Company Announcements

CEPS PLC

 ("CEPS" or the "Company")

Related Party Transactions

CEPS announces the following historic related party transactions ("Transactions"):

1.      A loan of £55,000 to Andrew Gregory on the sale of shares to him in Davies Odell Limited ("DOL") on 4 November 2013 plus associated costs of £15,000.  Andrew Gregory is the managing director of DOL, a subsidiary of the Company and is, therefore, deemed to be a related party pursuant to the AIM Rules for Companies.  In 2013 CEPS decided that, as managing director of DOL, Andrew Gregory should become a shareholder in DOL, and a new class of share was formed for this purpose.  As a result of the share issue he became a 15% shareholder in DOL for a sum of £55,000.  In order to facilitate his investment in DOL, a loan from DOL to Andrew Gregory of £55,000 was made with a view to it being repaid within five years.  At the time the belief was that DOL's performance would improve and that it would generate enough profits to be able to pay Andrew Gregory a bonus or dividends, from which he would repay the loan.  Unfortunately, this has not been the case and DOL's performance has not met expectations.  On the fifth anniversary of the loan, being 4 November 2018, the Company extended the payment date by 12 months.  A further formal extension to 4 November 2020 was entered into today.  The intention is to do this on annual basis and further announcements will be made pursuant to AIM Rule 13 as required.  The associated costs are legal costs associated with the transaction.     

2.      Deferred consideration due to David Kaitiff from Friedman's Limited ("FL") for him to dissolve his agency agreement with Carvico and for FL to assume the role of sole distributor for Carvico in the UK for £150,000, the first payment of which was made on 31 July 2018.  David Kaitiff is the managing director of FL, a subsidiary of the Company, and is, therefore, deemed to be a related party pursuant to the AIM Rules for Companies.  From January 2008 he owned personally the sole UK agency agreement with Carvico, an Italian manufacturer of Lycra fabrics.  In 2018 it was decided that FL should become the sole distributor for Carvico in the UK and a price of £150,000, payable to David Kaitiff by FL, was agreed based on the original price paid by David Kaitiff for the agency.  Under the new agreement David Kaitiff is to be paid the £150,000 in five equal annual instalments, the first of which was paid on 31 July 2018.  The loan attracts interest at 5% per annum which is paid retrospectively on 31 July each year. 

3.      The issue of 8,501 shares to Tony Mobbs in Hickton Group Limited ("HGL"). Tony Mobbs was managing director of Hickton Consultants Limited when CEPS acquired the company in January 2016 and his investment in the newly formed Hickton Holdings Limited was announced at the time.  Subsequently, HGL was incorporated to purchase Hickton Holdings Limited, Cook Brown Building Control Limited and Cook Brown Energy Limited.  This was announced on 11 March 2020.  Tony Mobbs had been the only shareholder and director of HGL on its incorporation and after the acquisition of Hickton Holdings Limited and the two Cook Brown companies by HGL he holds 8,501 shares in HGL.  As a director of a subsidiary of the Company, he is deemed to be a related party pursuant to the AIM Rules for Companies.

4.      A loan facility from Chelverton Asset Management Limited ("CAM") to CEPS of up to £3,000,000 which was established on 10 January 2018 and currently totals £2,950,000 (£2,730,000 as at 31 December 2019).  The loan is unsecured and interest of 5% per annum is payable quarterly in arrears.  The loan is guaranteed by David Horner and is repayable by 31 December 2021.  As David Horner, (chairman 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 56.25% of CAM Holdings Limited, which owns 100% of CAM, this loan is deemed to be a related party transaction.    

5.       Further to the announcement of 7 October 2019 regarding a loan from a third party, which was used in part to fund the acquisition of Milano International Limited and was guaranteed by David Horner and is, therefore, deemed to be a related party transaction pursuant to the AIM Rules for Companies, the repayment date of the loan was, on 8 April 2020, moved from 31 October 2020 to 30 June 2021.

Transactions 1, 2, 4 and 5 have been disclosed in the Annual Report of the Company for the year ended 31 December 2019 on page 68 as related party transactions. 

The above five Transactions are deemed to be Related Party Transactions pursuant to AIM Rule 13.  Transactions 1-3 were transactions with a subsidiary company director, Transaction 4 was a transaction with a related party of David Horner (who is a director of the Company), and Transaction 5 related to CEPS' obligations in respect of a loan being guaranteed by David Horner.  The directors of the Company who are considered independent for the purposes of Transactions 1-3 (being the whole Board), and for Transactions 4 and 5 (being the whole Board save for David Horner), having consulted with the Company's nominated adviser, Cairn Financial Advisers LLP, consider that, at the time they were entered into, the terms of the Transactions were fair and reasonable insofar as the Company's shareholders are concerned.

The announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

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