Ceps Regulatory News (CEPS)

13 December 2021

CEPS PLC

 ("CEPS" or the "Company")

Pension scheme, extension of existing related party loans and general trading update

Pension Scheme

CEPS announces that the Trustee of the Company's defined benefit scheme (Dinkie Heel plc Retirement Benefits Scheme (the "Scheme")) has entered into a buy-in contract with Aviva. This will provide long-term security for the benefits of all of the members of the Scheme and also removes longevity, investment and funding risks in the Scheme. The current expectation is that the contract will convert to a full buy-out policy in due course without the need for any additional financial support from the Company. Although supportive of the decision of the Trustees to enter into the buy-in contract, this was a decision made by the Trustees and not one that could be taken by CEPS.

The Scheme is expected to go into formal winding up as soon as possible once data cleansing and Guaranteed Minimum Pension equalisation is complete. It is possible that at this time a surplus arising from the excess of Scheme assets over Scheme liabilities, will be repaid to CEPS, but at the moment it is too early to determine how much this will be. A further announcement will be made when there is more certainty about the figure.

There is no impact on the Company's balance sheet as a consequence of this transaction as the actuarial surplus on the Scheme has not been recognised as the Company does not have an unconditional right to refunds of surpluses arising in the Scheme. However, it will mean that CEPS will, in due course, no longer need to expense costs and professional fees in relation to the administration of the Scheme. Moreover, the uncertainty of whether the Company will need to make-good any future deficit in the Scheme will be removed. Both these actions will have a positive impact on future cash.

Extension of Existing Related Party Loans

1. On 20 May 2021 the Company announced that it had secured a third-party loan for £2,000,000 which was repayable on or before 30 June 2022 (the "Loan"). The Loan has been extended such that it is repayable on or before 30 June 2025. All other terms of the Loan remain the same including the annual interest rate of 7 per cent. accruing daily and payable in arrears on 31 March, 30 June, 30 September and 31 December.

CEPS' obligations in respect of the Loan have been guaranteed by Mr David Horner, a director of the Company. 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 Loan, being Geoff Martin, David Johnson and Vivien Langford, having consulted with the Company's nominated adviser, Cairn Financial Advisers LLP, consider the guarantee of the Loan by David Horner to be fair and reasonable insofar as the Company's shareholders are concerned.

2. The repayment date of the loan from Chelverton Asset Management Limited (the "CAM Loan"), which now stands at £2,950,000 after the repayment of the short-term element of the CAM Loan of £150,000 made possible by the equity placing on 17 September 2021, has been extended from 31 March 2022 to 31 March 2023. All other terms of the CAM Loan remain the same including that it carries an interest rate of 5 per cent. accruing daily and payable in arrears on 31 March, 30 June, 30 September and 31 December.

CEPS' obligations in respect of the CAM Loan have been guaranteed by Mr David Horner. As David Horner is a director of the Company and, therefore, deemed to be a related party pursuant to the AIM Rules for Companies, is a 14.06% shareholder and, together with his family, owns 55.25% of CAM Holdings Limited, which owns 100% of CAM (which is, therefore, itself a related party), both the extension of the CAM Loan, and the provision of the guarantee, 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 CAM Loan, being Geoff Martin, David Johnson and Vivien Langford, having consulted with the Company's nominated adviser, Cairn Financial Advisers LLP, consider the CAM Loan and the guarantee of the CAM Loan by David Horner to be fair and reasonable insofar as the Company's shareholders are concerned.

Trading Update

As the Company is approaching its financial year end of 31 December 2021, it is useful to provide a trading update. The Board of CEPS is confident that all segments will perform better than in the previous year, notwithstanding the well-publicised challenges in the British economy, and are well placed to deliver good growth. No further significant acquisitions in new segments are anticipated over the next two years while the Company focuses on enhancing its existing portfolio companies through both organic growth and bolt-on acquisitions.

In addition, further to the announcement made on 15 March 2022 relating to the acquisition by Hickton Group Limited ("HGL") of Millington Lord Limited ("MLL"), the additional £100,000 of earn-out consideration, the payment of which was dependent on the combined MLL group achieving certain turnover targets over the period from 15 March 2022 to 31 August 2021, has been paid. The payment was funded from existing cash resources within HGL.

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

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.