REG - CEPS PLC - Business and Assets Purchase by Aford Awards Ltd

CepsAnnouncement

12/04/2022 09:45

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RNS Number : 1056I  CEPS PLC  12 April 2022

12 April 2022

CEPS PLC

("CEPS" or the "Company")

 

 

Purchase by Aford Awards Limited of the business and assets of Impact
Promotional Merchandise Ltd

 

CEPS announces that Aford Awards Limited ("AA"), a 75% indirectly held
subsidiary of CEPS, has purchased the business and related assets of Impact
Promotional Merchandise (the "IPM Business", or "IPM"), previously carried on
by Impact Promotional Merchandise Ltd (the "Seller"). IPM has traded since
2004 and supplies a wide range of trophies, glass awards and medals whilst
also providing customised goods such as sports bags, mugs and shirts from its
site in Luton, Bedfordshire.  AA will not acquire the limited company which
is currently carrying on the IPM Business, nor any land, buildings, or other
tangible assets other than a small amount of stock, nor any cash or debtors
held by IPM. AA will not acquire or assume any of IPM's existing liabilities
(save for those relating to IPM's TrustPilot rating), including in respect of
taxation and leases.  After completion AA will administer any legacy
transactions, but will not be responsible for the costs associated with them.
The purchase was completed on 12 April 2022.

 

The consideration for the purchase is £1,008,000, £558,000 being paid on
completion ("Initial Consideration") with a deferred consideration of
£450,000 ("Deferred Consideration") to be paid post completion in the
following amounts and on the following dates: £210,000 on 14 March 2023;
£60,000 on 30 September 2023; £60,000 on 31 March 2024; £60,000 on 30
September 2024 and £60,000 on 31 March 2025.  As a term of the agreement to
acquire the IPM Business, David Horner, a director of the Company, has agreed
to personally guarantee the Deferred Consideration ("Guarantee").  Given that
David Horner is a director of the Company, the provision of the Guarantee is
considered to be a related party transaction pursuant to AIM Rule 13.  The
directors of the Company who are considered independent for the purposes of
the Guarantee, being Vivien Langford, Geoff Martin and David Johnson, having
consulted with the Company's nominated adviser, Cairn Financial Advisers LLP,
consider the Guarantee by David Horner to be fair and reasonable insofar as
the Company's shareholders are concerned.

 

The purchase is for the business information, contracts, goodwill (including
the business names), the trading records (but excluding accounting records),
the website and domain names and a small amount of stock valued at £8,000.

 

AA has entered into a new short-term lease with IPM which will enable AA to
continue operating the IPM Business from the site in Luton and to use the
equipment and computer systems at the property for the purpose of the business
from the date of completion up until 30 September 2022.  The monthly rent is
£4,068 and is inclusive of all utility costs attributable to the property
save for telephone costs which are included in the rent up to a maximum of
£20 per month.  Eight employees of IPM will have their employment
transferred to AA under TUPE.

 

The profit before tax of IPM as set out in the unaudited accounts for the year
ended 30 June 2021 was £31,086 on a turnover of £535,604.  As at 30 June
2021 the assets being acquired were valued in the unaudited balance sheet at
£41,505.

 

The Initial Consideration is being funded as to £8,000 from AA's existing
cash resources, a loan of £450,000 from CEPS, a loan of £50,000 from Paul
Wood, the Managing Director of AA, and £50,000 of a total loan of £90,000
from Rob Ferguson, the Sales Director of AA.  The remaining £40,000 of the
loan from Rob Ferguson will be used by AA for working capital purposes. All
the loans have a coupon of 5% per annum accruing daily with interest payable
quarterly in arrears or at the time the loan is repaid.  There are no fixed
repayment dates for the loans.  It is intended that the Deferred
Consideration will be paid from available cash resources within AA at the time
at which the payments are due. Given that Paul Wood and Rob Ferguson are
directors of AA, the loan agreements dated 12 April 2022 between AA and each
of Paul Wood and Rob Ferguson and provision to AA of the loans (together "Loan
Agreements") are considered to be related party transactions pursuant to AIM
Rule 13.  The directors of the Company who are considered independent for the
purposes of the Loan Agreements, being Vivien Langford, Geoff Martin and David
Johnson, having consulted with the Company's nominated adviser, Cairn
Financial Advisers LLP, consider the terms of the Loan Agreements to be fair
and reasonable insofar as the Company's shareholders are concerned.

 

The acquisition of IPM furthers AA's goal of increasing market share and
consolidating a fragmented retail market whilst providing economies of scale
and improving AA's website technology.  The directors of CEPS believe that
this purchase will be a valuable addition to the Aford Awards group and to
CEPS as a whole.

 

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).

The directors of the Company accept responsibility for the content of this
announcement.

 

Enquiries

 

 CEPS PLC

 Vivien Langford, Group Finance Director                +44 1225 483030

 Cairn Financial Advisers LLP

 James Caithie / Sandy Jamieson / Ludovico Lazzaretti   +44 20 7213 0880

 

Caution regarding forward looking statements

Certain statements in this announcement, are, or may be deemed to be, forward
looking statements. Forward looking statements are identified by their use of
terms and phrases such as ''believe'', ''could'', "should" ''envisage'',
''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect",
''will'' or the negative of those, variations or comparable expressions,
including references to assumptions. These forward-looking statements are not
based on historical facts but rather on the Directors' current expectations
and assumptions regarding the Company's future growth, results of operations,
performance, future capital and other expenditures (including the amount,
nature and sources of funding thereof), competitive advantages, business
prospects and opportunities. Such forward looking statements reflect the
Directors' current beliefs and assumptions and are based on information
currently available to the Directors.

 

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