CEPS PLC Reports Profit Decline in H1 2025 Amid Economic Headwinds

CEPS H1 2025: revenue up, profits down – here’s what moved the dial

CEPS PLC has reported a mixed first half. Group revenue rose 5.8% to £16.82m, but operating profit slipped 14.3% to £1.35m as margins tightened and finance costs crept higher. Earnings per share fell to 1.55p from 2.29p.

Management points to sticky inflation, weaker consumer confidence and wider policy uncertainty as the backdrop. Within the portfolio, inspection and compliance services continued to grow, while textiles struggled.

Key numbers investors should know

Metric	H1 2025	H1 2024	Comment
Revenue	£16.82m	£15.89m	Up 5.8%
Operating profit	£1.35m	£1.58m	Down 14.3%
Profit before tax	£951k	£1.23m	Lower on margin and interest
Profit after tax	£675k	£952k	Group EPS 1.55p (2.29p)
Net finance costs	£403k	£354k	Higher after ICA borrowing
Net cash from operations	£1.61m	£1.98m	Still strong cash generation
Net debt (note 5)	£6.31m	£4.89m	Includes new Santander loan at ICA
Gearing ratio	120%	75%	Higher due to debt and lower equity

EBITDA is mentioned throughout. That is earnings before interest, tax, depreciation and amortisation – a proxy for cash profit from operations.

Divisional performance: where growth and pressure showed up

ICA Group – steady growth and a bolt-on executed

ICA, which provides inspection, building control and compliance services, remains the engine room. Revenue rose to £11.53m (H1 2024: £10.37m) and EBITDA increased to £1.47m (H1 2024: £1.33m). The acquisition of Align Group completed on 1 April 2025 and contributed three months. Management says it is performing to expectations, reinforcing ICA’s M&A capability.

Recruitment and retention remain challenging as local councils bid up salaries. Even so, ICA’s margin improvement helped offset weakness elsewhere.

Signature Fabrics – the drag on Group earnings

Signature Fabrics had a tough half. Revenue fell to £3.07m (H1 2024: £3.46m) and EBITDA dropped to £137k (H1 2024: £479k). Milano met sales targets largely by clearing old stock at reduced margins, while Friedman’s faced soft demand, though a competitor’s liquidation could provide a future pick-up.

Bottom line: this is the division that pulled Group profits down in H1. Recovery depends on reigniting sales and restoring margins.

Aford Awards – resilient trading in a smaller market

Revenue nudged up to £2.22m (H1 2024: £2.06m), though EBITDA edged back to £417k (H1 2024: £450k). Management notes the trophy and medal market may have contracted by as much as 20% year on year. The team is sharpening efficiency and scouting for bolt-on deals.

With deferred payments on a prior acquisition now finished, Aford is throwing off more free cash and has parked surplus funds on deposit pending M&A.

Debt, cash and gearing: what changed and why it matters

Net debt rose to £6.31m, with gearing at 120% (H1 2024: 75%). The step-up is mainly the £2.5m Santander loan at ICA used to fund the Align acquisition and accelerate repayment of ICA loan stock. There is no right of recourse to CEPS for this bank loan, which is important for risk containment at the parent level.

Group finance costs rose to £403k. CEPS also rolled its £2m unsecured third-party loan for 12 months at a 9% coupon (previously 7%), with the intention to repay from cash reserves when due. All debt sits on fixed rates, giving visibility if base rates move again.

Operationally, cash generation stayed healthy at £1.61m, albeit down on last year. Cash at bank ended at £1.55m.

Strategic progress against management’s six drivers

• Subsidiary profits: ICA up, Aford slightly down, Signature down. EPS declined 32.3% to 1.55p.
• Self-funded bolt-ons: ICA completed the Align acquisition on 1 April 2025. Aford is evaluating targets.
• Loan stock repayments: ICA loan stock fell to £2.43m from £3.93m year on year, with £1.25m due to CEPS. Further repayments are paused for 12 months under the Santander terms after an accelerated March payment. Signature Fabrics has begun repaying amounts owed to CEPS.
• Increase in CEPS’ subsidiary stakes: CEPS’ effective holding in ICA rose by 1.7% after ICA bought in minority shares for £374k.
• Share buybacks: not yet started. The Board’s preferred capital return, when reserves allow, is to buy back and cancel shares.
• Offers for subsidiaries: none received.

M&A detail: Align deal structure at a glance

Consideration	Amount
Total consideration	£1.48m
Cash outflow at completion (net of acquired cash)	£745k
Loan notes issued	£118k
Deferred consideration	£460k over three years
Recognised goodwill	£1.36m
Customer-related intangibles	£133k

The integration seems to be on track and contributed to ICA’s growth in the half.

Outlook: what to watch into H2 2025

The Board expects ICA’s momentum to continue. Aford is set for a stronger second half with ongoing cash generation. Signature Fabrics is the swing factor. Management hopes for improvement in the seasonally stronger H2 at Milano and from changes implemented across the textiles businesses.

On the macro side, the Chairman calls out policy-induced costs and uncertainty, but notes the Bank of England has made two 0.25% rate cuts this year to 4.0%. Any further easing would help confidence and finance costs, though CEPS’ fixed-rate debt already provides some insulation.

My take: balanced progress with a clear weak link

• Positives: ICA delivered revenue and EBITDA growth and executed a bolt-on. Cash generation remained solid. Debt is largely ring-fenced at subsidiary level with the new Santander facility having no recourse to CEPS.
• Negatives: Group profits and EPS fell, driven by Signature Fabrics’ sales shortfall and lower margins. Gearing rose to 120%, and the rolled £2m loan now carries a 9% coupon.
• Why it matters: With ICA now roughly two thirds of revenue and EBITDA, the Group’s resilience increasingly hinges on that division. Any recovery at Signature would have a disproportionate impact on Group profitability and the path back to buybacks or dividends.

In short, H1 shows CEPS can grow through acquisition and keep generating cash, but the textiles turnaround needs to materialise in H2 to steady EPS and reduce gearing. Keep an eye on Signature’s sales run-rate, ICA’s margin progression, and any bolt-on news from Aford.