A4 Laser Labels acquires CF Labels in pre-pack

Richard Stuart-Turner
Friday, April 30, 2021

Self-adhesive label manufacturer CF Labels has been acquired by connected party A4 Laser Labels in a pre-pack deal.

CF Labels supplied and manufactured a wide range of labels. Image: Google Maps
CF Labels supplied and manufactured a wide range of labels. Image: Google Maps

Mike Dillon and Katy McAndrew of Leonard Curtis Business Rescue & Recovery were appointed joint administrators of the New Mills, High Peak, Derbyshire-based business on 26 March 2021.

In a statement sent to Printweek, Leonard Curtis said the business – which was established in 2007 – had entered administration as a result of a bad debt and the ongoing impact of the Covid-19 pandemic.

“Despite a number of cost-cutting measures the company fell behind with its financial obligations and professional advice was sought. As a result, the appropriate steps were taken to preserve the business,” the statement said.

“After a period of marketing the administrators concluded a pre-packaged sale of the business to a connected party, resulting in the safeguarding of 19 jobs.”

The statement of administrator’s proposal, filed at Companies House and dated 6 April 2021, confirmed CF Labels’ buyer as A4 Laser Labels.

According to unaudited accounts, the business had recorded a turnover of around £2m and a profit of around £56,000 for the year ended 31 January 2018, and a turnover of around £2m and a profit of around £159,000 a year later.

But management accounts for the year ended 31 January 2020 show that while turnover increased to £2.2m, it incurred a loss of around £75,000, which was attributed to a bad debt totalling £200,000 that also impacted cashflow.

Management accounts for the year ended 31 January 2021 showed a turnover of around £2.4m and a profit of £23,000. The business said that it experienced trading issues due to Covid-19 restrictions and has suffered from further cashflow problems as a result of high overheads.

It took steps to reduce its overheads by making five redundancies in February 2021 and by vacating a second trading site, as well as storage premises. Despite the cost cutting measures, however, the company was no longer able to pay its creditors as and when debts fell due.

HMRC is owed £166,000 in respect of VAT and £71,000 in respect of PAYE/NIC. The company owes its largest supplier around £237,000 and had entered into a payment plan with the supplier to repay a minimum of around £4,000 per week, which was deemed unsustainable.

Stephen Plant, a shareholder of CF Labels and a director and shareholder of A4 Laser Labels, sought advice from Leonard Curtis, which concluded that CF Labels was insolvent.

Plant was granted authority to deal with the affairs of CF Labels, due to the illness of its managing director and shareholder Gary Burton, who is also a shareholder of A4 Laser Labels.

Administration was considered the most suitable course of action, to best allow the possibility of selling CF Labels as a going concern and to enable maximum value to be realised from the company’s assets. A notice of intention to appoint an administrator was then filed on 15 March.

The company’s business and assets were marketed for sale for a period of a week in March, with the length of the period determined by the need to quickly find a buyer as the company had insufficient funding in order to be able to continue trading.

While no third parties expressed any interest, one expression of interest was received from A4 Laser Labels, which was connected via the shareholdings of Plant and Burton, as well as through Adam Ormrod and Susan Plant, who are both also directors and shareholders at A4 Laser Labels and were shareholders at CF Labels.

The offer received was for £75,000 plus outstanding sums due to Close Brothers Finance under an invoice finance agreement. This was accepted and CF Labels subsequently filed a notice of appointment on 26 March, with the sale of the business completely shortly after.

A further document on Companies House shows that the proposals were deemed to be approved by CF Labels’ creditors on 20 April.

Stephen Plant told Printweek: “I was a shareholder in CF Labels, but I never looked at the finance side of things. Just over two years ago we had a customer go down on us for probably the best part of quarter of a million pounds. We tried to trade out of it but then the pandemic hit, and it was just escalating, and we had a lot of external costs.

“When myself and Sue [Susan Plant] came back after both having a period in hospital with Covid at Christmas, we took over the day-to-day running of the business, because the managing director of CF Labels [Gary Burton] had suffered with various illnesses as well.

“We hadn’t realised the impact that all of these factors had had. There was no other way to go – it was either this or 24 people would have been on the dole. I was concerned that I wanted to save jobs and keep the business going, because it has a decent structure about it, it’s just that all these unforeseen circumstances have caused it to go.”

Plant, who has invested his own money back into the business, said CF Labels was primarily a trade house that also served NHS brokers and some end users. He added A4 Laser Labels had retained most of the brokers and suppliers used by CF Labels.

Stephen and Susan Plant are now running A4 Laser Labels alongside production director Adam Ormrod. Gary Burton is not a director of the business.

As part of the purchase, A4 Laser Labels has acquired all of CF Labels’ assets, which included a raft of print, finishing and specialist label machines.

A4 Laser Labels was previously an internet-only business with two staff that bought products from CF Labels and sold them through its website. It will now become the main identity of the whole operation, with the CF Labels branding not being retained according to Plant.

The business supplies A4 sheet labels, fanfolded labels, roll labels, and foil labels, and manufactures a wide range of self-adhesive labels including standard and bespoke, sheets, rolls, fanfolded, and barcodes.

Stephen Plant said the projected turnover for A4 Laser Labels is around £1.6m to £1.8m. The business will operate from one leased 1,115sqm site in New Mills.

“I’m confident we can turn the business around with the continued support of the current materials suppliers and customers, and just by working a bit smarter,” Plant added.

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