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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Ceps Plc | LSE:CEPS | London | Ordinary Share | GB00B86TNX04 | ORD 10P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 17.50 | 15.00 | 20.00 | 17.50 | 17.50 | 17.50 | 0.00 | 08:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Fabricated Rubber Pds, Nec | 26.45M | 460k | 0.0219 | 7.99 | 3.68M |
TIDMCEPS
RNS Number : 6434Z
CEPS PLC
25 May 2021
CEPS PLC
('CEPS' OR THE 'COMPANY' OR THE 'GROUP')
FINAL RESULTS
The Board of CEPS is pleased to announce its final results for the year ended 31 December 2020.
CHAIRMAN'S STATEMENT
We, the nation, CEPS, our colleagues, shareholders, customers and suppliers have all come through, and are moving through, a very difficult period.
I strongly believe that we should reflect on what has happened in this past year and take strength from the resilience that has been shown across all areas of British society and the economy. In respect of CEPS, the 15 months since the first lockdown has given us the time to evaluate our businesses and how we want them to develop going forward.
Over the past year I have heard, on numerous occasions, the management teams of various public companies saying that they had chosen to use the period of the lockdown as an opportunity to implement changes to their businesses. These developments had been planned and were scheduled to take two to five years to carry out but, given the extraordinary circumstances in 2020, they decided to complete the changes in three to six months. Generally, these changes are to make processes and systems more efficient and automated and so require less labour, and to ultimately be more cost effective and efficient.
Readers of my statements over recent years will be aware that, contrarily, I have been very concerned about the availability of skilled employees, now and in the future and, therefore, anything that can be done to remove labour from our businesses is to be encouraged.
Over the past 18 months the Board has made a number of announcements setting out developments in each of the companies as appropriate. None of these announcements were of themselves "earth shattering", but collectively we feel that they will prove to be transformational for the parent company. For the benefit of shareholders, I set them out collectively again in abbreviated form. We will not make a habit of this as I doubt if any single year in the future, we will make so many changes requiring announcements.
October 2019 Acquisition of Milano International by Signature Fabrics, the parent company of Friedman's. January 2020 Removal of the lossmaking CEM group of companies by way of administration. March 2020 Acquisition of Cook Brown Building Control and Cook Brown Energy by Hickton Group and reorganisation of the capital structure and modest increase in CEPS' shareholding. September 2020 Change of management, increase in CEPS' shareholding and capital reconstruction of Aford Awards. December 2020 Merger of Davies Odell and Vale Partners and revised capital structure of the new holding company for these. Since the year end: March 2021 Acquisition of the Millington Lord group of companies by Hickton Group.
It is the Board's firm belief that all of these corporate changes listed above will, in time, prove to be highly beneficial to the parent, CEPS.
Financial review
The financial year being reported on is something of a curate's egg!
The accounts, as in the last few years, are completely distorted by a few one-off factors and I am fully aware and acknowledge that this has, unfortunately, been the mantra of the Board over the past few years. It is to be hoped going forward that our accounts will become less complex.
As already mentioned, in January 2020 CEM and Sampling International went into administration, and in December 2020 CEPS' ownership of Davies Odell moved from being a subsidiary to an associate on its merger with Vale Brothers. Consequently, these companies are classified as discontinued operations in 2020 and the 2019 comparatives. Those companies that are categorised as continuing operations are Aford Awards, Friedman's and Milano International, and Hickton Consultants, BRCS and the two Cook Brown companies.
Total revenue for 2020 was GBP14.0m (2019: GBP21.8m) of which GBP11.9m (2019: GBP12.5m) was generated from continuing operations and GBP2.1m (2019: GBP9.3m) from discontinued operations.
Unsurprisingly, given that Aford Awards, Friedman's and Milano International operate in the leisure sector, their results were decimated by the effects of the pandemic. The segmental result presented as EBITDA before exceptional items of GBP1.0m (2019: GBP971,000) shows EBITDA of GBP1.2m (2019: GBP2.5m) from continuing operations and a loss of GBP120,000 (2019: loss of GBP1.5m) from discontinued operations.
Looking at the individual companies in more detail shows that Aford Awards' EBITDA in the current year was GBP111,000 (2019: GBP411,000) and the combined EBITDA of Friedman's and Milano International in 2020 was GBP124,000 (2019: GBP1.2m). Despite the fact that these results are so much lower than in the previous year, the companies did extremely well to achieve a positive EBITDA in such difficult circumstances.
Hickton Group, with the addition of the Cook Brown companies in March 2020, fared much better due to its trading activities in the construction sector. The Hickton Group's EBITDA in 2020 was GBP929,000 compared to GBP850,000 in 2019. Although the 2020 results are better than those in 2019, the former include the results for the Cook Brown companies for the nine months following their acquisition. The performance of the expanded group would have been higher had not Covid-19 had an impact.
The adjusted Group operating profit, before exceptional items and the impairment of intangible assets, for the year was GBP12,000 (2019: adjusted operating loss of GBP38,000), split between an operating profit from continuing operations of GBP229,000 (2019: GBP1.7m) and an operating loss from discontinued operations of GBP217,000 (2019: operating loss GBP1.8m).
Other operating income in the year of GBP861,000 (2019: GBPnil) has derived from the Coronavirus Job Retention Scheme and other similar grants and without this government support CEPS would have made an operating loss, before exceptional items and the impairment of intangible assets, of GBP849,000, split between continuing operations (loss of GBP461,000) and discontinued operations (loss of GBP388,000).
After due consideration and to err on the side of caution, the remaining goodwill and customer list intangibles associated with BRCS were impaired in the year resulting in a write-off of GBP354,000.
Although CEM and Sampling International did not trade during the year, there was an exceptional profit on their disposal of GBP825,000, amended from the figure reported in the 2020 interims of GBP2.6m as announced to the market on 20 April 2021. This profit is analysed under discontinued operations and is reduced by the loss on disposal of Davies Odell of GBP199,000, producing a net profit on disposal of discontinued operations of GBP626,000.
Finance costs for the year of GBP762,000 are considerably higher than last year (2019: GBP441,000) and are split between continuing operations (GBP732,000) (2019: GBP340,000) and discontinued operations (GBP30,000) (2019: GBP101,000). This can be explained by the increased level of gearing which has increased from 156% in 2019 to 478% in 2020 with additional interest charges from the loan note funding of both the acquisition and restructuring.
The loss before taxation for the year was GBP645,000 (2019: GBP2.3m), GBP960,000 of which was the loss generated from continuing operations (2019: profit of GBP1.4m) and GBP315,000 was the profit from discontinued operations (2019: loss of GBP3.7m).
Taxation for the year at GBP20,000 is much reduced from the previous year's charge of GBP342,000 due to the impact that Covid-19 had on the results of the companies that usually pay corporation tax and including the carry back of losses to reclaim 2019 tax paid.
The loss for the year after taxation was GBP665,000 (2019: GBP2.6m), split between a loss from continuing operations of GBP980,000 (2019: profit of GBP1.1m) and a profit from discontinued operations of GBP315,000 (2019: loss of GBP3.7m).
Loss per share on a basic and diluted basis was 3.67p (2019: loss per share 15.86p) which can be analysed between a loss per share from continuing operations of 5.52p (2019: earnings per share of 2.20p) and an earnings per share from discontinued operations of 1.85p (2019: loss per share of 18.06p).
The cash generated from operations in 2020 was GBP1.5m which compares to GBP365,000 in 2019. Net debt, excluding acquisition loan notes, increased over the year from GBP4.3m to GBP5.2m. The additional cash was primarily used to finance the new acquisitions and the restructuring in the year.
During the 2020 financial year I have loaned the Company GBP650,000 interest free and with no fixed repayment date. Since the year end, I have loaned a further GBP100,000 on the same terms.
Finally, in the Consolidated Statement of Changes in Equity there is a charge of GBP957,000 which has resulted from the changes in ownership interest in the subsidiaries, Aford Awards, Davies Odell and Hickton Group, as listed in the corporate changes above. This reflects current values and the accounting treatment of the amounts consequently paid on the restructuring of continuing subsidiaries, in particular for the changes within the minority shareholdings in Hickton Consultants.
The directors consider that it is appropriate for the financial statements to be prepared on a going concern basis due to the additional funding of GBP2,000,000 from a new debt provider (replacing an existing loan which is due to be repaid on 30 June 2021) 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 2022.
However, the lack of certainty over trading and the ability of the subsidiaries to generate cash over the next 12 months created by the continuing Coronavirus restrictions 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. It should be noted that the auditor's opinion is not modified in respect of this matter.
Although it has been an extremely difficult year for all the Group companies, the management teams of each of the subsidiaries have taken a long hard look at their operations and made changes, sadly generally involving a reduction in the work force, leading to improved efficiency and the creation of more dynamic operational platforms.
It is the Board's belief that the underlying subsidiaries will, to a greater or lesser extent, improve their performances over the course of the second half of 2021 as the impact of lockdowns is progressively reduced. However, given the continued impact in the first half of 2021, it will not be until the 2022 financial year that the real progress and new strength of the CEPS group will become clear publicly.
Operational review
I will now report on the performance of the individual companies.
Aford Awards
Trading was in line with expectations, which was an increase on the previous year, until the first lockdown at the end of March 2020.
Since that date, the business has been working on a care and maintenance basis. Staff have been furloughed and gradually brought back into the business as required. The giving of trophies, medals and awards is generally part of a public event which has, of course, been banned for much of the past 15 months. However, fortunately, organisations have tried to continue as normally as possible, and the business has been gradually increasing its sales for the past six months.
A new management team took over in September from Jon Ford who is the son of the original founder, Andy Ford. This reorganisation was effected by setting up a new holding company with CEPS increasing its shareholding from 70% to 75% and receiving additional loan notes.
The new team are committed, as is the Board of CEPS, that a significant part of the future growth of Aford Awards will be through the acquisition of very small, uneconomic lifestyle businesses which can be absorbed and integrated into the existing Aford Awards' structure. Discussions are under way with several such opportunities, and we expect to report that some of these will be acquired this year. These are generally very small and the acquisition price will, in the main, be funded by Aford Awards from its own resources, with no recourse to CEPS.
There is no doubt that the turmoil caused by the Covid-19 lockdowns has accelerated the potential for consolidation in the sector. In addition, as these small companies have been surviving on a remote basis for much of the past 15 months, they have therefore "proved" that their businesses can be relocated with little or no loss of sales.
Davies Odell
The most important event in the company's year was the merger with Vale Brothers at the end of the financial year in December 2020.
Whilst more people were made redundant during the year, as the management team continued to "right-size" the business, the losses continued, albeit on a reduced basis.
The merger was achieved by a new holding company being established to acquire Davies Odell and Vale Brothers, Vale Brothers Group. CEPS has 33% of the equity of the new holding company and GBP405,000 of loan stock.
Vale Brothers manufactures equestrian equipment including saddles, bridles, horse whips, rugs and brushes. These products are complementary to Davies Odell's range of personal protection products sold under the Forcefield brand and matting for stables sold as Equimat.
As a result of the merger there have been further reductions in people employed and it is expected that these cost savings will give the combined businesses an opportunity to generate profits.
In addition, in time, further acquisitions and consolidation will be carried out in these very traditional and fragmented sectors.
Friedman's
The deep regret of 2020 was that the management team of the company had spent the six months from the acquisition of Milano International in October 2019 revamping, reorganising, and redesigning the Milano product range and were poised to relaunch the business in early April 2020. Clearly all of that has been put on hold until such a time as gyms and dance studios can reopen.
In the meantime, whilst Friedman's core sales have declined significantly, the Funki Fabrics business, after an initial decline, has over time recovered to its pre-Covid-19 levels and continued to be profitable.
The management team are poised to take advantage of all opportunities once the restrictions are eased.
Hickton Group
The financial year of 2020 was another year of strong development for the group.
In March 2020, a new holding company, Hickton Group, was set up to buy Cook Brown Building Control and Cook Brown Energy and to merge with the existing CEPS subsidiary Hickton Consultants. Amongst the benefits of this amalgamation was a broadening of the group's activities into other building services. As part of this exercise, James Cook and Matthew Brown, the founders of Cook 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 54.7% of the equity of the Hickton Group with a total of GBP2.24m of loan stock.
Trading in the enlarged group has continued to be very positive in 2020.
After the year end, on 15 March 2021, the Hickton Group acquired the Millington Lord group of companies for a maximum consideration of GBP1.1m. Millington Lord was owned by GT Realisations.
The Millington Lord group of companies is made up of Morgan Lambert Limited, Qualitas Compliance Limited and Morgan Lambert Electrical Limited. These companies make up a gas and electrical safety consultancy involved in providing auditing, consultancy and training services.
The Board remains very excited about the future development of this specialist building services group.
Outlook
It is of course still difficult at this stage to write anything about the outlook for the rest of this year. However, because of the mass vaccination programme, the much greater understanding of Covid-19 and the acknowledgement that Covid-19 is endemic, it is possible to think of a gradual but definite return to a version of "normal" over the balance of 2021.
It is the Board's very clear view that the survivors from the last 15 months will prosper as they will have proved themselves to be nimble, resourceful and resilient. We are certain that, because of the extensive corporate activity of the past year involving our companies and the extensive re-engineering of the businesses from the "bottom up", they are all in a much better place.
David Horner
Chairman
24 May 2021
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 (which forms part of domestic UK law pursuant to the European Union (Withdrawal) Act 2018).
David Horner, Chairman, CEPS PLC
Tel: 01225 483030
James Caithie, Cairn Financial Advisers LLP
Nominated Adviser
Tel: 020 7213 0880
CEPS PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEARED 31 DECEMBER 2020
Continuing Discontinued Operations Operations Audited Audited Audited 2020 2020 2020 GBP'000 GBP'000 Revenue (note 4) 11,861 2,091 13,952 Cost of sales (7,511) (1,817) (9,328) ------------ ------------- -------- Gross profit 4,350 274 4,624 Other operating income 690 171 861 Administration expenses before exceptional items (4,811) (662) (5,473) Adjusted operating profit/(loss) 229 (217) 12 Exceptional items (127) (64) (191) Impairment of intangible assets (note 10) (354) - (354) Operating loss (252) (281) (533) Analysis of operating loss ------------ ------------- -------- - Trading 659 (217) 442 - Exceptional items (127) (64) (191) - Impairment of intangible assets (354) - (354) - Group costs (430) - (430) ------------ ------------- -------- (252) (281) (533) -------------------------------------- ------------ ------------- -------- Profit on disposal of discontinued operations - 626 626 Finance income 24 - 24 Finance costs (732) (30) (762) -------- (Loss)/profit before tax (960) 315 (645) Taxation (note 5) (20) - (20) ------------ ------------- -------- (Loss)/profit for the financial
year (980) 315 (665) ------------ ------------- -------- Other comprehensive loss: Items that will not be reclassified to profit or loss Actuarial loss on defined benefit pension plans (13) - (13) ------------ ------------- -------- Other comprehensive loss for the year, net of tax (13) - (13) ------------ -------- Total comprehensive (loss)/profit for the financial year (993) 315 (678) ------------ ------------- -------- (Loss)/income attributable to: Owners of the parent (939) 315 (624) Non-controlling interests (41) - (41) ------------ ------------- -------- (980) 315 (665) ------------ ------------- -------- Total comprehensive (loss)/income attributable to: Owners of the parent (952) 315 (637) Non-controlling interests (41) - (41) ------------ ------------- -------- (993) 315 (678) ------------ ------------- -------- Earnings per share - basic and diluted (note 6) (5.52p) 1.85p (3.67p) ------------ ------------- --------
CEPS PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (PRIOR YEAR)
YEARED 31 DECEMBER 2020
Continuing Discontinued Operations Operations Audited Audited Audited 2019 2019 2019 GBP'000 GBP'000 Revenue (note 4) 12,501 9,252 21,753 Cost of sales (7,207) (8,381) (15,588) ------------ ------------- --------- Gross profit 5,294 871 6,165 Administration expenses before exceptional items (3,558) (2,645) (6,203) Adjusted operating profit/(loss) 1,736 (1,774) (38) Exceptional items - (1,836) (1,836) Operating profit/(loss) 1,736 (3,610) (1,874) Analysis of operating profit/(loss) ------------ ------------- --------- - Trading 2,112 (1,774) 338 - Exceptional items - (1,836) (1,836) - Group costs (376) - (376) ------------ ------------- --------- 1,736 (3,610) (1,874) -------------------------------------- ------------ ------------- --------- Finance income 28 - 28 Finance costs (340) (101) (441) --------- Profit/(loss) before tax 1,424 (3,711) (2,287) Taxation (note 5) (342) - (342) ------------ ------------- --------- Profit/(loss) for the year 1,082 (3,711) (2,629) ------------ ------------- --------- Other comprehensive loss: Items that will not be reclassified to profit or loss Actuarial loss on defined benefit pension plans (99) - (99) ------------ ------------- --------- Other comprehensive loss for the year, net of tax (99) - (99) ------------ --------- Total comprehensive profit/(loss) for the financial year 983 (3,711) (2,728) ------------ ------------- --------- Income/(loss) attributable to: Owners of the parent 375 (3,071) (2,696) Non-controlling interests 707 (640) 67 ------------ ------------- --------- 1,082 (3,711) (2,629) ------------ ------------- --------- Total comprehensive income/(loss) attributable to: Owners of the parent 276 (3,071) (2,795) Non-controlling interests 707 (640) 67 ------------ ------------- --------- 983 (3,711) (2,728) ------------ ------------- --------- Earnings per share - basic and diluted (note 6) (2.20p) 18.06p (15.86p) ------------ ------------- ---------
CEPS PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
2020 2019 GBP'000 GBP'000 -------- -------- Assets Non-current assets Property, plant and equipment (note 7) 633 1,099 Right-of-use assets (note 8) 976 1,072 Intangible assets (note 10) 9,208 6,360 10,817 8,531 -------- -------- Current assets Inventories 1,441 2,254 Trade and other receivables 1,883 3,366 Cash and cash equivalents (excluding bank overdrafts) 2,332 1,958 5,656 7,578 -------- -------- Total assets 16,473 16,109 ======== ======== Equity Capital and reserves attributable to owners of the parent Called up share capital (note 11) 1,700 1,700 Share premium (note 11) 5,841 5,841 Retained earnings (8,402) (6,808) -------- -------- (861) 733 Non-controlling interests in equity 1,954 2,018 Total equity 1,093 2,751 -------- -------- Liabilities Non-current liabilities Borrowings 6,415 5,152 Lease liabilities 887 982 Deferred tax liability 51 109 7,353 6,243 -------- -------- Current liabilities Borrowings 3,861 2,174 Lease liabilities 248 201 Trade and other payables 2,909 3,544 Current tax liabilities 1,009 1,196 8,027 7,115 -------- -------- Total liabilities 15,380 13,358 -------- -------- Total equity and liabilities 16,473 16,109 ======== ========
The comprehensive income within the parent company financial statements for the year was GBP1,343,000 (2019: loss of GBP3,254,000).
CEPS PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
YEARED 31 DECEMBER 2020
2020 2019 GBP'000 GBP'000 Cash flows from operating activities Loss for the financial year (665) (2,629) Adjustments for: Depreciation and amortisation 601 633 Profit on disposal of subsidiaries (626) - Customer list impairment 182 - Impairment of goodwill 172 395 Write-down of fixed assets - 229 Pension contributions less than administrative charge 9 - Net finance costs 738 413 Taxation charge 20 342 Changes in working capital: Movement in inventories 375 172 Movement in trade and other receivables 325 928 Movement in trade and other payables 377 (118) Cash generated from operations 1,508 365 Corporation tax paid (241) (341) Net cash generated from operations 1,267 24 -------- -------- Cash flows from investing activities Interest received 2 28 Acquisition of subsidiaries net of cash acquired (866) (1,790) Acquisition in minority shareholdings in subsidiaries (1,366) - Disposal of subsidiaries, net of cash (4) - Purchase of property, plant and equipment (95) (241) Proceeds from sale of assets 1 - Purchase of intangibles assets (24) - Net cash used in investing activities (2,352) (2,003) -------- -------- Cash flows from financing activities Proceeds from borrowings 3,174 2,885 Repayment of borrowings (904) - Loan issue costs paid (86) - Proceeds from subsidiary share issue 26 - Interest paid (432) (310) Lease liability payments (319) (343) -------- -------- Net cash generated from financing activities 1,459 2,232 -------- -------- Net increase in cash and cash equivalents 374 253 Cash and cash equivalents at the beginning of the year 1,958 1,705 -------- -------- Cash and cash equivalents at the end of the year 2,332 1,958 -------- --------
CEPS PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEARED 31 DECEMBER 2020
Attributable to owners Non-controlling Share Share Retained of the interest Total capital premium earnings parent equity GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 At 1 January 2019 1,700 5,841 (4,013) 3,528 1,932 5,460 ---------- ---------- ----------- ------------- ------------------ --------- Actuarial loss - - (99) (99) - (99) (Loss)/profit for the year - - (2,696) (2,696) 67 (2,629) ---------- ---------- ----------- ------------- ------------------ --------- Total comprehensive (loss)/income for the year - - (2,795) (2,795) 67 (2,728) ---------- ---------- ----------- ------------- ------------------ --------- Minority ownership interest in a subsidiary - - - - 19 19 Acquisition of a subsidiary - - - - 19 19 ---------- ---------- ----------- ------------- ------------------ --------- At 31 December 2019 1,700 5,841 (6,808) 733 2,018 2,751 ---------- ---------- ----------- ------------- ------------------ --------- Actuarial loss - - (13) (13) - (13) Loss for the year - - (624) (624) (41) (665) ---------- ---------- ----------- ------------- ------------------ --------- Total comprehensive loss for the financial year - - (637) (637) (41) (678) ---------- ---------- ----------- ------------- ------------------ --------- Changes in ownership interest in subsidiaries - - (957) (957) (23) (980) Total distributions recognised directly in equity - - (957) (957) (23) (980) At 31 December 2020 1,700 5,841 (8,402) (861) 1,954 1,093 ---------- ---------- ----------- ------------- ------------------ ---------
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 is not attributable to the owners of the parent.
Notes to the financial information
1. General information
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 4. Segmental analysis is also given in note 4.
The financial statements are presented in British Pounds Sterling (GBP), the currency of the primary economic environment in which the Group's activities are operated and are reported in GBP'000. The Group comprises the Company and its subsidiary companies. The financial statements are to the year ended 31 December 2020 (2019: year ended 31 December 2019).
The registered number of the Company is 00507461.
The principal accounting policies applied in the preparation of the consolidated financial statements are set out in the financial statements. These policies have been consistently applied throughout the year, unless otherwise stated.
2. Basis of preparation and going concern
This announcement is an extract from the consolidated financial statements of the Company for the year ended 31 December 2020 and comprises the Company and its subsidiaries. The consolidated financial statements were authorised for issuance on 19 May 2021. The financial information set out below does not constitute the Company's statutory accounts for the years ended 31 December 2019 or 2020 within the meaning of Section 434 of the Companies Act 2006, but is derived from those accounts. Statutory accounts for 2019 have been delivered to the Registrar of Companies and those for 2020 will be delivered following the Company's Annual General Meeting. The auditor's reports on the statutory accounts for the years ended 31 December 2019 and 31 December 2020 were unqualified with reference to a material uncertainty in respect of going concern due to the global Coronavirus pandemic, and do not contain statements under s498(2) or (3) Companies Act 2006.
This financial information has 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 ('IFRSs'), IFRIC interpretations and the Companies Act 2006 as applicable to companies reporting under IFRS.
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.
Certain statements in this announcement constitute forward-looking statements. Any statement in this announcement that is not a statement of historical fact including, without limitation, those regarding the Company's future expectations, operations, financial performance, financial condition and business is a forward-looking statement. Such forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, amongst other factors, changing economic, financial, business or other market conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described in this announcement and the Company undertakes no obligation to update its view of such risks and uncertainties or to update the forward-looking statements contained herein. Nothing in this announcement should be construed as a profit forecast
The lack of certainty over trading and the ability of the subsidiaries to generate cash over the next 12 months created by the continuing Coronavirus restrictions 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 financial information set out in this announcement was approved by the Board on 24 May 2021.
3. Critical accounting assumptions, judgements 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:
i) Impairment of intangible assets (including goodwill)
The Group tests annually whether intangible assets (including goodwill) have suffered any impairment, in accordance with the relevant accounting policy. 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 10).
ii) 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. iii) 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.
iv) 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.
v) 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.
vi) 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.
vii) 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.
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;
-- Friedman's, a convertor and distributor of specialist Lycra, including Milano International (trading as Milano Pro-Sport), a designer and manufacturer of leotards;
-- Hickton Group, comprising Hickton Consultants, BRCS and Cook Brown, providers of services to the construction industry.
Discontinued operations represent the activities of Davies Odell, a manufacturer and distributor of protection equipment, matting and footwear components, until disposal in December 2020 and of the CEM Press companies including Travelfast (trading as Sampling International), a manufacturer of fabric, carpet and wallpaper pattern books, swatches and shade cards, until these went into administration in January 2020.
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. Group revenue is recognised at a point in time, other than GBP2,674,000 in respect of Cook Brown Building Control (2019: GBPnil) which is recognised over a period in time as the services are performed, in line with the requirements of IFRS 15.
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 Aford Hickton Continuing Discontinued Total Awards Friedman's Group operations operations Group 2020 2020 2020 2020 2020 2020 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Revenue 844 3,878 7,139 11,861 2,091 13,952 -------- ----------- -------- ------------ ------------- --------- Expenses (733) (3,754) (6,210) (10,697) (2,211) (12,908) Segmental result (EBITDA) before exceptional costs 111 124 929 1,164 (120) 1,044
-------- ----------- -------- ------------ ------------- --------- Depreciation and amortisation charge (7) (209) (40) (256) (63) (319) IFRS 16 depreciation (47) (139) (63) (249) (34) (283) Exceptional items - - (481) (481) (64) (545) Profit on disposal of discontinued operations - 626 626 Group costs (430) - (430) Net finance costs (including IFRS 16) (708) (30) (738) ------------ ------------- --------- (Loss)/profit before taxation (960) 315 (645) Taxation (20) - (20) ------------ ------------- --------- (Loss)/profit for the year (980) 315 (665) ------------ ------------- --------- Aford Hickton Continuing Discontinued Total Awards Friedman's Group operations operations Group 2019 2019 2019 2019 2019 2019 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Revenue 1,969 5,791 4,741 12,501 9,252 21,753 -------- ----------- -------- ------------ ------------- --------- Expenses (1,558) (4,547) (3,891) (9,996) (10,786) (20,782) Segmental result (EBITDA) before exceptional costs 411 1,244 850 2,505 (1,534) 971 -------- ----------- -------- ------------ ------------- --------- Depreciation and amortisation charge (9) (208) (12) (229) (203) (432) IFRS 16 depreciation (43) (102) (19) (164) (37) (201) Exceptional items - - - - (1,836) (1,836) Group costs (376) - (376) Net finance costs (including IFRS 16) (312) (101) (413) ------------ ------------- --------- Profit/(loss) before taxation 1,424 (3,711) (2,287) Taxation (342) - (342) ------------ ------------- --------- Profit/(loss) for the year 1,082 (3,711) (2,629) ------------ ------------- --------- ii) Assets and liabilities by segment
As at 31 December
Segment assets Segment liabilities Segment net assets/(liabilities) 2020 2019 2020 2019 2020 2019 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 -------- -------- ---------- ---------- ----------------- ---------------- Continuing operations CEPS Group 57 52 (5,995) (5,041) (5,938) (4,989) Aford Awards 1,661 1,576 (601) (407) 1,060 1,169 Friedman's 7,363 7,923 (2,227) (2,490) 5,136 5,433 Hickton Group 7,393 3,663 (6,558) (1,279) 835 2,384 Discontinued operations CEM Press - 1,386 - (3,177) - (1,791) Davies Odell - 1,509 - (964) - 545 Total - Group 16,474 16,109 (15,381) (13,358) 1,093 2,751 -------- -------- ---------- ---------- ----------------- ---------------- (iii) Revenue by geographical destination 2020 2019 GBP'000 GBP'000 UK 11,939 18,874 Europe 1,091 1,693 Rest of world 922 1,186 -------- -------- 13,952 21,753 -------- -------- 5. Taxation 2020 2019 GBP'000 GBP'000 -------- -------- Analysis of taxation in the year: Current tax Tax on profits of the year 41 340 Tax in respect of prior years (14) (7) -------- -------- Total current tax 27 333 -------- -------- Deferred tax Current year deferred tax movement (13) 2 Tax in respect of prior years 6 7 Total deferred tax (7) 9 -------- -------- Total tax charge 20 342 -------- --------
The tax assessed for the year is higher (2019: higher) than the standard rate of corporation tax in the UK (19%) (2019: 19%)
Factors affecting current tax: Loss before taxation (645) (2,287) ------ -------- Loss multiplied by the standard rate of UK tax of 19% (2019: 19%) (123) (435) Effects of: Expenses not deductible 46 613 Expenses not deductible goodwill impairment 67 75 Adjustments to brought-forward values - 21 Amounts credited directly to Other Comprehensive Income - 19 Capital allowances in excess of depreciation - 3 Adjustments to tax in prior periods (14) - Transfer pricing adjustment - (15) Other timing differences (2) - Gain on disposal not taxed (119) - Adjustments to deferred tax rate 6 3 Deferred tax not recognised 159 58 Total tax charge 20 342 ------ --------
The standard rate of corporation tax in the UK changed to 19% with effect from 1 April 2017. Accordingly, the Group's profits have been taxed at the actual rate of 19%.
The Finance Act 2016 included legislation to reduce the main rate of corporation tax from 19% to 17% from 1 April 2020. A change to the main rate of corporation tax announced in the 2020 Budget was substantively enacted on 17 March 2020. The rate from 1 April 2020 remains at 19% rather than the previously enacted reduction to 17%. The rate of 19% is accordingly applied to UK deferred taxation balances at 30 September 2020 (2019: 17%). In March 2021 it was announced that the rate of corporation tax is expected to increase to 25% from April 2023.
There are tax losses carried forward in the Company of approximately GBP1.3m and in the subsidiary companies of GBP195,000.
6. 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 GBP624,000 (2019: loss GBP2,696,000) and on 17,000,000 (2019: 17,000,000) ordinary shares, being the weighted number in issue during the year.
Basic earnings per share for continuing operations is calculated on the loss for the year after taxation attributable to owners of the parent of GBP939,000 (2019: profit GBP375,000) and on 17,000,000 (2019: 17,000,000) ordinary shares, being the weighted number in issue during the year. Basic earnings per share for discontinued operations is calculated on the profit for the year after taxation attributable to owners of the parent of GBP315,000 (2019: loss GBP3,071,000) and on 17,000,000 (2019: 17,000,000) ordinary shares, being the weighted number in issue during the year.
There are no potentially dilutive shares in the Group.
7. Property, plant and equipment Leasehold Plant, machinery, Motor Total property tools and vehicles improvements moulds Group GBP'000 GBP'000 GBP'000 GBP'000 -------------- ------------------ ---------- -------- Cost at 1 January 2019 384 2,760 38 3,182 Assets acquired on purchase of a subsidiary 255 1,313 8 1,576 Additions at cost 38 203 - 241 Transfers - (3) - (3) Disposals - (224) - (224) -------------- ------------------ ---------- -------- at 31 December 2019 677 4,049 46 4,772 Assets acquired on purchase of a subsidiary 34 77 - 111 Additions at cost 22 74 - 96 Disposals on sale or administration of subsidiaries (253) (3,559) (37) (3,849) Disposals - (35) - (35) -------------- ------------------ ---------- -------- at 31 December 2020 480 606 9 1,095 -------------- ------------------ ---------- -------- Accumulated depreciation at 1 January 2019 79 2,087 25 2,191 Accumulated depreciation acquired on purchase of a subsidiary 199 904 - 1,103 Charge for the year 62 295 10 367 Impairment - 229 - 229 Transfers - (3) - (3) Disposals - (214) - (214) at 31 December 2019 340 3,298 35 3,673 Accumulated depreciation acquired on purchase of a subsidiary 24 51 - 75 Charge for the year 50 202 1 253 Disposals on sale or administration of subsidiaries (225) (3,253) (27) (3,505) Disposals - (34) - (34) at 31 December 2020 189 264 9 462 -------------- ------------------ ---------- -------- Net book amount at 31 December 2020 291 342 - 633 -------------- ------------------ ---------- -------- at 31 December 2019 337 751 11 1,099 -------------- ------------------ ---------- --------
At the year end, assets held under hire purchase contracts or finance leases and capitalised as plant, machinery, tools and moulds have a net book value of GBP46,000 (2019: GBP290,000).
The depreciation of GBP23,000 in respect of these has been charged to cost of sales in the Consolidated Statement of Comprehensive Income.
8. Right-of-use assets Leasehold Plant, machinery, property tools and Motor improvements moulds vehicles Total Group GBP'000 GBP'000 GBP'000 GBP'000 -------------- ------------------ ---------- -------- Cost at 1 January 2019 1,238 - 99 1,337 Additions at cost 83 - 50 133 ------------------ at 31 December 2019 1,321 - 149 1,470 Assets acquired on purchase of a subsidiary 30 11 14 55 Additions at cost 162 5 - 167 Reclassification 39 - (39) - Disposals on sale of a subsidiary (52) - (48) (100) Disposals at the end of the lease term (98) - (64) (162) -------------- ------------------ ---------- -------- At 31 December 2020 1,402 16 12 1,430 -------------- ------------------ ---------- -------- Accumulated depreciation At 1 January 2019 160 - 37 197 Charge for the year 160 - 41 201 -------------- ------------------ ---------- -------- at 31 December 2019 320 - 78 398 Charge for the year 246 5 32 283 Disposals on sale of a subsidiary (26) - (39) (65) Disposals at the end of the lease term (98) - (64) (162) -------------- ------------------ ---------- -------- At 31 December 2020 442 5 7 454 -------------- ------------------ ---------- -------- Net book amount at 31 December 2020 960 11 5 976 -------------- ------------------ ---------- -------- at 31 December 2019 1,001 - 71 1,072 -------------- ------------------ ---------- -------- 9. Business combinations and disposals i) Acquisition in 2020 of Cook Brown Building Control Limited and Cook Brown Energy Limited
On 11 March 2020, a newly-incorporated subsidiary, Hickton Group Limited, acquired 100 per cent of the issued share capital of Cook Brown Building Control Limited and Cook Brown Energy Limited.
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 GBP296,000.
Goodwill of GBP3,234,000 arose from the acquisition primarily in respect of the overall workforce skills and their ability to generate income. Acquisition fees of GBP101,000 were incurred which have been expensed as an exceptional administrative cost in the year.
The following table shows the fair value of assets and liabilities included in the consolidated statements at the date of acquisition:
Fair value GBP'000 Identifiable assets and liabilities Intangible assets 9 Property, plant and equipment 91 Trade and other receivables 643 Cash and cash equivalents 734 Trade and other payables (1,021) Lease liabilities (55) Corporation tax payable (103) Deferred taxation (2) ---------------------- 296 ---------------------- Consideration Cash consideration 1,600 Existing loans offset against consideration 270 Shares issued 25 Loan notes issued 1,635
---------------------- Goodwill 3,234 ---------------------- Analysis of cash flows on acquisition Cash paid 1,600 Less: net cash acquired with the subsidiary (734) ---------------------- Net cash outflow on acquisition 866 ----------------------
From the date of acquisition Cook Brown Building Control Limited and Cook Brown Energy Limited contributed GBP2,834,000 of revenue and GBP437,000 profit before tax. If the combination had taken place at the beginning of the year, revenue would have been GBP3,408,000 and the profit before tax would have been GBP517,000.
ii) Disposal in 2020 of CEM Press Limited, Travelfast Limited (trading as Sampling International) and Davies Odell Limited
An administration process commenced in January 2020 in respect of CEM Press Limited and Travelfast Limited (trading as Sampling International) and they have been treated as disposals from 1 January 2020.
On 20 December 2020, CEPS PLC acquired the minority interest of 15% in Davies Odell Limited and transferred the shares to a new company, Vale Brothers Group Limited, in return for a 33% shareholding.
This ceased to be a subsidiary and is now treated as an associate.
The trading from Davies Odell Limited and the profit on disposal of all subsidiaries is presented in discontinued operations in the Consolidated Statement of Comprehensive Income.
The assets and liabilities disposed of were as follows:
CEM Press and Travelfast Davies Odell GBP'000 GBP'000 Property, plant and equipment 239 139 Inventories 9 429 Trade and other receivables 1,135 396 Cash and cash equivalents 4 - Borrowings (1,147) (303) Trade and other payables (1,839) (404) Lease liabilities (97) (58) Corporation tax payable (103) - Deferred taxation (53) - ---------------- ------------- (1,852) 199 ---------------- ------------- Fair value consideration - - Non-controlling interest released 1,027 - ---------------- ------------- (Profit)/loss on disposal (825) - ---------------- -------------
The cash flows from the discontinued operations were as follows:
2020 2019 GBP'000 GBP'000 Operating cash flows 58 (958) Investing cash flows (5) (9) Financing cash flows (164) 931 10. Intangible assets Customer Goodwill lists Other Total Group GBP'000 GBP'000 GBP'000 GBP'000 --------- --------- -------- -------- Cost at 1 January 2019 5,606 772 250 6,628 Additions at cost 2,078 - 1 2,079 At 31 December 2019 7,684 772 251 8,707 Additions at cost 3,234 - 34 3,268 Disposals (1,241) - - (1,241) At 31 December 2020 9,677 772 285 10,734 --------- --------- -------- -------- Accumulated amortisation and impairment at 1 January 2019 1,221 597 69 1,887 Amortisation charge - - 62 62 Impairment 10 (7) - 3 Impairment 395 - - 395 at 31 December 2019 1,626 590 131 2,347 Amortisation charge - - 66 66 Impairment 172 182 - 354 Disposals (1,241) - - (1,241) at 31 December 2020 557 772 197 1,526 --------- --------- -------- -------- Net book amount at 31 December 2020 9,120 - 88 9,208 --------- --------- -------- -------- at 31 December 2019 6,058 182 120 6,360 --------- --------- -------- --------
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.
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 and customer list assets are allocated to the Group's cash generating units (CGUs) on a business segment basis:
CEM Aford Awards Press Friedman's Hickton Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Goodwill and customer lists at 1 January 2019 1,043 - 1,484 2,033 4,560 Additions at cost - 395 1,683 - 2,078 Amortisation charge (3) - - - (3) Impairment - (395) - - (395) ------------- -------- ----------- ---------- -------- at 31 December 2019 1,040 - 3,167 2,033 6,240 Additions at cost - - - 3,234 3,234 Impairment - - - (354) (354) ------------- -------- ----------- ---------- -------- at 31 December 2020 1,040 - 3,167 4,913 9,120 ------------- -------- ----------- ---------- --------
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 increase only by a long-term growth rate of 1%. A discount rate of 10.0% (2019: 10.6%), 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 that trading will return to pre-pandemic revenue levels in the Friedman's and Aford Awards businesses over the course of two years and that gross margins will recover in 2021. The Hickton Group businesses have not been affected to any major degree and forecasts reflect a continuation of 2020 trading results and underlying growth trends.
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, Hickton Consultants and Cook Brown within the Hickton Group the value-in-use calculation gives rise to sufficient headroom such that reasonable changes in the key assumptions do not eliminate the headroom. The Milano business within the Friedman's segment has been impacted by the pandemic, but a return to the level of trading profits achieved prior to this supports the goodwill in respect of this business.
At 31 December 2020 impairment charges of GBP354,000 have been taken against the BRCS business goodwill and customer list assets (within Hickton) as this business incurred a loss in both 2019 and 2020. Actions have been taken to improve margins with a break-even performance projected, but there is at present insufficient certainty over future trading profits to support these intangible assets. In 2019 an impairment charge of GBP395,000 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.
11. Share capital and share premium Number of shares Share capital Share premium Total GBP'000 GBP'000 GBP'000 At 31 December 2019 and 31 December 2020 17,000,000 1,700 5,841 7,541 ----------- -------------- -------------- -------- 12. Post balance sheet events
On 21 January 2021 D A Horner agreed to provide to the Company an additional GBP100,000 for general working capital purposes. This is in addition to the GBP650,000 loan in place at the year end.
On 15 March 2021, Hickton Group Limited ('HGL'), the Company's 54.7% subsidiary, completed the acquisition of the entire issued share capital of Millington Lord Limited and its subsidiaries Morgan Lambert Limited ('MLL'), Qualitas Compliance Limited ('QCL) and Morgan Lambert Electrical Limited ('MLEL'), which is not actively trading. MLL and QCL provide building inspection related services which are complementary to those already provided by HGL in this sector. The consideration was a maximum of GBP1.1 million, which comprised a cash payment on completion of GBP700,000 plus a further GBP299,999 deferred, to be paid in two instalments: GBP150,000 on or before 30 June 2021 and GBP149,999 on or before 31 August 2021. An additional up to GBP100,000 may be payable, dependent on the acquired business group achieving certain turnover targets over the same period. The acquisition was funded from existing cash resources within HGL.
On 15 April 2021, HGL also drew down on a four-year GBP500,000, secured Coronavirus Business Interruption Loan ('CBIL') with Santander UK plc available for general corporate purposes. The CBIL is repayable in equal quarterly payments commencing approximately 12 months after drawdown and attracts an annual interest rate of 3.8% over Bank of England base rate.
On 20 May 2021, CEPS entered into a loan agreement ("Loan") with a third party for GBP2,000,000. In drawdown, which is anticipated to be on or around 28 June 2021, the Loan will be used to repay an existing GBP2,000,000 from another third party which falls due for payment on 30 June 2021. The Loan carries interest at an annual rate of 7% and is repayable on or before 30 June 2022. The loan is guaranteed by D A Horner.
13. Distribution of the Annual Report and Notice of AGM
A copy of the 2020 Annual Report, together with a notice of the Company's Annual General Meeting ('AGM') to be held at 11:30am on Tuesday 22 June 2021 at 11 Laura Place, Bath BA2 4BL , will be sent to all shareholders on Friday 28 May 2021. Further copies will be available to the public from the Company Secretary at the Company's registered address at 11 Laura Place, Bath BA2 4BL and from the Group website, www.cepsplc.com .
The AGM would normally provide an opportunity for shareholders to meet with the directors, for the directors to provide an update on the Company's business and to answer questions from shareholders. We would normally, therefore, welcome shareholders who choose to attend the AGM in person.
However, in the light of the uncertainty surrounding the government's proposed intention to remove all legal limits on social contact on or before Monday 21 June 2021, the special arrangements described below will be followed for the holding of the AGM this year, unless the Company subsequently notifies you otherwise.
Two Company directors who are entitled to vote at the meeting will be physically present at the AGM in order to form the necessary quorum to enable the business of the meeting to be carried out. In the event that one of those directors is not the Company's Chairman, David Horner, one of the directors who is present will be designated as Chairman of the AGM.
We are sorry to have to inform you that no other shareholders will be permitted to attend the AGM. Any person who does attempt to attend the AGM in person, other than those required to form the quorum, will be refused admission.
All of the resolutions to be put to shareholders at the AGM will be put to a vote on a poll, rather than a show of hands.
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