,716,000.
Despite management’s efforts and cash injections from CEPS PLC it was not possible to
achieve the envisaged savings and efficiencies from consolidating CEM Press and
Sampling International’s operations and streamlining the processes. As a result,
Travelfast Limited was placed into administration on 15 January 2020. On 17 January
2020 the administrator sold the business and assets of Travelfast Limited to a newly-
formed company called Sampling International Enterprises Limited (trading as Sampling
International). No return to CEPS PLC arose from this sale.
Consequently, the £395,000 goodwill that arose on acquisition was written-off in 2019.
51
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
17. Business combinations
16. continued
ii) Acquisition in 2019 of Milano International Limited (trading as Milano Pro-Sport)
On 4 October 2019 Signature Fabrics Limited acquired 90 per cent of the issued share
capital of a newly incorporated company, Milano International Holdings Limited, which
had been formed to acquire 100 per cent of the issued share capital of Milano
International Limited, trading as Milano Pro-Sport, for a consideration of £1,850,000.
The acquisition has been accounted for using the acquisition method of accounting.
After the alignment of accounting policies and other adjustments to the valuation of
assets and liabilities to reflect their fair value at acquisition, the fair value of net assets
acquired was £186,000.
Goodwill of £1,683,000 arose from the acquisition.
The following table shows the fair value of assets and liabilities included in the
consolidated statements at the date of acquisition:
Identifiable assets
Cash and cash equivalents
Property, plant and equipment
Inventories
Trade and other receivables
Trade and other payables
Corporation tax liabilities
Consideration calculation)
Purchase price consideration
Goodwill
Goodwill
Non-controlling interest in equity on acquisition
Analysis of cash flows on acquisition)
Cash paid
Less: net cash acquired with the subsidiary
Net cash outflow on acquisition
Fair value)
£’000)
32)
65)
310)
35)
(212)
(44)
)
186)
)
1,850)
)
1,683)
(19)
)
1,664)
)
1,850)
(32)
)
1,818)
)
From the date of acquisition Milano International Limited contributed £578,000 of
revenue and £177,000 profit before tax. If the combination had taken place at the
beginning of the year, revenue would have been £1,725,000 and the profit before tax
would have been £220,000.
52
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
18. Intangible assets
18. Group
Goodwill) Customer lists)
£’000)
£’000)
Other)
£’000)
Total)
£’000)
Cost
at 1 January 2018
Additions at cost
Fair value adjustment
Disposals
at 31 December 2018
Additions at cost
at 31 December 2019
8,950)
–)
(363)
(2,981)
)
5,606)
2,078)
)
7,684)
)
Accumulated amortisation and impairment
at 1 January 2018
Amortisation charge
Impairment
Disposals
at 31 December 2018
Amortisation charge
Adjustments
Impairment
at 31 December 2019
Net book amount
at 31 December 2019
at 31 December 2018
Cost
at 1 January 2018, 31 December 2018
and 31 December 2019
Accumulated amortisation
at 1 January 2018, 31 December 2018
and 31 December 2019
Net book amount
at 31 December 2019
at 31 December 2018
18. Company
)
772)
–)
–)
–)
)
772)
–)
)
772)
)
5)
4)
588)
–)
)
597)
–)
(7)
–)
)
590)
)
182)
)
175)
)
–)
)
–)
)
–)
–)
)
100)
150)
–)
–)
)
250)
1)
)
251)
)
59)
10)
–)
–)
)
69)
62)
–)
–)
)
131)
)
120)
)
181)
)
17)
)
17)
)
–)
–)
)
9,822)
150)
(363)
(2,981)
)
6,628)
2,079)
)
8,707)
)
4,222)
58)
588)
(2,981)
)
1,887)
62)
3)
395)
)
2,347)
)
6,360)
)
4,741)
)
97)
)
97)
)
–)
–)
)
4,158)
44)
–)
(2,981)
)
1,221)
–)
10)
395)
)
1,626)
)
6,058)
)
4,385)
)
80)
)
80)
)
–)
–)
)
Goodwill is not amortised under IFRS, but is subject to impairment testing either annually
or on the occurrence of a triggering event. Impairment charges are included in
administration expenses and disclosed as an exceptional cost.
Customer lists are subject to annual impairment reviews.
Other intangibles relate to computer software, website costs and licences and are
amortised over their estimated economic lives. The annual amortisation charge is
expensed to cost of sales in the Consolidated Statement of Comprehensive Income.
5353
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
18. Intangible assets
16. continued
Impairment tests for goodwill and intangible assets
The Group tests goodwill and intangible assets arising on the acquisition of a subsidiary
(customer lists) annually for impairment or more frequently if there are indications that
goodwill or customer lists may be impaired.
For the purpose of impairment testing, goodwill is allocated to the Group’s cash
generating units (CGUs) on a business segment basis:
at 1 January 2018
Fair value adjustment
Amortisation charge
Impairment
at 31 December 2018
Additions at cost
Amortisation charge
Impairment
at 31 December 2019
Aford)
Awards)
£’000)
1,047)
–)
(4)
–)
)
1,043)
–)
(3)
–)
)
1,040)
)
CEM)
Press) Friedman’s)
£’000)
£’000)
588)
–)
–)
(588)
)
–)
395)
–)
(395)
)
–)
)
1,528)
–)
(44)
–)
)
1,484)
1,683)
–)
–)
)
3,167)
)
Hickton)
£’000)
2,396)
(363)
–)
–)
)
2,033)
–)
–)
–)
)
2,033)
)
Total)
£’000)
5,559)
(363)
(48)
(588)
)
4,560)
2,078)
(3)
(395)
)
6,240)
)
The recoverable amount of a CGU is based on value-in-use calculations. These
calculations use cash flow projections based on financial budgets approved by
management covering a five-year period. Cash flows beyond five years are assumed to
be constant. A discount rate of 10.60% (2018: 9.36%), representing the estimated
pre-tax cost of capital, has been applied to these projections.
The key assumptions used in the value-in-use calculations are as follows:
Aford Awards
CEM Press
Friedman’s
Hickton
Milano
Revenue growth
2018)
2019)
%)
%)
1.0)
–)
3.0)
2.0)
2.0)
1.0)
4.7)
3.0)
2.0)
–)
Gross margin
2019)
%)
31.5)
–)
45.0)
39.6)
53.0)
2018)
%)
32.2)
33.0)
45.0)
40.6)
–)
Long-term growth
2018)
2019)
%)
%)
1.0)
–)
2.0)
1.0)
2.0)
1.0)
1.0)
2.0)
1.0)
–)
Management has determined the budgeted revenue growth and gross margins based on
past performance and their expectations of market developments in the future. Long-
term growth rates are based on the lower of the UK long-term growth rate and
management’s general expectations for the relevant CGU.
In respect of Aford Awards, Friedman’s, including Milano Pro-Sport, and Hickton
Consultants the value-in-use calculation gives rise to sufficient headroom such that
reasonable changes in the key assumptions do not eliminate the headroom.
At 31 December 2019 an impairment charge of £395,000 was taken against the goodwill
arising on the acquisition of Travelfast Limited (trading as Sampling International) as it
went into administration on 15 January 2020.
5454
19. Investments
19. Company
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
Shares)
in Group)
subsidiaries)
£’000)
Loans)
to Group)
Total)
investments)
subsidiaries)in subsidiaries)
£’000)
£’000)
Cost
at 1 January 2018
Disposals
Repayment
at 31 December 2018
Repayment
at 31 December 2019
Accumulated amortisation and impairment
at 1 January 2018 and 31 December 2019
Net book amount
at 31 December 2019
)
at 31 December 2018
358)
(80)
–)
)
278)
–)
)
278)
)
80)
)
198)
)
198)
)
3,277)
(1,370)
(163)
)
1,744)
(327)
)
1,417)
)
3,635)
(1,450)
(163)
)
2,022)
(327)
)
1,695)
)
592)
)
672)
)
825)
)
1,152)
)
1,023)
)
1,350)
)
The loans to Group subsidiaries’ balance is represented by 8% loan stock which has no
set repayment date. Repayments will only be requested when surplus cash is available.
55
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
19. Investments continued
Investments in subsidiary companies are stated at cost less provision for impairment.
A list of subsidiary undertakings, all of which have been included in the consolidation, is
given below.
Name of subsidiary, principal activity
and registered address
Aford Awards (Holdings) Limited
CCHolding company for Aford Awards Limited
CC11 Laura Place, Bath BA2 4BL
Aford Awards Limited
CCSuppliers of trophies and awards
CCand engraving specialists
CCGrange House, The Green, Bearsted,
CCMaidstone, Kent ME14 4DZ
BRCS (Building Control) Limited
CCProvider of building control services
CCAmber Court, 51 Church Street, Elsecar,
CCBarnsley, South Yorkshire S74 8HT
CemTeal Limited
CCHolding company for CEM Press
CCHoldings Limited
CC11 Laura Place, Bath BA2 4BL
CEM Press Holdings Limited
CCHolding company for CEM Group Limited
CC11 Laura Place, Bath BA2 4BL
CEM Group Limited
CCHolding company for C.E.M. Press Limited
CCTeal Close, Victoria Business Park,
CCNetherfield, Nottingham NG24 2PE
C.E.M. Press Limited
CCDesign and compilation of fabric, wallpaper
CCand carpet sample books
CCTeal Close, Victoria Business Park,
CCNetherfield, Nottingham NG24 2PE
*
Proportion of*
ownership*
interests*
Wholly or
non-wholly
owned
subsidiary
Place of
operation
England
70%* Non-wholly
England
70%* Non-wholly
England
52%* Non-wholly
England
80%* Non-wholly
England
78%* Non-wholly
England
78%* Non-wholly
England
78%* Non-wholly
Davies Odell Limited
CCManufacturer and distributor of protection
CCequipment, matting and footwear components
CC11 Laura Place, Bath BA2 4BL
Friedman’s Limited
CCConversion and distribution of specialist Lycra
CCUnit E, Altrincham Business Park,
CC3 Tudor Road, Cheshire WA14 5RZ
England
85%* Non-wholly
England
55%* Non-wholly
5656
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
19. Investments continued
Name of subsidiary, principal activity
and registered address
*
Proportion of*
Place of ownership*
interests*
operation
Wholly or
non-wholly
owned
subsidiary
Hickton Holdings Limited
CCHolding company for Hickton Consultants Limited
CCAmber Court, 51 Church Street, Elsecar,
CCBarnsley, South Yorkshire S74 8HT
Hickton Consultants Limited
CCClerk of Works specialists
CCAmber Court, 51 Church Street, Elsecar,
CCBarnsley, South Yorkshire S74 8HT
Milano International Holdings Limited
CCHolding company for Milano International Limited
CC11 Laura Place, Bath BA2 4BL
Milano International Limited
(trading as Milano Pro-Sport)
CCDesign and manufacture of leotards
CC11 Laura Place, Bath BA2 4BL
Signature Fabrics Limited
CCHolding company for Friedman’s Limited
CCUnit E, Altrincham Business Park,
CC3 Tudor Road, Cheshire WA14 5RZ
Travelfast Limited
(trading as Sampling International)
CCDesign and compilation of fabric, wallpaper
CCand carpet sample books
CCUnit 11, Grange Road Industrial Estate,
CCGrange Road, Batley, West Yorkshire WF17 6LN
Davies & Co (Kettering) Limited*
CCDormant company
CC11 Laura Place, Bath BA2 4BL
Phillips Rubber Limited*
CCDormant company
CC11 Laura Place, Bath BA2 4BL
Farmat Limited*
CCDormant company
CC11 Laura Place, Bath BA2 4BL
Davies and Company Limited*
CCDormant company
CC11 Laura Place, Bath BA2 4BL
England
52%* Non-wholly
England
52%* Non-wholly
England
50%* Non-wholly
England
50%* Non-wholly
England
55%* Non-wholly
England
80%* Non-wholly
England
100%*
Wholly
England
100%*
Wholly
England
100%*
Wholly
England
100%*
Wholly
* These entries are excluded from the consolidation on the basis that they are dormant.
5757
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
19. Investments continued
The non-controlling interests disclosed below are considered to be material based on
percentage holding and performance contributed to the Group.
Details of non-wholly owned subsidiaries that have a material non-controlling interest are
disclosed below:
Statement of Financial Position Signature Fabrics Group Hickton Holdings Group
2018)
£’000)
2019)
£’000)
2019)
£’000)
2018)
£’000)
As at 31 December
Current
Assets
Liabilities
Total current net assets
Non-current
Assets
Liabilities
Total non-current net assets
Net assets
3,215)
(2,330)
)
885)
)
4,708)
(160)
)
4,548)
)
5,433)
)
2,525)
(855)
)
1,670)
)
2,235)
(163)
)
2,072)
)
3,742)
)
1,466)
(1,028)
)
438)
)
2,197)
(251)
)
1,946)
)
2,384)
)
1,439)
(1,117)
)
322)
)
2,048)
(496)
)
1,552)
)
1,874)
)
Statement of Comprehensive Income Signature Fabrics Group Hickton Holdings Group
2018)
£’000)
2019)
£’000)
2019)
£’000)
2018)
£’000)
20. Inventories
For year ended 31 December
Revenue
Profit before income tax
Income tax expense
Post-tax profit from continuing operations
Total comprehensive income
Total comprehensive income allocated
CCto non-controlling interests
Dividends paid
CCto non-controlling interests
Raw materials and consumables
Work in progress
Finished goods and goods for resale
5,791)
855)
(151)
704)
)
704)
)
331)
–)
2019)
£’000)
578)
14)
1,662)
)
2,254)
)
5,345)
988)
(170)
818)
)
818)
)
368)
45)
4,741)
748)
(134)
614)
)
614)
)
4,484)
636)
(127)
509)
)
509)
)
292)
242)
–)
–)
Group
Company
2018)
£’000)
440)
17)
1,358)
)
1,815)
)
2019)
£’000)
2018)
£’000)
–)
–)
–)
)
–)
)
–)
–)
–)
)
–)
)
The cost of inventories recognised as an expense and included in cost of sales
amounted to £6,364,000 (2018: £7,528,000).
58
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
21. Trade and other
18. receivables
Trade receivables
less: provision for impairment
CCof trade receivables
Trade receivables – net
Amount due from subsidiary
CCcompanies
Other receivables
Prepayments and accrued income
Group
Company
2019)
£’000)
2018)
£’000)
2019)
£’000)
2018)
£’000)
2,987)
2,738)
(40)
)
2,947)
–)
187)
232)
)
3,366)
)
(13)
)
2,725)
–)
94)
512)
)
3,331)
)
–)
–)
)
–)
1,039)
11)
20)
)
1,070)
)
–)
–)
)
–)
541)
8)
4)
)
553)
)
As at 31 December 2019, trade receivables of £1,259,000 (2018: £1,006,000) were fully
performing.
Trade receivables that are less than three months past due are not considered impaired.
As of 31 December 2019, trade receivables of £1,416,000 (2018: £1,718,000) were past
due, but not impaired. These relate to a number of independent customers for whom
there is no recent history of default.
At 31 December 2019 trade receivables of £311,000 (2018: £230,000) were impaired.
A significant portion of the receivables is expected to be recovered and a provision of
£40,000 (2018: £13,000) has been made for non-recovery. The individually impaired
receivables mainly relate to customers who are in unexpectedly difficult economic
situations. The ageing of these receivables is as follows:
3 to 6 months
Over 6 months
2019)
£’000)
188)
123)
)
311)
)
2018)
£’000)
216)
14)
)
230)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
The carrying amounts of the Group trade and other receivables are denominated in the
following currencies:
Sterling
Euro
US $
2019)
£’000)
2,790)
42)
115)
)
2,947)
)
2018)
£’000)
2,505)
126)
93)
)
2,724)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
59
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
21. Trade and other
18. receivables continued
Movements in the Group provision for impairment of trade receivables are as follows:
At 1 January
Provision for receivables impairment
At 31 December
2019)
£’000)
2018)
£’000)
13)
27)
)
40)
)
13)
–)
)
13)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
The creation and release of provisions for impaired receivables have been included in
cost of sales in the Consolidated Statement of Comprehensive Income. Amounts
charged to the allowance account are generally written off when there is no expectation
of recovering additional cash.
The other classes within trade and other receivables do not contain impaired assets. The
Group does not hold any collateral as security.
The maximum exposure to credit risk at the reporting date is the carrying value of each
class of trade and other receivables.
22. Trade and other
18. payables
Current:
Trade payables
Deferred consideration
Other payables
Accruals and deferred income
Group
Company
2019)
£’000)
2018)
£’000)
2019)
£’000)
2018)
£’000)
2,423)
–)
418)
703)
)
3,544)
)
1,126)
145)
253)
656)
)
2,180)
)
19)
–)
108)
179)
)
306)
)
–)
–)
200)
111)
)
311)
)
At the end of the year contingent consideration of £nil (2018: £145,000) was payable
relating to the acquisition of BRCS (Building Control) Limited on 18 May 2017.
23. Current tax liabilities
Other tax and social security
Corporation tax
Group
Company
2019)
£’000)
912)
284)
)
1,196)
)
2018)
£’000)
745)
248)
)
993)
)
2019)
£’000)
2018)
£’000)
4)
–)
)
4)
)
2)
–)
)
2)
)
6060
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
24. Borrowings
Group
Company
Non-current:
Bank loans
Other loans
Hire purchase obligations
IFRS 16 lease liability
Current:
Bank overdraft
Bank loans
Trade receivables backed working
CCcapital facilities
Other loans
Hire purchase obligations
IFRS 16 lease liability
Total borrowings
2019)
£’000)
–)
5,152)
–)
)
5,152)
982)
)
6,134)
)
75)
206)
1,030)
766)
97)
)
2,174)
201)
)
2,375)
)
8,509)
)
Other loans can be analysed as follows:
Group
Non-current:
From an entity under common control
From a third party
Acquisition loan notes
From a director of a subsidiary
Other
Current:
From an entity under common control
Acquisition loan notes
From a director of a subsidiary
Other
2019)
£’000)
2,730)
2,000)
351)
60)
11)
)
5,152)
)
–)
728)
30)
8)
)
766)
)
2018)
£’000)
112)
895)
121)
)
1,128)
–)
)
1,128)
)
–)
513)
796)
1,340)
85)
)
2,734)
–)
)
2,734)
)
3,862)
)
2018)
£’000)
–)
–)
805)
90)
–)
)
895)
)
1,310)
–)
30)
–)
)
1,340)
)
2019)
£’000)
–)
4,730)
–)
)
4,730)
–)
)
4,730)
)
–)
–)
–)
–)
–)
)
–)
–)
)
–)
)
4,730)
)
2018)
£’000)
–)
–)
–)
)
–)
–)
)
–)
)
–)
–)
–)
1,310)
–)
)
1,310)
–)
)
1,310)
)
1,310)
)
Company
2019)
£’000)
2018)
£’000)
)2,730)
)2,000)
–)
–)
–)
)
4,730)
)
)–)
)–)
–)
–)
)
–)
)
–)
–)
–)
–)
–)
)
–)
)
1,310)
–)
–)
–)
)
1,310)
)
6161
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
24. Borrowings continued
The loan from an entity under common control has a total available facility of £3,000,000.
Amounts were initially repayable by 31 March 2020, but the repayment date has
been extended to 31 December 2021. Amounts due are unsecured and attract interest
at 5% per annum. The loan is guaranteed by D A Horner. See also note 30.
The loan from a third party is repayable in full by 30 June 2021. Amounts due are
unsecured and attract interest at 10% per annum. The loan is guaranteed by D A Horner.
See also note 30.
The acquisition loan note balance is made up as follows:
Aford Award (Holdings) Limited – £90,000 Shareholder Loan Notes which are
unsecured, attract interest at 8% per annum and are repayable on demand as there
is no repayment date.
CEMTeal Limited – £223,000 Vendor Loan Notes and £108,000 Shareholder Loan
Notes both of which are unsecured, attract interest at 7% per annum and are
repayable on demand as there is no repayment date. See also note 33.
Hickton Holdings Limited – £398,000 of Shareholder Loan Notes which are
unsecured and attract interest at 8% per annum. Amounts are repayable by quarterly
instalments between 31 March 2020 and 31 July 2022. See also note 33.
Milano International Limited – £160,000 Vendor Loan Notes which are unsecured,
attract interest at 4% per annum and are repayable by 3 October 2020 and £100,000
Shareholder Loan Notes which are unsecured, attract interest at 6% per annum and
are repayable on demand as there is no repayment date.
The loan from a director of a subsidiary is repayable in annual instalments ending
31 July 2022. Amounts due are unsecured and attract interest at 5% per annum.
See also note 30.
Bank borrowings and overdrafts are secured by fixed and floating charges over the
assets of the subsidiaries to which they relate. Trade receivable backed working capital
facilities are secured by the trade receivable to which they relate. The facilities are
renegotiated on an annual basis. Obligations under hire purchase contracts are secured
against the assets to which they relate. All borrowings are denominated in Sterling.
At 31 December 2019 the analysis of the security of bank borrowings and overdrafts and
trade receivables backed working capital facilities was as follows:
Secured on the assets of
CEM Press
Davies Odell
Hickton
By fixed and)
floating charges)
£’000)
By trade)
receivables)
£’000)
–)
169)
112)
)
281)
)
816)
214)
–)
)
1,030)
)
Total)
£’000)
816)
383)
112)
)
1,311)
)
6262
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
24. Borrowings continued
At 31 December 2018 the analysis of the security of bank borrowings and overdrafts and
trade receivables backed working capital facilities was as follows:
Secured on the assets of
CEM Press
Davies Odell
Hickton
By fixed and)
floating charges)
£’000)
By trade)
receivables)
£’000)
–)
350)
275)
)
625)
)
395)
229)
172)
)
796)
)
Total)
£’000)
395)
579)
447)
)
1,421)
)
The exposure of the Group’s borrowings to interest rate changes and the contractual
repricing dates at the dates of the Statement of Financial Position are as follows:
Within one year
Between one and two years
Between two and five years
2019)
Bank) Hire purchase)
£’000)
£’000)
97)
1,311)
–)
–)
–)
–)
)
)
97)
1,311)
)
)
2018)
Bank) Hire purchase)
£’000)
£’000)
85)
1,309)
110)
112)
11)
–)
)
)
206)
1,421)
)
)
The fair value of non-current borrowings equals their carrying amount, as the impact of
discounting is not significant.
There is no material difference between the carrying book value and the fair value of the
finance lease obligations.
The minimum lease payments under hire purchase agreements fall due as follows:
Not more than one year
Between one and two years
Between two and five years
Finance charge
Present value of hire purchase agreement liabilities
2019)
£’000)
97)
–)
–)
)
97)
–)
)
97)
)
2018)
£’000)
95)
74)
77)
)
246)
(40)
)
206)
)
63
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
25a. Financial instruments
25a. by category
The accounting policies for financial instruments have been applied to the line items below:
Group
31 December 2019
Assets as per Statement of Financial Position
Trade and other receivables (excluding prepayments and accrued income)
Cash and cash equivalents
Total
Liabilities at amortised cost as per Statement of Financial Position
Bank borrowings (excluding hire purchase obligations)
Hire purchase obligations
IFRS 16 lease liability
Trade payables
Other loans
Total
Group
31 December 2018
Assets as per Statement of Financial Position
Trade and other receivables (excluding prepayments and accrued income)
Cash and cash equivalents
Total
Liabilities at amortised cost as per Statement of Financial Position
Bank borrowings (excluding hire purchase obligations)
Hire purchase obligations
Trade payables
Other loans
Total
Loans and)
receivables)
£’000)
3,134)
1,958)
)
5,092)
)
Other financial)
liabilities)
£’000)
1,311)
97)
1,183)
2,423)
5,918)
)
10,932)
)
Loans and)
receivables)
£’000)
2,819)
1,705)
)
4,524)
)
Other financial)
liabilities)
£’000)
1,421)
206)
1,126)
2,235)
)
4,988)
)
The Group’s assets in both the current and prior year are categorised as cash and cash
equivalents and receivables. The Group’s liabilities are categorised as other financial
liabilities at amortised cost.
6464
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
25b. Credit quality of
25b. financial assets
The credit quality of financial assets that are neither past due nor impaired can be
assessed by reference to external credit ratings (if available) or to historical information
about counterparty default rates:
Trade and other receivables are analysed between:
Group
CEPS Group
Aford Awards
CEM Press
Davies Odell
Friedman’s
Hickton
)
)
)
2019)
£’000)
31)
106)
1,134)
496)
552)
1,047)
)
3,366)
)
2018)
£’000)
12)
91)
751)
548)
570)
1,359)
)
3,331)
)
The Group has a customer base which is for the most part stable, long standing and well
known to the businesses. Credit and credit terms are negotiated with these customers
taking into account their trading history with the Group and their payment record. New
customers are only given credit after taking references or making trade and agency
enquiries. Management does not believe there to be a credit exposure beyond that for
which provision has already been made.
The Company cash and cash equivalents includes £1,958,000 (2018: £1,705,000) which
is on account with differing financial institutions and is readily available. The external
credit rating as assessed by Standard & Poor’s for short-term funds for each of the
institutions is A-1+.
65
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
26. Deferred tax
The following are the major deferred tax assets and liabilities recognised by the Group,
and the movement thereon, during the current and prior years.
At 1 January 2018, asset/(liability)
(Debit)/credit to the Consolidated
CCStatement of Comprehensive Income
at 31 December 2018, liability
Credit/(debit) to the Consolidated
CCStatement of Comprehensive Income
at 31 December 2019, liability
)
)
Losses)
£’000)
189)
(189)
)
–)
–)
)
–)
)
Other) Accelerated)
timing)
capital)
allowances)
differences)
£’000)
£’000)
(34)
31)
)
(3)
3)
)
–)
)
–)
(85)
)
(85)
(24)
)
(109)
)
Total)
£’000)
155)
(243)
)
(88)
(21)
)
(109)
)
Deferred income tax assets and liabilities are offset only when there is a legally
enforceable right to offset current tax assets against current tax liabilities and when the
deferred income taxes relate to the same fiscal authority.
Deferred income tax assets are recognised for tax loss carry-forwards to the extent that
the realisation of the related tax benefit through the future taxable profits is probable.
At 1 January 2018
Release of provision in year
At 31 December 2018 and 31 December 2019
At 1 January 2018
Shares issued
Transaction costs
Adjustment
At 31 December 2018 and
31 December 2019
Number)
of shares)
13,199,940)
3,800,060)
–)
–)
)
17,000,000)
)
Ordinary)
shares)
£’000)
Share)
premium)
£’000)
1,320)
380)
–)
–)
)
1,700)
)
4,843)
950)
(4)
52)
)
5,841)
)
Dilapidations)
£’000)
100)
(100)
)
–)
)
Total)
£’000)
6,163)
1,330)
(4)
52)
)
7,541)
27. Provisions for liabilities
23. and charges
28. Share capital and
25. share premium
6666
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
29. Leases
On 1 January 2019, the Group applied IFRS 16 Leases using the modified retrospective
approach without restatement of the comparative information.
Total commitments payable under non-cancellable operating leases in 2018 were as
follows:
Land and buildings:
CCwithin one year
CCwithin two to five years
CCafter more than five years
2019)
£’000)
–)
–)
–)
)
–)
)
2018)
£’000)
377)
1,314)
696)
)
2,387)
)
Impact on financial statements
On transition to IFRS 16, the Group recognised an additional £1,606,000 of right-of-use
assets and £1,228,000 of lease liabilities.
When measuring lease liabilities, the Group discounted lease payments using its
incremental borrowing rate at 1 January 2019. The weighted average rate applied is 8%.
Operating lease commitment at 31 December 2018 as disclosed
in the Group’s consolidated financial statements
Discounted using the incremental borrowing rate at 1 January 2019
Leases omitted from IFRS 16 calculation relating to administration,
CCsee below
Differences in application of discount rates
Lease liabilities recognised at 1 January 2019
£’000)
2,387)
)
1,625)
(496)
99)
)
1,228)
)
The operating lease commitment note as per the December 2018 financial statements
classified all leases as ‘land and buildings’. This included an amount for motor vehicles
and other leases which will now be disclosed separately.
The operating lease commitment disclosure at 31 December 2018 included leases of
£617,000, with a discounted value of £496,000 relating to CEM Press Limited and
Travelfast Limited. These subsidiaries entered into administration post year end and the
leases relating to these subsidiaries have, therefore, been omitted from the IFRS 16
transition calculations. See note 33 for more detail.
The Group leases a number of properties under operating leases. The leases typically
run for a period of five to twenty years. Rents are generally reviewed every five years.
During the year ended 31 December 2018, £640,000 was recognised as an expense in
the Consolidated Statement of Comprehensive Income in respect of operating leases
and other hire charges.
£187,000 was recognised in the Consolidated Statement of Comprehensive Income,
principally for short-term leases, during the year ended 31 December 2019, details of
which are set out in note 5.
67
67
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
30. Related party
26. transactions
During the year the Company entered into the following transactions with its subsidiaries.
Aford)
Awards)
(Holdings))
Limited)
£’000)
)
CemTeal)
Limited)
£’000)
Davies)
Odell)
Limited)
£’000)
)
Signature)
Fabrics)
Limited)
£’000)
Sunline)
Hickton) Direct Mail)
(Holdings))
Holdings)
Limited)
Limited)
£’000)
£’000)
Receipt of equity
CCshare dividend
– 2019
– 2018
Receipt of loan interest
– 2019
– 2018
Receipt of management
CCcharge income
– 2019
– 2018
Amount owed to
CCthe Company
– 31 December 2019
– 31 December 2018
Loans and investments
CCwritten-off or impaired
– 2019
– 2018
–)
–)
32)
51)
20)
20)
216)
537)
–)
–)
–)
111)
–)
–)
–)
–)
–)
–)
27)
12)
15)
15)
–)
55)
15)
–)
35)
35)
–)
–)
49)
49)
13)
13)
808)
534)
1,026)
–)
623)
623)
–)
–)
–)
–)
–)
1)
–)
–)
–)
–)
1,955)
2,719)
808)
–)
–)
–)
–)
–)
–)
2,702)
The Company is under the control of its shareholders and not any one party.
At the year end the parent company owed £2,730,000 (2018: £1,310,000) to an entity
under common control and interest of £115,000 (2018: £29,000) was charged on this
loan during the year. The loan is guaranteed by D A Horner.
At the year end the parent company owed £2,000,000 to a third party. Interest of £56,000
(2018: £nil) was charged on this loan during the year. The loan is guaranteed by D A Horner.
At the year end amounts owed to directors of subsidiary companies and their close
family members in respect of acquisition loan notes amounted to £1,079,000
(2018: £805,000). Interest paid on these loans in the year amounted to £73,000
(2018: £79,000).
At the year end amounts owed to a director of a subsidiary company in relation to a loan
amounted to £90,000. Interest paid on this loan in the year amounted to £5,000
(2018: £3,000).
At the year end the total amounts owed by a director shareholder of a subsidiary
company was £70,000 (2018: £70,000) in respect of unpaid share capital and
associated expenses.
During the year a subsidiary company paid rent on a property amounting to £9,000
(2018: £21,000) to a pension scheme in which a director of the company was a trustee.
During the year a subsidiary company purchased goods totalling £nil (2018: £362,000)
from entities under the control of one of the subsidiary directors. At the year end the
subsidiary company owed £nil (2018: £56,000) to these entities. All transactions were
conducted under normal commercial terms.
68
68
CEPS PLC 31 December 2019
Notes to the Financial Statements continued
31. Cash and cash
26. equivalents
Cash at bank and in hand
Bank overdrafts repayable on demand
2019)
£’000)
1,958)
–)
)
1,958)
)
Group
2018)
£’000)
1,705)
–)
)
1,705)
)
Company
2019)
£’000)
2018)
£’000)
21)
–)
)
21)
)
48)
–)
)
48)
)
32. Changes in liabilities
29. arising from financing
29. activities
Current
Borrowings
Finance lease obligations
Non-current
Borrowings
Finance lease obligations
)
1 January)
2019)
£’000)
Movement)
£’000)
31 December)
2019)
£’000)
2,649)
85)
)
2,734)
1,007)
121)
)
1,128)
3,862)
)
(572)
1,195)
623)
4,145)
(121)
4,024)
2,077)
1,280)
)
3,357)
5,152)
–)
)
5,152
4,647)
8,509)
33. Post balance sheet
29. events
Administration of CEM Press Limited
On 8 January 2020 CEM Press Limited was placed in administration. The remaining
entities in the CEMTeal group will be wound-up in the near future.
Administration of Travelfast Limited (trading as Sampling International)
On 15 January 2020 Travelfast Limited (trading as Sampling International) was placed in
administration.
On 17 January 2020 the administrator sold the business and assets of Travelfast Limited
to a newly-formed company called Sampling International Enterprises Limited (trading as
Sampling International). No return to CEPS PLC arose from the sale.
Acquisition of Cook Brown Building Control Limited and Cook Brown Energy Limited
A new sub-holding company called Hickton Group Limited was formed by CEPS PLC to
own Hickton Holdings Limited, Hickton Consultants Limited and BRCS (Building Control)
Limited. On 11 March 2020 Hickton Group Limited purchased 100% of the share capital
of Cook Brown Building Control Limited and Cook Brown Energy Limited for a
consideration of £3,530,445. CEPS PLC’s equity holding in Hickton Group Limited
moved to 54.7% from its previous 52.4% stake in Hickton Holdings Limited.
Coronavirus
Subsequent to the year end, there has been an outbreak of Coronavirus which has
developed into a global pandemic. At this stage the directors are assessing what impact
this may have on the Group, but although there is a high level of uncertainty about the
extent and the timeframe of the virus on the global economy, they believe the Group is
strongly positioned to handle any downturn that may occur in the sectors in which the
Group operates.
6969
CEPS PLC Year ended 31 December 2019
Supplementary Analysis of Consolidated Statement
of Comprehensive Income
Revenue)
Cost of sales)
Gross profit)
Administration expenses
Adjusted operating profit/(loss)
Exceptional item
Operating profit/(loss)
Analysis of operating profit/(loss)
CCTrading
CCExceptional item
CCGroup costs
Finance income
Finance costs
Profit/(loss) before tax
Taxation
Profit/(loss) for the year
Other comprehensive loss:
Items that will not be reclassified
to profit or loss
Actuarial loss on defined benefit pension plans 9
Other comprehensive loss for the year,
net of tax
Total comprehensive income/(loss) for the year
Income/(loss) attributable to:
Owners of the parent
Non-controlling interest
Total comprehensive income/(loss)
attributable to:
Owners of the parent
Non-controlling interest
Notes
4
To be)
Continuing) discontinued)
operations)
operations)
2019)
2019)
£’000)
£’000)
5,689)
16,064)
(5,370)
(10,218)
)
)
319)
5,846)
2019)
£’000)
21,753)
(15,588)
)
6,165)
6
5
10
10
11
(4,228)
)
1,618)
–)
)
1,618)
1,994)
–)
(376)
)
1,618)
28)
(369)
)
1,277)
(342)
)
935)
)
(99)
)
(99)
)
836)
)
250)
685)
)
935)
)
151)
685)
)
836)
)
(1,975)
)
(1,656)
(1,836)
)
(3,492)
(1,656)
(1,836)
–)
)
(3,492)
–)
(72)
)
(3,564)
–)
)
(3,564)
)
–)
)
–)
)
(3,564)
)
(2,946)
(618)
)
(3,564)
)
(2,946)
(618)
)
(3,564)
)
(6,203)
)
(38)
(1,836)
)
(1,874)
338)
(1,836)
(376)
)
(1,874)
28)
(441)
)
(2,287)
(342)
)
(2,629)
)
(99)
)
(99)
)
(2,728)
)
(2,696)
67)
)
(2,629)
)
(2,795)
67)
)
(2,728)
)
Earnings per share
CCbasic and diluted
13
1.47p)
)
(17.33p)
)
(15.86p)
)
70
CEPS PLC Year ended 31 December 2019
Supplementary Analysis of Group Statement of Cash Flows
Cash flows from operating activities Profit/(loss) for the financial year
Adjustments for:
CCDepreciation and amortisation
CCImpairment of goodwill
CCWrite-down of fixed assets
CCNet finance costs
CCTaxation charge
Changes in working capital:
CCMovement in inventories
CCMovement in trade and other receivables
CCMovement in trade and other payables
CC
Cash generated from/(used in) operations
Corporation tax paid
Net cash generated from/(used in) operations
Cash flows from investing activities Interest received
Acquisition of subsidiary net of cash acquired
Purchase of property, plant and equipment
Net cash (used in)/generated from
investing activities
Cash flows from financing activities Proceeds from borrowings
Interest paid
Repayment of finance leases/IFRS 16 leases
Net cash generated from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the
CCbeginning of the year
Cash and cash equivalents
CCat the end of the year (note 31)
To be)
Continuing) discontinued)
operations)
operations)
2019)
2019)
£’000)
£’000)
(2,938)
309)
484)
395)
–)
141)
342)
(225)
729)
(749)
)
1,426)
(444)
)
982)
)
28)
(1,818)
(222)
)
(2,012)
)
1,620)
(38)
(281)
)
1,301)
)
271)
1,684)
)
1,955)
)
149)
–)
229)
272)
–)
397)
199)
631)
)
(1,061)
103)
)
(958)
)
–)
28)
(19)
)
9)
)
1,265)
(272)
(62)
)
931)
)
(18)
21)
)
3)
)
2019)
£’000)
(2,629)
633)
395)
229)
413)
342)
172)
928)
(118)
)
365)
(341)
)
24)
)
28)
(1,790)
(241)
)
(2,003)
)
2,885)
(310)
(343)
)
2,232)
)
253)
1,705)
)
1,958)
)
71
CEPS PLC
Notes to the Financial Statements continued
Group Information
Directors
Secretary and
registered office
Operating locations
D A Horner, Chairman
V E Langford, Group Finance
D E Johnson, Non-executive
G C Martin, Non-executive
V E Langford
11 Laura Place, Bath BA2 4BL
Company number 00507461
www.cepsplc.com
Aford Awards Limited
Grange House, Bearsted Green Business Centre, Maidstone, Kent ME14 4DF
telephone 01622 738711; email orders@afordawards.co.uk; www.afordawards.co.uk
BRCS (Building Control) Limited
Amber Court, 51 Church Street, Elsecar, Barnsley, South Yorkshire S74 8HT
telephone 01226 743959; email info@brcs.co.uk; www.brcs.co.uk
Cook Brown Building Control Limited and Cook Brown Energy Limited
Unit 4, Middle Bridge Business Park, Bristol Road, Portishead, Bristol BS20 6PN
telephone 01275 848228; email admin@cookbrown.co.uk; www.cookbrown.co.uk
Davies Odell Limited
Portland Road, Rushden, Northants NN10 0DJ
telephone 01933 410818
email info@daviesodell.co.uk; www.forcefieldbodyarmour.com
email info@davieskett.co.uk; www.equimat.co.uk
Friedman’s Limited
Unit E, Altrincham Business Park, 3 Tudor Road, Cheshire WA14 5RZ
telephone 0161 975 9002; email info@friedmans.co.uk;
www.friedmans.co.uk; www.funkifabrics.com; www.alexandermaverick.co.uk
Hickton Consultants Limited
Amber Court, 51 Church Street, Elsecar, Barnsley, South Yorkshire S74 8HT
telephone 01226 743959; email info@hickton.co.uk; www.hickton.co.uk
Milano International Limited (trading as Milano Pro-Sport)
The Arena, 65 Bow Lane, Preston, Lancashire PR1 8ND
telephone 01772 277777;
email info@milano-pro-sport.com; www.milano-pro-sport.com
Registrars and
share transfer office
Share price information
Independent auditor
Solicitors
Share Registrars Limited
The Courtyard, 17 West Street, Farnham GU9 7DR
telephone 01252 821390, lines are open 9.00am to 5.30pm Monday to Friday
The day-to-day movement of the share price on the London Stock Exchange can be
found on the Company’s website and at www.londonstockexchange.com (code CEPS)
Cooper Parry Group Limited
Sky View, Argosy Road, East Midlands Airport, Castle Donington, Derby DE74 2SA
Roxburgh Milkins Limited
Merchants House North, Wapping Road, Bristol BS1 4RW
Nominated adviser
and broker
Cairn Financial Advisers LLP
Cheyne House, Crown Court, 62-63 Cheapside, London EC2V 6AX
7272
CEPS PLC Company number 00507461
Notice of Meeting
Annual General Meeting
Notice is hereby given that the Annual General Meeting of CEPS PLC (the ‘Company’)
will be held at 11 Laura Place, Bath BA2 4BL on Tuesday 23 June 2020 at 11.30am for
the following purposes:
To consider and, if thought fit, to pass the following resolutions, of which resolutions
numbered 1 to 5 will be proposed as ordinary resolutions and resolutions numbered
6 to 9 will be proposed as special resolutions.
1
2
3
4
5
6
To receive, consider and adopt the Company’s annual accounts for the financial
year ended 31 December 2019 together with the Directors’ Report and Auditor’s
Report on those accounts.
To re-appoint V E Langford as a director, being a director who retires by rotation
pursuant to Article 72 of the Company’s articles of association (‘the Articles’).
To re-appoint Cooper Parry Group Limited, Chartered Accountants and Statutory
Auditor, as auditor of the Company to hold office from conclusion of the meeting
to the conclusion of the next meeting at which the accounts are to be laid.
To authorise the directors to agree the auditor’s remuneration.
THAT, in substitution for any existing authority subsisting at the date of this
resolution to the extent unused, the directors be generally and unconditionally
authorised in accordance with section 551 of the Companies Act 2006 (the ‘Act’)
to allot shares in the Company or grant rights to subscribe for or to convert any
security into shares in the Company up to an aggregate nominal amount of
£1,700,000, such authority to expire at the commencement of the next Annual
General Meeting held after the date of the passing of this resolution, but so that
the Company may, before the expiry of such period, make an offer or agreement
which would or might require equity securities to be allotted after the expiry of
such period and the directors may allot equity securities pursuant to such an offer
or agreement as if the authority had not expired.
THAT subject to and conditional on the passing of resolution number 5 and in
substitution for any existing authority subsisting at the date of this resolution to
the extent unused, the directors be empowered, pursuant to section 570 of the
Act, to allot equity securities (within the meaning of section 560 of the Act) for
cash pursuant to the authority conferred by resolution number 5 as if section
561(1) of the Act did not apply to any such allotment, provided that this power
shall be limited to the allotment of equity securities:
6.1 in connection with an offer of such securities by way of rights issue (as
defined below);
For the purposes of this resolution, ‘rights issue’ means an offer of equity
securities to holders of ordinary shares in the capital of the Company on the
register on a record date fixed by the directors in proportion as nearly as may be
to the respective numbers of ordinary shares held by them, but subject to such
exclusions or other arrangements as the directors may deem necessary or
expedient to deal with any treasury shares, fractional entitlements or legal or
practical issues arising under the laws of, or the requirements of, any recognised
regulatory body or any stock exchange in, any territory or any other matter.
6.2 otherwise than pursuant to sub-paragraph 6.1 above up to an aggregate
nominal amount of £1,700,000 (such shares representing 100% of the
Company’s issued ordinary capital as at the date of this notice), and shall expire
at the commencement of the next Annual General Meeting held after the date
7373
Annual General Meeting
continued
CEPS PLC Company number 00507461
Notice of Meeting continued
6 continued
of the passing of this resolution, save that the Company may, before such expiry,
make an offer or agreement which would or might require equity securities to be
allotted after such expiry and the directors may allot equity securities in pursuance
of any such offer or agreement as if the power had not expired.
7
THAT the Company be generally and unconditionally authorised to make market
purchases (within the meaning of section 693(4) of the Act) of ordinary shares of
10 pence each in the capital of the Company on such terms as the directors think
fit, provided that:
the maximum number of ordinary shares hereby authorised to be
7.1
purchased is limited to an aggregate of 1,700,000 (such shares representing
approximately 10% of the Company’s issued ordinary capital as at the date of this
notice);
the minimum price, exclusive of any expenses, which may be paid for an
7.2
ordinary share is 10 pence;
7.3
the maximum price, exclusive of any expenses, which may be paid for each
ordinary share is an amount equal to the higher of: (a) 105 per cent of the average
of the middle market quotations for an ordinary share, as derived from the London
Stock Exchange Daily Official List, for the five business days immediately
preceding the day on which the ordinary share is purchased; and (b) the amount
stipulated by Article 5(6) of the Market Abuse Regulation, (EU) No 596/2014
(as amended); and
7.4
the authority hereby conferred shall, unless previously revoked and varied,
expire at the commencement of the next Annual General Meeting held after the
date of the passing of the resolution (except in relation to the purchase of ordinary
shares the contract for which was concluded before the expiry of this authority
and which will or may be executed wholly or partly after such expiry).
8
THAT the Articles be and are hereby altered by:
the deletion of the heading to and the text of article 3 of the Articles and the
8.1
replacement of them with the words ‘THERE IS NO ARTICLE 3’;
8.2
the deletion of all provisions of the Company’s Memorandum of Association
which, by virtue of section 28 of the Act, were treated, with effect from 1 October
2009, as provisions of the Company’s Articles of Association; and
8.3
the deletion, in accordance with paragraph 42(2)(b) of Schedule 2 of the
Companies Act 2006 (Commencement No 8, Transitional Provisions and Savings)
Order 2008 (SI 2008/2860) (the ‘Order’), of any provision of the Articles which
sets a maximum to the amount of shares that may be allotted by the Company
(‘Maximum Share Amount’), as became applicable to the Company, with effect
from 1 October 2009, by virtue of paragraph 42(2)(a) of the Order.
9
THAT the making by the Company of all allotments of shares in the capital of the
Company since 1 October 2009 which caused any Maximum Share Amount to
be exceeded be and is hereby ratified and any breaches of the Articles which may
have been incurred by the directors in approving any such allotments be and are
hereby waived.
On behalf of the Board
V E Langford
Company Secretary
21 May 2020
7474
CEPS PLC Company number 00507461
Notice of Meeting continued
Annual General Meeting
continued
Registered office: 11 Laura Place, Bath BA2 4BL
Registered in England and Wales with number 00507461
Notes
1. A member entitled to attend and vote is entitled to appoint proxy(ies) to attend, speak
and vote instead of him. A member may appoint more than one proxy, provided that
each proxy is appointed to exercise the rights attached to different shares. A proxy
need not be a member of the Company.
2.
In order to be valid an appointment of proxy, and any power of attorney or other
authority under which it is executed (or a duly certified copy of any such power or
authority) must be deposited at the office of the Registrars of the Company, Share
Registrars at The Courtyard, 17 West Street, Farnham GU9 7DR not less than
48 hours, excluding any part of a day that is not a working day, before the time for
holding the meeting.
A proxy form is enclosed. The appointment of a proxy will not prevent a shareholder
from subsequently attending and voting at the meeting in person.
3. Under Regulation 41 of the Uncertificated Securities Regulations 2001, only those
shareholders whose names are on the register of members of the Company as at
11.30am on Friday 19 June 2020 or, if the meeting is adjourned, shareholders
entered on the Company’s register of members not later than 48 hours before the
time fixed for the adjourned meeting are entitled to attend and vote at the meeting in
respect of the shares registered in their names at that time. Subsequent changes to
the register shall be disregarded in determining the rights of any person to attend and
vote at the meeting.
7575