TIDMCEPS
RNS Number : 1548J
CEPS PLC
18 December 2020
18 December 2020
CEPS PLC
("CEPS" or the "Company")
Merger of Davies Odell with Vale Brothers
The Board of CEPS is pleased to announce that its subsidiary
company, Davies Odell Limited ("Davies Odell"), has undertaken a
merger with Vale Brothers Limited ("Vale Brothers"). This merger
has been achieved by the incorporation of a new company, Vale
Brothers Holdings Limited ("VBH"), which has acquired 100% of the
share capital of both Davies Odell and Vale Brothers.
Davies Odell has of late been loss-making and despite much
effort and investment has been unable, to date, to move into
sustained profitability.
Vale Brothers is larger in terms of turnover than Davies Odell
(for the year ending 31 December 2019 turnover was GBP4.6m and
GBP3.6m respectively) and manufactures and supplies a range of
branded products for the equestrian market. In this respect there
is an interesting overlap with Davies Odell which has a
complementary range of products addressing the same markets.
As at 31 December 2019, the unaudited accounts of Vale Brothers
showed net assets of GBP577,000 with a loss before tax of
GBP263,000 for the year ending 31 December 2019. As at 30 June
2020, the unaudited management accounts of Vale Brothers showed net
assets of GBP373,000. In comparison, as at 31 December 2019, Davies
Odell had audited net assets of GBP551,000 (adjusted for the
write-back of the intercompany balance with CEPS) with a loss
before tax of GBP184,000 for the year ending 31 December 2019. As
at 30 June 2020, the unaudited management accounts of Davies Odell
showed net assets of GBP445,000 (adjusted for the writeback of the
intercompany balance with CEPS).
Andrew Gregory, the Managing Director of Davies Odell, is
leaving the business to facilitate the merger, but has entered into
a two-month part-time consultancy role from 1 January 2021 to
facilitate an orderly handover. A component part of the
arrangements to rationalise the senior management team include the
acquisition by CEPS of the 15% of the share capital of Davies Odell
owned by Andrew Gregory for GBP100,000, following which CEPS owns
100% of the share capital of Davies Odell. Further to the
announcement of 5 November 2020, Andrew Gregory also repaid his
outstanding loan and associated legal costs with Davies Odell.
Immediately following the acquisition of the 15% minority
shareholding in Davies Odell by CEPS, in a share for share exchange
VBH issued 67,000 ordinary shares (67%) and GBP800,000 of loan
stock to the shareholders of Vale Brothers in exchange for 100% of
Vale Brothers and 33,000 ordinary shares (33%) and GBP405,000 of
loan stock to CEPS in exchange for 100% of Davies Odell. The loan
stock bears a coupon of 3%. From completion, Davies Odell is,
therefore, no longer treated as a subsidiary of the Company, but is
part of VBH which is to be treated as an associate of the Company.
David Horner, Chairman of CEPS, will become a director of VBH
representing CEPS' interests.
The Directors believe that there will be a number of economies
of scale which can be achieved by combining Davies Odell with Vale
Brothers as well as the potential for development of new products
marketed by the enlarged sales team. In addition, the shareholders
of VBH are firmly of the view that opportunities will materialise
in the medium term to consolidate the market segments in which it
operates.
The purchase by CEPS of the 15% minority shareholding in Davies
Odell from Andrew Gregory and repayment by him of the loan and
associated legal costs as well as the entering into of a
consultancy agreement for two months as detailed above is deemed to
be a Related Party Transaction pursuant to AIM Rule 13 (the
"Transaction"), as the Transaction is with a subsidiary company
director. The directors of the Company who are considered
independent for the purposes of the Transaction (being the whole
Board), having consulted with the Company's nominated adviser,
Cairn Financial Advisers LLP, consider that the terms of the
Transaction are fair and reasonable insofar as the Company's
shareholders are concerned.
As an addition to this announcement, it is important, and
useful, to note that the merger of Davies Odell with Vale Brothers
has completed the recent restructuring of the CEPS Group which
commenced in October 2019 with the purchase by the now 55% owned
Signature Fabrics Limited (which operates through its 100% owned
subsidiary Friedman's Limited) of 90% of Milano International
Limited through wholly owned Milano International Holdings Limited
(a company set up specifically to acquire Milano International
Limited). Milano International Limited is a manufacturer of lycra
garments and, in particular, branded gymnastic leotards.
This was followed, in January 2020, by the removal of the CEM
group of companies and Travelfast Limited (trading as Sampling
International) by way of administration.
In March 2020, Hickton Group Limited (now owned as to 54.7% by
the Company) was set up to acquire 100% of Hickton Holdings
Limited, 100% of Cook Brown Building Control Limited and 100% of
Cook Brown Energy Limited. These acquisitions were of key strategic
import to the Company. Hickton Group Limited also holds 100% of
Hickton Holdings Limited, which in turn holds 100% of Hickton
Consultants Limited which in turn holds 100% of BRCS (Building
Control) Limited.
In October 2020, CEPS formed Aford Awards Group Holdings Limited
(now a 75% subsidiary of the Company), to facilitate the purchase
of CEPS' then 70% owned subsidiary Aford Awards (Holdings) Limited,
which held 100% of Aford Awards Limited, in order to change the
senior management team, issue them with loan notes and shares and
increase the shareholding in Aford Award (Holdings) Limited to the
now 100%. The new management team remains highly motivated and
incentivised to develop this area of the business.
The Directors believe that the merger, as set out above, of
Davies Odell with Vale Brothers will produce significantly better
results than Davies Odell has done historically on its own.
As a result of the restructuring, the CEPS Group now comprises
three subsidiaries, and an associate stake in a business, which the
Directors believe is positioned for improved results.
The announcement contains inside information for the purposes of
Article 7 of EU Regulation 596/2014.
The Directors of the Company accept responsibility for the
content of this announcement
Enquiries
CEPS PLC
David Horner, Chairman +44 1225 483030
Cairn Financial Advisers LLP
James Caithie / Sandy Jamieson
/ Ludovico Lazzaretti +44 20 7213 0880
Caution regarding forward looking statements
Certain statements in this announcement, are, or may be deemed
to be, forward looking statements. Forward looking statements are
identi ed 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 re ect the Directors' current beliefs
and assumptions and are based on information currently available to
the Directors.
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END
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December 18, 2020 04:18 ET (09:18 GMT)
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