CEPS PLC Sunline Direct Mail Limited Update (3232R)

TIDMCEPS

RNS Number : 3232R

CEPS PLC

13 June 2018

CEPS PLC

("CEPS" or the "Company")

Notice of intention to appoint an administrator to Sunline Direct Mail Limited

The Board of CEPS announces that, for the reasons explained below, Sunline Direct Mail Limited ("SDM"), is today filing a notice of intention to appoint an administrator ("NOI"). SDM is a wholly owned subsidiary of Sunline Direct Mail (Holdings) Limited ("Sunline") which in turn is 80% owned by CEPS, with management owning the remaining 20%.

Through improved efficiency and automation, SDM was coping with the continued gentle down-turn in the direct mail polywrap market. New investment has taken place over the past two years to expand the letter and paper segment of the business to the point where it was anticipated that polywrap would have become the smaller part of the direct mail business in 2019.

However, the impact of the introduction of the new General Data Protection Regulations ("GDPR"), as highlighted by the Royal Mail in its recent results where it forecast a severe decline in volumes, coupled with the reaction to the plastics debate prompted by the BBC's Blue Planet Television series, have had an impact on the sector more than SDM can stand in its current form. As a result, the order book is not filling at the rate that management would expect it to at this time of year for the "golden period" from August to November and the business is likely to require significant amounts of additional funding to move forward.

As at 31 December 2017 the consolidated net liabilities of SDM were GBP2,592,220. SDM's turnover in the year was GBP6,675,329 and the consolidated operating loss was GBP60,829. If SDM had been excluded from the 2017 consolidated results, the CEPS Group's consolidated revenue would have reduced from GBP23,601,257 to GBP16,925,928 and operating profit would have increased from GBP1,100,578 to GBP1,161,407, prior to a one-off write-off of the inter-company debt between CEPS and Sunline which amounted to GBP2,414,015 at 31 December 2017. The impact on the CEPS Group's consolidated net assets would have been roughly neutral.

The inter-company debt between CEPS and Sunline amounts to GBP2,789,317 at 31 May 2018.

Moorfields Advisory Limited ("Moorfields") has been engaged by SDM to provide advice to the SDM Board and outline the options available to the company given its current financial position. Moorfields has recommended an accelerated marketing process for the SDM business with a view to effecting its sale as a going concern if possible and has been engaged to oversee this process. It has been necessary for the directors of SDM to file the NOI so as to obtain a court-sanctioned moratorium over the business to protect it against any enforcement action by creditors whilst it continues to trade as usual and is marketed for sale. Any sale of SDM's business and/or assets will be completed by the administrators once they have been appointed.

Interested parties requiring further information on SDM's business and the sale process itself should contact Moorfields as follows:

Moorfields Advisory Limited

88 Wood Street

London

EC2V 7QF

Principal Contact: Darren Morrison

   Direct Dial:              [phone] 
   Switchboard:           [phone] 
   Fax:                         [phone] 
   Email:                      [e-mail] 
 
 
    Since the sale process will necessarily be conducted over an accelerated timescale, interested 
    parties are encouraged to pursue this opportunity as a matter of urgency. 
 

Once the outcome of the sale process for SDM is clear a further announcement will be made. However, it is anticipated that there will be no cash cost to CEPS in respect of this action.

Group trading to date in 2018, excluding SDM, is marginally behind the Board's expectations.

The announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

Enquiries

 
 CEPS PLC 
  David Horner, Chairman       [phone] 
 Cairn Financial Advisers 
  LLP 
  Tony Rawlinson / James 
  Caithie/Richard Nash         [phone] 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

END

MSCFKNDNPBKDOAD

(END) Dow Jones Newswires

June 13, 2018 11:40 ET (15:40 GMT)