Ceps Regulatory News (CEPS)

4 November 2014

CEPS PLC

 ("CEPS" or the "Company")

Acquisition of Aford Awards Limited

CEPS announces that it has acquired 70 per cent. of the issued share capital of a newly incorporated company, Aford Awards (Holdings) Limited ("AAHL"), which has been formed to acquire 100 per cent. of Aford Awards Limited ("Aford") for £1,500,000, the acquisition of which was completed on 3 November. The vendors of Aford are Jon Ford, the Managing Director, and members of his family.

Aford is a sports trophy and engraving company based in Maidstone, Kent, which was established in 1981 and produces and sells trophies, awards and gifts and associated products and services. Aford is profitable, cash generative and has enjoyed annual growth in sales and EBITDA over the last five years. In the year ended 30 November 2013, Aford's sales were £1.2 million and EBITDA was £0.3 million. At 30 November 2013 net assets were £452,352, including a cash balance of £409,066. Trading performance of Aford in 2014 has been in line with management's expectations for the year to date.

Jon Ford, who has been Managing Director of Aford since 2005, will continue as Managing Director of Aford and will be a director of AAHL. As part of his consideration Jon Ford will receive 30,000 Ordinary Shares, being 30 per cent. of the issued share capital of AAHL.

CEPS will subscribe £770,000 into AAHL for 70,000 Ordinary Shares for £70,000, £490,000 Acquisition Loan Notes and £210,000 Shareholder Loan Notes, both with an 8 per cent. interest rate. The Acquisition Loan Notes will be repaid before the Shareholder Loan Notes, but after the Vendor Loan Notes. The Vendor Loan Notes have an annual interest rate of 7 per cent. All categories of loan notes will be repaid subject to the availability of free cash and it is envisaged that the Vendor Loan Notes will be repaid within three years from Completion.

The Ford family will receive total consideration of £1.5 million made up of cash of £1,080,000 at Completion, £300,000 of Vendor Loan Notes, and Jon Ford will receive £90,000 of Shareholder Loan Notes and 30,000 Ordinary Shares issued at a price of £1 per share. The cash element of the consideration will be funded from the £770,000 subscribed by CEPS into AAHL, as explained above, and a £400,000 dividend from Aford.

The acquisition of Aford fits with CEPS' strategy of acquiring established, profitable, high margin, niche businesses and utilises a funding structure aimed at returning acquisition funds to CEPS as rapidly as possible, thereby maximising the return on equity employed. The Directors of CEPS believe that the acquisition of Aford will be a valuable addition to the CEPS group of companies.

Third party loan

In order to finance the CEPS Acquisition, the Company has received a loan from a third party for £800,000 ("Loan"). The Loan carries interest at an annual rate of 10 per cent. accruing daily and payable in arrears on 31 January 2015, 30 April 2015 and 30 June 2015. The Loan is repayable on or before the 30 June 2015 and may be repaid in one or more instalments after 30 April 2015.

The Loan is secured against assets held (directly or indirectly) by Mr David Horner, a director of the Company.

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