CEPS subsidiary Signature Fabrics is acquiring 90% of Milano International for £1.85m in cash and loan notes.
The Preston-based business trades as Milano Pro-Sport and it supplies athletic and gymnastic leotards and costumes. In the year to May 2018, Milano generated revenues of £1.68m and pre-tax profit of £93,000.
Signature trades as Friedman’s and it converts and supplier Lycra. Milano will widen the product range. In the six months to June 2019, Friedman’s generated revenues of £2.75m, which was similar to the first half of the previous year, but profit contribution improved from £298,000 to £444,000. Friedman’s made £1m profit in 2018.
The deal is funded by a new £2m loan with an annual interest charge of 10% and it is repayable by the end of October 2020. The loan is guaranteed by CEPS director David Horner. The vendors are retaining a 10% stake.
At the end of June 2019, CEPS had net debt of £3.7m, before leases.
Excluding discontinued revenues from loss-making direct mail services provider Sunline, interim revenues grew from £9.06m to £10.2m, while underlying pre-tax profit declined from £346,000 to £265,000.
That excludes £115,000 of restructuring costs for CEM and Sampling International. This fabric and wallpaper pattern books business is losing money and offset improved profit contributions from other group businesses.
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