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.

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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.