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Universe Group Plc

Universe Group plc Acquisition of Camden Technology and new £5.0 million facilities with HSBC

Universe Group plc (LON: UNG), a leading developer and supplier of point of sale, payment and loyalty systems, today announced its completion of the acquisition of 95% of the issued share capital of Camden Technology Investments Limited and its subsidiaries, each trading as Celtech, for an initial cash consideration of €4.48 million and the issue (out of existing AGM authorities) of 22,842,785 new shares in Universe representing 8.95% of the issued share capital of the Company as enlarged by the issue of these shares.

The total initial consideration due, at the Company’s closing share price on 2 April 2019 and assuming a EUR/GBP exchange rate of 1.17, is £4.96 million. In addition, the remaining 5% of the shares in Camden Technology are subject to a put and call option exercisable after 1 year at a cost of €0.32 million, payable in cash.

Highlights

· Celtech is a developer of retail and wholesale management solutions based in Dublin with a customer base in the UK and Ireland

· For the year ended 31 December 2018 Celtech had unaudited revenues of £1.92 million (2017: audited revenues of £3.33 million) and an unaudited loss after tax of £0.57 million (2017: audited profit after tax of £0.47 million) following a year of significant investment in product and systems development. Unaudited net assets at 31 December 2018 were £0.75 million (2017: audited net assets of £1.32 million)

· The Acquisition is being funded out of existing cash resources and a new 4-year, £3.50 million term loan and a new 3-year, £1.50 million revolving credit facility with HSBC. Unaudited net cash of the Group on 31 December 2018 was £1.92 million (2017: audited net cash of £1.86 million)

· The acquisition of Celtech is expected to be earnings enhancing in its first full year of ownership by Universe

Jeremy Lewis, Chief Executive of Universe Group plc, commented:

“We are delighted with this transaction as Celtech is a class-leading developer of cloud-based retail and wholesale management solutions. The acquisition allows the Group to offer the very latest in RMS technologies to existing and new customers and extends the Group’s product offering into wholesaling and new geographies such as Ireland. It is expected to be earnings enhancing in its first full year of ownership.”

Darragh Fanning, Founder and Managing Director of Celtech, said:

“We have a best in class software solution for retail and wholesale evidenced by the breadth and quality of our customer base. This transaction with Universe gives us the opportunity to quickly promote and support our offering to more customers. We were attracted to Universe’s culture and their investment in customer care services and we are very excited about the prospects for the combined group.”

About Celtech

Celtech develops and sells its RMS, called ab-initio, to wholesale and retail customers in the UK and Ireland. Approximately 14,000 users log into ab-initio every day to manage their retail and wholesale businesses. Customers include Bestway, One Stop and various co-ops across the UK. For the year ended 31 December 2018, it had unaudited revenues of £1.92 million and an unaudited loss after tax of £0.57 million, principally as a result of it undertaking a large amount of internal product and systems development (rather than focusing on fee earning work) that year. All development costs are written off as incurred. In 2017, the audited revenues were £3.33 million and audited profit after tax was £0.47 million. Unaudited net assets at 31 December 2018 were £0.75 million (2017: audited net assets of £1.32 million). For further information on Celtech, please see www.celtechgroup.com.

Acquisition rationale

Celtech’s ab-initio software product is a class-leading, cloud-based RMS offering that gives large, multi-site operators a uniquely powerful modular suite operating in real-time and allowing them to control all aspects of their business with full reporting, insights and analytics. As such, it meets the needs of Universe’s larger customers and broadens the Group’s customer base in the UK and Ireland with additional high-profile retailers.

Consideration for the Acquisition

The initial consideration due on completion is €4.48 million payable in cash and the issue of 22,842,785 new shares in Universe Group plc. The issued shares are subject to a 12-month lock-in period. In addition, the remaining 5% of the target company’s share capital is subject to a put and call option exercisable after 1 year at a cost of €0.32 million, to be satisfied in cash. The Acquisition is being funded out of existing cash resources and a new 4-year, £3.50 million term loan and a 3-year, £1.50 million revolving credit facility with HSBC. Unaudited net cash of the Group on 31 December 2018 was £1.92 million (2017: audited net cash of £1.86 million).

Notice of Results

The Group announces that its results for the year ended 31 December 2018 will be released on 17 April 2019. These results are expected to be in line with current market expectations.

Application for Admission and Total Voting Rights

Application has been made for the 22,842,785 new shares to be admitted to trading on AIM which is expected to occur on 8 April 2019 (“Admission”). Following Admission, Universe will have 255,191,720 ordinary shares of 1p each in issue with each share carrying the right to one vote. This is the total voting rights figure which may be used by shareholders as the denominator for the calculations by which they will determine whether they are required to notify their interests in, or a change to their interest in, the Company under the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules.

No statement in this announcement is intended to be a profit forecast or estimate and no statement in this announcement should be interpreted to mean that the earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company. This announcement contains inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014. Upon publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.