Ceps Regulatory News (CEPS)

1 February 2016

CEPS PLC

 ("CEPS" or the "Company")

Acquisition of Hickton Consultants Limited

CEPS announces that it has acquired 55 per cent. of the issued share capital of a newly incorporated company, RAM (1003) Limited ("RAM") for an investment of £670,000 ("CEPS Acquisition"), which has been formed to acquire 100 per cent. of Hickton Consultants Limited ("Hickton"), the acquisition of which was completed on 29 January 2016. The vendors of Hickton are Tony Hickton, the Chairman, members of his family and a number of former employees. Tony Hickton has not undertaken an executive role in the running the business for a number of years.

Hickton is a leading provider of Clerks of Works services to the construction industry, providing a quality assurance resource on larger value projects across the UK, with customers ranging from end-user clients, architects, project management firms and contractors. The business was established in 1991, and is based in Elsecar, South Yorkshire.

Hickton is profitable, cash generative and has enjoyed significant growth in sales and EBITDA over the last three years. In the year ended 28 February 2015, Hickton's sales were £2.69 million and EBITDA was £0.42 million. At 28 February 2015 net assets were £469,000, including a cash balance of £361,000. Trading performance and net assets of Hickton in 2015/6 are in line with management's expectations for the year to date.

Hickton has been acquired by RAM for a total consideration of £2.00 million, comprising initial consideration of £1.35 million and deferred consideration of £0.65 million payable over four years from completion in quarterly instalments.

CEPS will subscribe £670,000 into RAM for 54,973 Ordinary Shares for £54,973, and £615,027 Shareholder Loan Notes, with an 8 per cent interest rate.

Tony Mobbs, who has been Managing Director of Hickton since 2012, will continue as Managing Director of Hickton and will be a director of RAM. Tony Mobbs was not a shareholder in Hickton prior to the acquisition by CEPS, but has invested as part of the transaction, and will receive 20,000 Ordinary Shares, being 20 per cent of the issued share capital of RAM.

The acquisition of Hickton 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 Hickton 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 £690,000 ("Loan"). The Loan carries interest at an annual rate of 10 per cent. accruing daily and payable in arrears on 30 April 2016, 31 July 2016, 30 October 2016 and 31 January 2017. The Loan is repayable on or before the 31 January 2017 and may be repaid in one or more instalments after 30 October 2016.

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

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