12 Nov 2007 07:01
Vestpa PLC12 November 2007 Embargoed for Release at 7:01 a.m. on 12 November 2007 Not for release, publication or distribution in whole or in part in or into the United States, Canada, Japan, Singapore, the Peoples' Republic of China, Australia, the Republic of South Africa or any other jurisdiction where it is unlawful to do so Vestpa Plc ("Vestpa" or "the Company") Proposed acquisition of Full Fortune Holdings Pte. Limited ("Full Fortune") Proposed Subscriptions for 16,666,667 New Ordinary Shares of 4p each at a price of 30p per share Proposed 1 for 40 share consolidation Proposed change of name to "China Food Company Plc" Proposed adoption of New Articles Application for admission of the Enlarged Share Capital to trading on AIM Notice of General Meeting The Board of Vestpa is pleased to announce that it has today conditionallyagreed to acquire the entire issued ordinary share capital of Full FortuneHoldings Pte. Limited ("Full Fortune"), a company incorporated in Singapore.Full Fortune is an investment holding company whose trading subsidiaries areprincipally engaged in the manufacture and sale of branded consumer condimentsproducts and animal feeds in Weifang City and Shou Guang City, in the Shandongprovince of China. Certain definitions and terms apply throughout this announcement and yourattention is drawn to the table at the end of this announcement where thesedefinitions and terms are set out in full. Highlights • Full Fortune is the holding company for Fu-Rich, Fuss Feed and FussBiotech. Fu-Rich is the group's consumer foods business which produces a rangeof different types of soya sauce, vinegar and bean paste under its own brandnames from its premises in Weifang City, Shangdong. For the year ended 31December 2006, Full Fortune made a profit before tax of approximately £6.08million on revenue of approximately £19.28 million. • Fu-Rich produces approximately 50 to 60 products under its "Fushi" and"Fushi Hao Tai Tai" brand names from its current factory occupying a totalbuilt-up area of approximately 17,663 sq. m. The Full Fortune Group has land userights over an area of 199,657 sq. m. for new premises in Shou Guang City and anew manufacturing facility for Fu-Rich is currently under construction whichwill increase its production capacity by 50 per cent. from 100,000 to 150,000tonnes per annum. • Fu-Rich operates in one of the fastest growing segments within thePRC's food industry reflecting the increasing purchasing power of Chineseconsumers. Annual sales for this market segment are estimated to have grown fromRMB59 billion in 2004 to RMB100 billion in 2006 (approximately £6.4 billion atthe current exchange rate). • Fu-Rich's primary market is Weifang but it also sells to other citiesin Shandong, as well as to neighbouring provinces including Henan, Jiangsu,Anhui, Hebei, Tianjin, Beijing and Liaoning. Fu-Rich is believed to hold aleading market position in Weifang and a significant share of the wider Shandongmarketplace. For the year to 31 December 2006, sales to provinces outside ofShandong accounted for approximately 16.9 per cent. of Fu-Rich's total revenues. • Fu-Rich sells its products via a network of 205 distributors,retailers and numerous outlets of large and medium sized supermarket chains inten provinces and municipal cities in the north-eastern region of the PRC,including Wal Mart, Carrefour, Shiji Lianhua and Jialejia. • Fuss Feed was founded in November 1994. Initially focused on themanufacture of Compound Feed for poultry, cows and pigs; it has sincediversified to manufacture higher-margin Premix and Concentrate Feed, operatingtwo production lines at a 15,000 sq. m. plant in Shou Guang City, Shangdong. • In 2004, Fuss Feed embarked on a deliberate strategy to expand intothe neighbouring provinces around Shandong, with the selective appointment ofpreferred distributors. As at 30 June 2007, it had a total of 13 distributorslocated in Henan, Anhui, Jiangsu and Hebei and the New Board believes that thereis significant potential to grow revenues from these territories now that theFull Fortune Group has an established foothold. Summary financial information on the Full Fortune Group Year ended Year ended Year ended 31 December 2004 31 December 2005 31 December 2006 £000s £000s £000s Revenue 8,978 13,870 19,273Gross profit 3,077 4,314 6,771Gross margin (per cent.) 34.27 31.10 35.13EBITDA 2,988 4,172 6,454Profit before taxation 2,619 3,834 6,077Profit after taxation 1,971 2,838 4,437Net margin (per cent.) 21.95 20.46 23.02Cash and cash equivalents 2,337 3,799 3,656Net assets 4,820 6,997 10,545 • Proposed board of Vestpa from Completion to consist of members of theFull Fortune Group's existing senior management including Raphael Tham (CEO),Feng Bo (COO) and Frank Chau (CFO), alongside John McLean, the existingExecutive Director of Vestpa who will become Non-Executive Chairman and DerekMarsh, CVO, as a new Non-Executive Director. On Completion, James Cane andThomas Vaughan are to step down from the board. • The consideration payable in respect of the Acquisition is to besatisfied through the issue of 40,333,333 New Ordinary Shares at the Issue Priceand a cash payment of £5 million. The consideration values all of the issuedFull Fortune share capital at approximately £25.17 million based on the IssuePrice and approximately £35.25 million based on the closing middle market priceof 75 pence (as adjusted for the Share Consolidation) per New Ordinary Share asderived from the AIM Appendix to the Daily Official List on the business dayimmediately prior to the date of this announcement. • Share Consolidation comprising one New Ordinary Share of 4 pence eachfor every 40 Existing Ordinary Shares of 0.1 pence each. • Subscriptions to raise £5 million gross (approximately £4.1 millionafter expenses) through the issue of 16,666,667 Subscription Shares at 30 penceper share. The Subscription Shares will be issued fully paid and will, inaggregate, represent approximately 25.33 per cent. of the Enlarged ShareCapital. • In view of the size and nature of the Acquisition, it constitutes areverse takeover of the Company under the AIM Rules and therefore requires theprior approval of Shareholders at a General Meeting. • Following shareholder approval, Vestpa will change its name to "ChinaFood Company Plc". • Strand Partners is acting as Financial and Nominated Adviser andBroker in connection with the Proposals. John McLean, Executive Director of Vestpa and Proposed Non-Executive Chairman ofthe Enlarged Group, commented: "The enlarged group will be led by a highly experienced management teamoperating a well established business, in a growing market that is highly cashgenerative, with a number of leading food brands. Our strategy will include theexpansion of the Full Fortune Group's existing product range in order tocapitalise on Fu-Rich's existing distribution network into the multiples inChina. The Full Fortune Group is currently increasing its production capacity ona new site in Shou Guang City to meet anticipated future demand and will have alow level of gearing on Admission." An Admission Document containing a notice covening a General Meeting to be heldat the offices of Fasken Martineau Stringer Saul LLP, 17 Hanover Square, LondonW1S 1HU at 11.00 a.m. on Wednesday 5 December 2007 is being sent to shareholderstoday. Enquiries: Vestpa PlcJohn McLean, Executive Director Tel: +44 (0)7768 031 454 Strand Partners LimitedJames Harris Tel: +44 (0) 20 7409 3494Matthew Chandler Hansard GroupAdam Reynolds Tel: +44 (0) 20 7245 1100John Bick This summary should be read in conjunction with the full text of thisannouncement set out below. Strand Partners Limited, which is authorised and regulated in the United Kingdomby the Financial Services Authority, is acting as financial and nominatedadviser and broker to the Company in connection with the Acquisition,Subscriptions and proposed admission of the Enlarged Share Capital to trading onAIM. Its responsibilities as the Company's nominated adviser and broker underthe AIM Rules are owed solely to the London Stock Exchange and are not owed tothe Company or to any Director or Proposed Director or to any other person inrespect of their decision to acquire shares in the Company in reliance on anypart of this announcement. Strand Partners Limited is acting exclusively forVestpa and for no one else and will not be responsible to anyone other than theCompany for providing the protections afforded to their clients or for providingadvice in relation to the contents of this announcement or the Acquisition, theSubscriptions or the proposed admission of the Enlarged Share Capital to tradingon AIM. No representation or warranty, express or implied, is made by StrandPartners Limited as to the contents of this announcement, without limiting thestatutory rights of any person to whom this announcement is issued. Theinformation contained in this announcement is not intended to inform or berelied upon by any subsequent purchasers of New Ordinary Shares (whether on oroff exchange) and accordingly no duty of care is accepted in relation to them. Strand Partners Limited has approved the contents of this announcement solelyfor the purpose of section 21 of the Financial Services and Markets Act 2000.The principal place of business of Strand Partners Limited is 26 Mount Row,London W1K 3SQ. The Directors and Proposed Directors of Vestpa accept responsibility,individually and collectively, for the information contained in thisannouncement and for compliance with the AIM Rules. To the best of the knowledgeand belief of the Directors and Proposed Directors, who have taken allreasonable care to ensure that such is the case, the information contained inthis announcement is in accordance with the facts and does not omit anythinglikely to affect the import of such information. This announcement does not constitute, or form part of, an offer or aninvitation to purchase any securities. Not for release, publication or distribution in whole or in part in or into the United States, Canada, Japan, Singapore, the Peoples' Republic of China, Australia, the Republic of South Africa or any other jurisdiction where it is unlawful to do so 12 November 2007 Vestpa Plc ("Vestpa" or "the Company") Proposed acquisition of Full Fortune Holdings Pte. Limited Proposed Subscriptions for 16,666,667 New Ordinary Shares of 4p each at a price of 30p per share Proposed 1 for 40 Share Consolidation Proposed change of name to "China Food Company Plc" Proposed adoption of New Articles Application for admission of the Enlarged Share Capital to trading on AIM Notice of General Meeting 1. Introduction The Board is pleased to announce that the Company has conditionally agreed toacquire the entire issued ordinary share capital of Full Fortune Holdings Pte.Limited for a consideration, payable on Completion, comprising the issue of40,333,333 New Ordinary Shares at the Issue Price and a cash payment of £5million. The consideration values all of the issued Full Fortune share capitalat approximately £25.17 million based on the Issue Price and approximately£35.25 million based on the closing middle market price of 75 pence (as adjustedfor the Share Consolidation) per New Ordinary Share as derived from the AIMAppendix to the Daily Official List on the business day immediately prior to thedate of the Admission Document. The cash element of the consideration is proposed to be financed by the Companyfrom the issue of 16,666,667 Subscription Shares at a price of 30 pence for eachSubscription Share. Full Fortune is an investment holding company registered in Singapore whosetrading subsidiaries are principally engaged in the manufacture and sale ofanimal feed and condiments for human consumption in Weifang City and Shou GuangCity, in the Shandong province of China. In view of the size and nature of the Acquisition, it constitutes a reversetakeover of the Company under the AIM Rules and a change of control of theCompany under the City Code. Accordingly, the Proposals are conditional, interalia, on the approval of Shareholders, such approval to be sought at the GeneralMeeting, notice of which is set out at the end of the Admission Document whichis being posted to Shareholders today. If the Resolutions are duly passed at the General Meeting, the Company'sexisting trading facility on AIM will be cancelled and the Company will applyfor the Enlarged Share Capital to be admitted to trading on AIM. Irrevocableundertakings to vote in favour of the Resolutions have been received fromcertain of the Directors and Albany in respect of 223,900,039 Existing OrdinaryShares, representing approximately 60.51 per cent. of the Company's existingissued share capital. Shareholders should note that the Proposals are inter-conditional. If theResolutions are passed, it is expected that Admission will take place and thatdealings on AIM in the shares comprising the Enlarged Share Capital willcommence on 6 December 2007. In connection with the Acquisition and Admission, it is proposed that JohnMcLean and the Proposed Directors will assume responsibility for the EnlargedGroup, including all of Vestpa's and Full Fortune's assets, and all of theSellers will exchange their Full Fortune Ordinary Shares for New Ordinary Shareswith the exception of Main World who will exchange its Full Fortune OrdinaryShares for New Ordinary Shares and £5 million in cash pursuant to theAcquisition Agreement. 2. The Company and its investment strategy The Company was incorporated in England and Wales as a public limited company on1 February 2007 and was established to seek to acquire a controlling interest ina company, partnership or joint venture located in Europe, North America orAsia. The Company's focus is on potential acquisition targets trading in any ofthe following sectors: investment, consumer goods, engineering, industrials,leisure and hotels, media and entertainment, professional and support services,retailing, technology and telecommunications. It was admitted to trading on AIMon 12 June 2007. The Company's investment strategy is to seek suitable targets for investment oracquisition that have some of the following characteristics: • an experienced management team in place; • good prospects, either in an established market or as an early mover in ahigh growth market; • quoted or unquoted; and • located in Europe, North America or Asia. If the Acquisition does not proceed, the Directors will continue to pursue theaforementioned strategy. Whilst the Company will have incurred expensesamounting to approximately £0.6 million in pursuit of the Acquisition, theDirectors are of the opinion that, whether or not the Acquisition proceeds, theCompany will have sufficient working capital for its present requirements, thatis for at least the next twelve months from the date of this announcement. 3. Background to and reasons for the Acquisition As set out above, Vestpa's primary objective as an investment company is toacquire a company with, inter alia, attractive growth prospects and anexperienced management team. In line with this strategy, the Directors believethat the Acquisition represents a substantial investment opportunity with thepotential to deliver significant long-term enhancement of Shareholder value andprovide the Company with a number of benefits. In particular, the New Boardbelieves that the Acquisition will: • provide the Company with a well established and proven business in the PRCwhich has a decade of expertise in the production and sale of animal feed andsignificant experience in the field of condiments, including soya sauce, vinegarand bean paste; • provide the Company with a profitable business with the opportunity forcontinued commercial development and sustained long-term growth, utilising newproduction facilities, under an experienced local management team; • provide the Company with a strong position in an expanding market place,fuelled by China's continuing prosperity and sustained economic growth; and • raise the profile of the Enlarged Group, which may assist the EnlargedGroup to attract and retain additional suitably qualified and experiencedpersonnel to augment the experience of the New Board. Full Fortune may alsobenefit from the perceived status and stature of being part of a publicly tradedgroup, which may enhance its reputation and financial standing with its keypartners and suppliers. In particular, it may provide a means by which theEnlarged Group can fund its future activities and growth, both organically andvia potential acquisitions. 4. Information on Full Fortune, its business and strategy Background and principal activity Full Fortune is a privately owned investment holding company which wasincorporated in Singapore on 26 May 2005 as part of a corporate restructuring,to act as the holding company for Fuss Feed, Fu-Rich and Fuss Biotech. Founded in November 1994 by Fuss International Investment Group Inc. which isowned by Mr Fu Guoping, Fuss Feed's principal activity is the production andsale of a variety of animal feeds including Premix, Compound Feed andConcentrate Feed. Initially focused on the manufacture of Compound Feed forpoultry, cows and pigs; it has since diversified to manufacture higher-marginPremix and Concentrate Feed, operating two production lines at a 15,000 sq.m.plant in Shou Guang City, Shandong. Incorporated on 7 August 2001, Fu-Rich produces and sells a range of condimentsfor human consumption, primarily different types of soya sauce, vinegar and beanpaste under its own brand names from its premises in Weifang City, Shandongcovering an area of 28,294 sq.m. In addition to its own products, it also sellsother food products, for example, pickled products, fungi products, chilli oiland other flavour-enhancers (including MSG and chicken bouillon seasoning) thatare sourced from third party manufacturers and resold under its own brand names.Fu-Rich was recognised as one of the top brands in Shandong for vinegar and soyasauce products in both 2005 and 2006. Fuss Biotech was incorporated on 24 June 2005 but has not commenced any tradingactivities to date. It currently holds the land use rights in connection withthe development of the Full Fortune Group's new premises in Shou Guang City.These land use rights cover an area of 199,657 sq.m. and the site is expected tobecome the Full Fortune Group's corporate headquarters in mid 2008. In addition,the Full Fortune Group has paid a deposit for rights to an adjoining land areaof 67,009 sq.m. for possible future expansion. The Full Fortune Group has been financed to date by a combination of short termloans from Chinese banks, loans and equity investment from its founder andprincipal beneficial shareholder, Mr Fu Guoping, equity subscriptions from thirdparty investors and cash flow generated by the operating businesses. Business location and local demographics China is the world's most populous nation with approximately 1.292 billioncitizens, equivalent to approximately 20 per cent. of the world's estimatedpopulation. Its population has continued to grow over the past decade, albeit ata declining rate, compared to the previous decade. The Full Fortune Group's operations are currently located at facilities in ShouGuang City and Weifang City, both of which are in the PRC's central Shandongprovince. Weifang borders Zibo to the west, Linyi to the southwest, Rizhao tothe south, Qingdao to the east and the Laizhou Bay to the north. The cityoccupies a land area of over 15,800 sq. km and has a population of approximately8.5 million people. Its neighbouring cities have similarly high populations withZibo, Linyi, Rizhao and Qingdao having approximately 4 million, 10 million, 2.8million and 7.3 million residents respectively. Shou Guang City is situated westof Weifang and Qingdao and east of Zibo and Jinan, the capital of the Shandongprovince, with approximately one million residents. One of its closestneighbours, Jinan, has a population of approximately 6 million people and coversan area of over 8,100 sq. km. In addition, the province of Shandong is itself bordered by some of the mostpopulous provinces in the PRC including Hebei, Henan, Anhui and Jiangsu withpopulations of approximately 68 million, 96 million, 64 million and 74 millionrespectively. Shandong comprises a geographical area of 156,700 sq. km with itsimmediate neighbours, Hebei, Henan, Anhui and Jiangsu, ranging in size from102,600 sq. km (Jiangsu) to 188,000 sq. km (Hebei), resulting in Jiangsu havingthe highest population density amongst such provinces of approximately 720persons per square kilometre. Markets and business model Animal Feed Business (Fuss Feed) Under the ''11th Five-Year Plan'' (2006 to 2010), the PRC government indicatedits commitment to developing the agricultural sector with measures and policiestargeted at raising standards in, inter alia, the livestock industry. Anincreasingly affluent PRC populace is driving demand for livestock, with agrowth in the number and size of farms benefiting the animal feed industry.Annual production of animal feed in 2005 was approximately 100 million tonneswith an estimated market value of approximately RMB274 billion (approximately£17.6 billion at the current exchange rate). Fuss Feed's business model involves the manufacture of three generic categoriesof animal feed; namely Premix, Concentrate Feed and Compound Feed by anexperienced workforce for sale via a large distribution network. For the year to31 December 2006, sales of animal feed products accounted for approximately 54.9per cent. of the Full Fortune Group's total revenues. Fuss Feed currently has two fully automated manufacturing lines with a combinedannual production capacity of 124,800 tonnes. One line is dedicated to Premixand is currently producing approximately 17,000 tonnes per annum (approximately58.7 per cent. of its designed production capacity) and the other is forConcentrate Feed and Compound Feed currently producing approximately 45,000tonnes per annum (approximately 46.7 per cent. of its designed productioncapacity). The manufacturing process and equipment used provide the capabilityfor Fuss Feed to vary the formulations produced and therefore respond tovariations in customer orders and market demand. Raw materials, comprisingEnergy Sources and Protein Sources, are sourced from a broad supplier base inWeifang and neighbouring cities, while Additives (being vitamins, minerals andmedicinal drugs) are obtained from either local pharmaceutical companies orforeign multinational corporations based in the PRC. Fuss Feed's main target market is Shandong, although its products are also soldin the neighbouring regions of Anhui, Jiangsu, Hebei and Henan. Shandong is oneof the largest agricultural and livestock provinces in East China, with apopulation of approximately 91 million people. Located in the lower reaches ofthe Yellow River, Shandong borders the Bo Sea and the East China Sea and is oneof China's leading producers of grain, cotton, peanuts, soya beans, vegetables,fruit, meat and aquatic products. Its livestock industry is characterised byfarms that are generally run as small scale enterprises with low levels oftechnological sophistication. Fuss Feed principally sells its animal feed to distributors that, in turn, sellit on to end users. It maintains a team of distribution channel managers, whomanage the distribution network. As at 31 December 2006, Fuss Feed had 238distributors, mostly comprising small distributorships located in neighbouringvillages or towns. The New Board believes that Fuss Feed's offering of compound, premix andconcentrate product ranges provides flexibility for it and its customers. FussFeed's main strategy is to focus on Premix where the vitamin, mineral andnutrition mix is formulated. Over the last decade, the company has accumulated alarge database of such formulations. As a result Fuss Feed is able to adapt itsplanned production volumes to meet market trends, customer demand, seasonalchanges and local conditions and thereby achieve the most cost effectivesolution for its customers. It also permits local distributors to buy their owningredients, such as Energy Sources, for example coarse grains like oats, wheatand maize (which act as the staple carbohydrates for animals) from localsources, thereby enabling them to minimise their transportation costs, which area major component of their overall product cost. The majority of Fuss Feed's customers pay in cash on collection of the productsdirectly from the factory. Fuss Feed monitors and reviews the performance of itsdistributors on an annual basis, based on the achievement of pre-agreedobjectives and offers rebates amounting to between four and six per cent. ofsales, depending on the type of product sold and an annual rebate of 0.5 to 2.5per cent. for sales above RMB1,000,000 (approximately £65,350), in accordancewith a rebate scheme introduced in January 2007. In addition, Fuss Feed provides small and medium sized farming enterprises inShandong with veterinary advice and nutrition education services. Since 2002,Fuss Feed's marketing efforts have focused on direct education and training ofsuch end users rather than broad based advertisements and promotions.Accordingly, the majority of its sales personnel are well trained in areas suchas Additives composition, common livestock ailments and the prevention andtreatment of common animal diseases. This, the New Board believes, enables themto advise end customers, alongside Fuss Feed's specialist veterinary employees,on the best usage of Fuss Feed's products, which engenders loyalty amongst bothdistributors and customers. In terms of product development, Fuss Feed uses its in-house technical knowledgeand expertise to formulate feeds that the New Board believes balance cost withnutritional content. Since 2002, Fuss Feed has also been collaborating with theresearch department of Shandong Agriculture University on livestock nutritionstudies. Its proprietary database of past varieties of formulated feeds,technical and reference data is used to facilitate its research and developmentactivities, and it tests the yield efficacy of new products in controlled smallfarm environments. Condiments Business (Fu-Rich) The condiments industry is one of the fastest growing segments within the PRC'sfood industry reflecting the increasing purchasing power of Chinese consumers.Annual sales of condiments are estimated to have grown from RMB59 billion in2004 to RMB100 billion in 2006 (approximately £6.4 billion). Fu-Rich currently produces a wide range of products that can be divided intothree main categories: soya sauce, vinegar and bean paste. Its various differentgrades of soya sauce, types of vinegar and flavours of bean paste, representapproximately 50 to 60 products that are produced under its ''Fushi'' and ''Fushi Hao Tai Tai'' brand names. In addition, Fu-Rich sells, under the same brand names, other food productssourced from third party manufacturers or suppliers. These products includepickled products, fungi products, chilli oil and flavour-enhancers such as MSGand chicken bouillon seasonings. The New Board believes that the sale of suchthird party products serves to: 1) increase Fu-Rich's existing product range; 2) capitalise on Fu-Rich's existing distribution channels; and 3) improve customer recognition for the "Fushi" or "Fushi Hao Tai Tai" brands. For the year to 31 December 2006, sales of condiments products accounted forapproximately 45.1 per cent. of the Full Fortune Group's total revenues. Theapproximate breakdown of condiments sales for the 2006 financial year by productcategory is: soya sauce (37.9 per cent.), vinegar (29.7 per cent.), bean paste(30.5 per cent.) and other (1.9 per cent.). Fu-Rich's current factory has a total built-up area of approximately 17,663sq.m. and houses 107 fermentation pools, two bottle packaging lines, amicro-organism cultivation centre (for example, yeast, mould and bacteria), anatural drying room, a research and development centre and a quality controlcentre. Fu-Rich's three main fully automated production lines are as follows: 1) Soya sauce: as at December 2006 producing in the region of 27,000 tonnes perannum (54 per cent. of its designed production capacity); 2) Vinegar: as at December 2006 running at approximately 20,000 tonnes perannum (67 per cent. of its designed production capacity); and 3) Bean paste: as at December 2006 running at approximately 13,000 tonnes perannum (65 per cent. of designed production capacity). Fu-Rich utilises a hybrid production method for its soya sauce and vinegarproducts, combining traditional techniques with modern technology andfermentation techniques so as to maintain the rich flavour and taste whileincreasing product yield. The production cycle for both soya sauce and vinegaris typically between 25 to 180 days, depending on the ingredients used and tasteto be achieved. Bean paste production is a faster process requiring between 15to 40 days, again dependent on the ingredients used and taste requirements. Rawingredients (mainly soya bean, wheat and flour) are sourced from a broad base ofsuppliers. Fu-Rich maintains a high level of production control and in April 2007, obtainedGB/T 22000-2006/ISO22000:2005 certification for its production process in soyasauce, vinegar and bean paste. Fu-Rich is currently building a new manufacturing facility in Shou Guang Citywith an estimated capacity of 50,000 tonnes per annum which the New Boardexpects to be completed in June 2008. Fu-Rich intends to use this facility tomanufacture premium grade soya sauce, which takes approximately three to fivemonths to produce, using technology from international suppliers. The New Boardexpects the new factory to commence shipping products in the last quarter of2008. Fu-Rich's primary market is Weifang but it also sells to other cities inShandong, as well as to neighbouring provinces including Henan, Jiangsu, Anhui,Hebei, Tianjin, Beijing and Liaoning. The New Board believes that Fu-Rich holdsa leading market position in Weifang and a significant share of the widerShandong marketplace. For the year to 31 December 2006, sales to provincesoutside Shandong accounted for approximately 16.9 per cent. of Fu- Rich's totalrevenues. Fu-Rich sells its products via a network of distributors, retailers andsupermarket outlets rather than directly to end consumers. As at 31 December2006 it had 205 distributors and retailers and numerous outlets of large andmedium sized supermarket chains in ten provinces and municipal cities in thenorth-eastern region of the PRC, including Wal Mart, Carrefour, Shiji Lianhuaand Jialejia. Depending on the locality of the supermarket and any existingrelationship between the supermarket and an existing distributor, Fu-Rich'spreference is to supply supermarkets directly, in order to benefit from itsgreater bargaining power. Fu-Rich typically provides credit terms of 30 to 45days for its supermarket customers and collects cash in advance from itsdistributors. Fu-Rich uses different types of packaging according to the consumer marketsegment being targeted, adopting for example, disposable bottles and barrels forthe mass market and ornate gift boxes for the high end consumer. The New Boardbelieves that such differentiation enables Fu-Rich's products to appeal to awide range of consumers and allows it to capture a number of different marketsegments. Fu-Rich employs an in-house team of research and development specialists,knowledgeable in fields such as micro-organism cultivation and quality control,who seek to develop improved industrial and cultivating technologies (forexample, experimenting with different strains of micro-organisms, temperaturecontrols and humidity levels) to enhance the traditional distinctive aroma,taste and quality of Fu-Rich's products while minimising production times. Italso collaborates with the College of Life Science, Shandong University onresearch into biological and foodstuff issues. Summary financial information on the Full Fortune Group A financial summary for the Full Fortune Group for the three financial yearsended 31 December 2006, which has been extracted without material adjustmentfrom, and should be read in conjunction with, the audited historical financialinformation set out in the Admission Document, is set out below: Year ended Year ended Year ended 31 December 2004 31 December 2005 31 December 2006 £000s £000s £000s Revenue 8,978 13,870 19,273Gross profit 3,077 4,314 6,771Gross margin (per cent.) 34.27 31.10 35.13EBITDA 2,988 4,172 6,454Profit before taxation 2,619 3,834 6,077Profit after taxation 1,971 2,838 4,437Net margin (per cent.) 21.95 20.46 23.02Cash and cash equivalents 2,337 3,799 3,656Net assets 4,820 6,997 10,545 For the six months ended 30 June 2007, the Full Fortune Group has traded in linewith expectations, with revenue of £10.85 million and profit after taxation of£2.62 million compared to £8.04 million and £1.85 million respectively for theprior year equivalent period. The increase in revenue was mainly due to anincrease in demand for Premix in Fuss Feed and a general increase in demand forFu-Rich's products. The gross margin for the six months ended 30 June 2007 ofapproximately 38.88 per cent. (2006: 36.11 per cent.) improved principally dueto price increases implemented at the end of 2006 and during the period. As at30 June 2007, the Full Fortune Group had cash and cash equivalents ofapproximately £3 million. It is important that you do not rely solely on the key or summary informationshown above or elsewhere in this announcement. This announcement should be readas a whole. Competition The New Board believes that the Full Fortune Group's in-house expertise andexperience, together with its extensive network of distributors, its scale ofoperations, current and planned future capacity and ability to offer qualityproducts catering for a wide range of customer tastes and requirements, serve todifferentiate it from its competitors. Animal Feed Industry The animal feed industry in the PRC is fragmented and highly competitive, withlow barriers to entry. This is a reflection of the industry's low level oftechnical sophistication and several government-funded initiatives to developthe agricultural sector. The New Board believes that as end customers aretypically price sensitive, the use of low product pricing to penetrate themarket is a common practice. However, the New Board believes that end customersare also increasingly influenced by product brand names and associated qualityperceptions. The New Board further believes that as Chinese farmers become more sophisticatedand large domestic corporations enter the livestock industry by setting uplarge-scale farms, it is expected that the quality and nutritional value ofanimal feed will play a bigger role in the end customers' purchasing decisions.As such, the New Board believes that the Full Fortune Group is well placed vis-a'-vis its competitors due to its long-standing emphasis on the nutritionalaspects of its products. The animal feed industry also contains many state-owned and privatisedcompanies, which are typically large scale and focus mainly on the production ofCompound Feed. The New Board believes Fuss Feed to be one of the larger animal feedmanufacturers in Shandong and regard the following companies to be its maincompetitors: • Liu He Feed: a state owned enterprise and one of the largest companiesin Shandong focused on the manufacture of Compound Feed; • Zhong Ji Feed: founded in 1987, this is Fuss Feed's closest competitorproducing Premix, Concentrate Feed and Compound Feed and was one of the firstanimal feed companies to be established in Shandong; • Huan Shan Feed: located in Weihai, Shandong, focused on the manufactureof Compound Feed for pigs; and • Pu Rui Na Feed: operates from Yantai, Shandong, focused on themanufacture of Concentrate Feeds for pigs. The New Board believes that the Full Fortune Group has a significant competitiveadvantage when compared to the aforementioned companies, as in their opinion fewcompetitors have the track record, brand awareness, breadth of nutritional andveterinary experience, product range and flexibility required to service thevarying customer demands and changing trends in the livestock industry. Condiments Industry Competition in the PRC's condiments industry has generally been restricted tothe immediate locality, since each region has its own taste preferences andlocal brands, which dominate their markets due to their long standing andoperating history. Accordingly, many operators have found it difficult to expandbeyond their local region. However, the rising affluence of consumers in the PRC has resulted in anincrease in both competition and opportunities, with customers becoming moreadventurous and demanding in their tastes and willing to spend more onpurchasing higher quality products. This has led to the growth of newcompetitors, encouraged existing companies to expand into new regions andattracted the entry of well-known international brands. The New Board believesthat, in the light of such enhanced competition, customers' brand awareness isincreasingly becoming a key differentiating factor in their buying decisions,with advertising campaigns and the creation of extensive distribution networksnow seen to be the main driver for many market participants. The New Board considers the following companies to be Fu-Rich's maincompetitors: • Yan Tai Xin He: focuses on bean paste and soya sauce; • Zi Bo Qiao Xifu: concentrates on soya sauce, vinegar and pickledvegetables; • Jinan De Xin Zhai: makes vinegar, soya sauce, bean paste, rice wine andpickled products; • Qingdao DengTa: makes soya sauce and vinegar, as its primary products;and • Zhoucun Yutu: produces soya sauce, vinegar, biscuits and confectionery. The New Board further believes that there are a number of other condiments'manufacturers that are smaller in size and focused principally on selling totheir respective local markets. The New Board believes that Fu-Rich has a number of competitive strengths,including strong brand recognition, a well established distributor and retailnetwork, experienced and long serving management, a proven hybrid productionprocess and intellectual property, including trademarks and proprietary strainsof bacteria used in the fermentation process. Future Strategy New Facilities in Shou Guang City At present, Fu-Rich operates from an 28,294 sq.m. site in Weifang City, with atotal built-up area of approximately 17,663 sq.m. The majority of theproduction lines at Fu-Rich are currently operating at close to their fulldesign capacities. Accordingly, in order for the Full Fortune Group to be better positioned toservice future anticipated growth in demand for the Enlarged Group's products,new premises are currently in the course of construction at a site in Shou GuangCity. The land use rights cover an area of 199,657 sq.m. and the Full Fortune Grouphas paid a deposit for rights to an adjoining land area of 67,009 sq.m. forpossible future expansion. Construction is expected to be completed in mid 2008when the new site will become the Full Fortune Group's corporate headquartersand Fu-Rich will re-locate its soya sauce production to a new purpose builtplant, thereby improving capacity for vinegar and bean paste production at theexisting Weifang City facility. The total cost of these new premises iscurrently expected to be approximately RMB256 million of which RMB111 millionhas been expended to date, funded in part by recent new equity subscriptionsfrom third party investors. Animal Feed Business In 2004, Fuss Feed embarked on a deliberate strategy to expand into theneighbouring provinces around Shandong, with the selective appointment ofpreferred distributors. As at 30 June 2007, it had a total of 13 distributorslocated in Henan, Anhui, Jiangsu and Hebei. While the contribution from suchneighbouring provinces was only approximately 2.4 per cent. of the Full FortuneGroup's total animal feed revenues in its financial year ended 31 December 2006,the New Board believes that there is significant potential to grow revenues fromthese territories now that the Full Fortune Group has an established foothold. Accordingly, Fuss Feed intends to continue its expansion in the north-easternpart of the PRC. The New Board believes that Fuss Feed will be able to improveits distribution network by gradually appointing more distributors, as well asproviding regular support to its existing distributors in terms of animalnutrition training and advice. By hiring and training additional sales channelstaff with veterinary knowledge and experience to visit farming communities inneighbouring provinces, the New Board believes that it should be possible toeducate their populace as to the importance of animal nutrition and healthcarewhilst increasing awareness of the Full Fortune Group's ''Fushi'' brand. Fuss Feed also intends to increase sales of its Premix and Concentrate Feed tolarge farms and Compound Feed manufacturers, which are able to grow or buy theEnergy Sources themselves, by establishing a dedicated sales team to target suchcustomers. The New Board believes that this strategy will allow Fuss Feed tobenefit from greater economies of scale and maintain its competitiveness. Bytargeting these two groups, rather than competing directly with them, the NewBoard believes that Fuss Feed can seek to reduce and limit the risks associatedwith expansion into new markets. In terms of research and development, Fuss Feed intends to hire additional staffto complement its existing animal nutrition research team. It will continue itsefforts to improve its animal feed formulations and keep abreast of newdevelopments in bio-technology and changes in climate, prices and type oflivestock. It also intends to continue to expand its collaboration efforts withlocal universities to improve its formulations. Condiments Business Fu-Rich will seek to increase its production volumes and is currently in theprocess of establishing a new 50,000 tonne capacity soya sauce processing plantat the Full Fortune Group's new premises in Shou Guang City, which the New Boardexpects to be completed in June 2008. This new plant is expected to produce ahigher grade of soya sauce to meet the requirements of a more demanding andaffluent Chinese population and which may also be suitable, in the longer term,for export to overseas markets. Fu-Rich will also seek to continue to broaden its customer base to regionsoutside Shandong, which have a combined population in excess of 450 million, byincreasing the number of regional distributors to capture market share. The NewBoard believes that expansion of Fu-Rich's distribution network via supermarketchannels will be a key factor in achieving growth in sales both within the PRCand internationally, especially for its premium priced branded products. Research and development activities will be maintained to extend Fu-Rich'sproduct range, including exploring potential healthier alternatives and organicproduce. In addition, further new products may potentially be sourced from thirdparty manufacturers. Xianka Xianka, which has been under development by Fu-Rich's in-house research anddevelopment team, is potentially a new seasoning product which the New Boardbelieves can enhance flavour when cooking food. Unlike traditional seasoningproducts that consist mainly of artificial chemical compounds, Xianka's rawmaterials and ingredients are extracted principally from marine plants such asseaweed and kelp. These marine plants contain natural ingredients such as aminoacid and proteins and fewer artificial compounds. The New Board believe Xiankawill become a substitute product for MSG and chicken bouillon seasoning,especially given its organic nature and origin. In 2006 the PRC produced 1.35million tonnes of MSG with a market value of approximately RMB13.7 billion(approximately £878 million at the current exchange rate) and 150,000 tonnes ofchicken bouillon seasoning with a market value of approximately RMB3 billion(approximately £192 million at the current exchange rate). Xian Meishen Technology, a newly formed company wholly owned by Mr Fu Guoping(the co-founder of Fuss Feed), intends to produce, market and sell Xiankaproducts from early 2008 and has entered into an agreement with Fu-Rich inrespect of its rental of floor space at the new Shou Guang City premises and theuse of Fu-Rich's established distributorship and retail networks following thesale of the Xianka business (including the licensing of intellectual propertyrights related to the Xianka trademarks and know-how) by Fu-Rich to Xian MeishenTechnology. The Full Fortune Group will have the right of first refusal torepresent and sell Xianka based products and the right to appoint two directorsto the board of Xian Meishen Technology. It should be stated that the Acquisition does not include the rights to theXianka Business which will be transferred before Completion to Xian MeishenTechnology. However, as part of the Acquisition, the Company has secured a calloption, exercisable by itself or by any one of its subsidiaries at the directionof the Company at any time during the two year period following Completion, toacquire the entire issued share capital of Xian Meishen Technology or any othercompany which carries on all or any part of the Xianka business for a maximumcash consideration of RMB80 million (approximately £5.1 million at currentexchange rates). Further details of this option are set out in the AdmissionDocument. Growth via acquisitions The Enlarged Group may potentially consider growing the business viacomplementary acquisitions of both animal feed and condiments businesses, withgood brands and established customers and/or distribution networks, eitherwithin the PRC or overseas, where opportunities present themselves to createvalue for Shareholders. 5. Current trading and prospects for the Enlarged Group Financial information on Vestpa for the period ended 30 September 2007 is setout in the Admission Document. Since 30 September 2007, the Company's onlyactivity has been to search for and evaluate suitable acquisition opportunitiesin line with its investment strategy and to enter into the agreements, detailsof which are set out in the Admission Document published today. Financial information on the Full Fortune Group for the three years ended 31December 2006 and the six months ended 30 June 2007 is also set out in theAdmission Document published today. The New Board is optimistic as to the Enlarged Group's prospects, based on thecombination of the Acquisition, the Subscriptions and their expectations for thecontinued growth of the Full Fortune Group, both organically and by acquisition. 6. Directors, Proposed Directors, senior management and employees At the General Meeting, resolutions will be proposed, conditional on havingobtained Shareholders' approval for the Acquisition and Admission to, interalia, appoint Raphael Tham, Feng Bo, Frank Chau and Derek Marsh as directors ofthe Company upon Admission. With effect from Admission, it is proposed that bothJames Cane and Thomas Vaughan will resign from the Board. John McLean willremain on the board and become Non-executive Chairman. He will also be thedesignated appointee of Albany. Brief biographical details of the Directors,Proposed Directors and senior management are set out below. Directors The current composition of the Board of Vestpa is as follows: John McLean (Executive Director) John McLean, aged 54, is Chairman of Albany Capital plc, which he, with threeother colleagues, founded in 2006 to invest in pre-IPO and other investments. Heis also the Chief Executive Officer of Fairfax Classical Properties Limited, acompany that he co-founded in 2003, which builds deluxe houses in the South ofEngland. John has had extensive business experience in a variety of sectors,including retail, branded products, property investment and development,textiles, mobile telephony, cable TV, manufacturing, licensing and logistics. Hehas managed operations globally, with specific expertise in China, Australia,the USA, Canada and Europe. In 1998, he was appointed by Gamma Holdings NV tocarry out a strategic review of their UK interests, including Sanderson, thetextile and wallpaper company. John remained with Sanderson until 2003, servingas its managing director to implement a turnaround and disposal plan. From 1992to 1996, he was employed as General Manager with ICS and co-led a managementbuy-out of the company with 3i, prior to its successful disposal to Hays plc in1996. John has a long track record in the development of growing companies andhas operated as both managing director and finance director. John is a CharteredAccountant and was formerly with Coopers & Lybrand in both London and New York. James Cane (Non-executive Director) James Cane, aged 55, has been a chief executive and finance director in bothlisted and private equity backed businesses, and was, until its merger with thePortman Building Society, a non-executive director of the Lambeth BuildingSociety and a member of its audit and assets & liabilities committees. James isa Chartered Accountant who trained with Arthur Young (now Ernst & Young), and isa member of the Securities Institute. He has operated through a consultancybusiness for nearly thirty years, and has been a management consultant andbusiness adviser for over thirty years. Earlier this year, he finished a two anda half year project with a UK-centric mid market private equity buyout fund,having resigned as the chief executive and finance director of the OFEX listedAshley House plc in 2004. James was a divisional managing director and financedirector at Westminster Health Care before and after its buyout by a privateequity consortium in 1999, followed by roles as the operations and financedirector of a private equity advisory firm between 2000 and 2002. James iscurrently a senior adviser to a leading emerging markets private equity fundmanager with 14 offices worldwide and over US$3.5 billion under management. Thomas Vaughan (Non-executive Director) Thomas Vaughan, aged 59, co-founded, with his brother, Oliver, Juliana'sHoldings Plc which in 1966 was the world's largest discotheque entertainmentgroup. Following its £30 million sale to Wembley Leisure Limited in 1988, Tombecame an executive director of Wembley Leisure. In 1994 Tom was appointedchairman of the newly-formed Gander Holdings Plc, a London based propertycompany specialising in the acquisition and development of prime Kensington andChelsea residential real estate. In January 2000, Tom became a director of theLondon Academy of Music and Dramatic Art. In April 2004, Tom was appointed adirector of ART VPS Limited, a Cambridge based technology company and fromJanuary 1996 until 30 March 2007, he was a director of Corporate Synergy GroupPlc (renamed Blue Oar Plc). Proposed Directors Raphael Tham Wai Mun (Proposed Chief Executive Officer) Raphael Tham Wai Mun, aged 37, is currently a director of Full Fortune andTastyfood Holdings Limited, a listed company on the Singapore Exchange. He hasexperience in various businesses within the technology, construction, retail andfinance industries and has been involved in general management, strategicdevelopment, financing and corporate restructuring. Prior to joining FullFortune, Mr Tham was the senior vice president of International FinancialNetwork Holdings Limited, a Hong Kong based, GEM listed company involved insecurities, corporate finance advisory and other related services and was thecountry manager of their Singapore subsidiary. Mr Tham has also founded and runother businesses and served on the board of listed companies in Singapore. He isalso currently a non-executive director of Byte Power Group Limited, anAustralian listed company. Mr Tham started his career with the EconomicDevelopment Board of Singapore and holds a Bachelor of Arts (Economics) from theNational University of Singapore. Mr Tham is fluent in both English andMandarin. Subject to and with effect from Admission, Mr Tham has entered into aservice agreement with Full Fortune and a letter of appointment with theCompany, details of which are set out in the Admission Document. Feng Bo (Proposed Chief Operating Officer) Feng Bo, aged 38, graduated from the Beijing Agriculture Engineering Universityin 1991 with a Bachelor of Science. She then completed her graduate course inInternational Trade at China Ocean University in 2003. She is also a committeemember of the China Animal Husbandry and Veterinary Institute of AnimalNutrition. She joined Fuss Feed in 1994 and subsequently became its GeneralManager. Feng Bo is currently a director of Fuss Feed, its legal representativeand General Manager. Subject to and with effect from Admission, Ms Feng hasentered into an employment agreement with Fuss Feed, letters of appointment withVestpa and Full Fortune, as well as "service agreements" which are equivalent toletters of appointment with Fuss Feed and Fu-Rich, details of which are set outin the Admission Document. Frank Chau (Proposed Chief Financial Officer) Frank Chau, aged 35, has more than ten years experience in audit, corporatefinance and financial management in Singapore, Hong Kong and mainland China. MrChau was the Financial Controller of a Singapore mainboard listed company priorto joining Full Fortune. Mr Chau started his career with the Hong Kong member ofGrant Thornton International and holds a Master's degree in BusinessAdministration from the University of Adelaide, Australia. Mr Chau is a fellowmember of the Association of Chartered Certified Accountants. Mr Chau is fluentin both English and Mandarin. Subject to and with effect from Admission, Mr Chauhas entered into a service agreement with Full Fortune and a letter ofappointment with the Company, details of which are set out in the AdmissionDocument. Derek Marsh, CVO (Proposed Non-executive Director) Derek Marsh, aged 61, has thirty-eight years of Government experience, includingwith the British diplomatic service in East Asia where he was Deputy BritishAmbassador in Seoul from 1997 to 2001 and British Trade Representative in Taipeifrom 2002 to 2005. His other Government experience includes the following areas:export promotion, aerospace industry, large-scale information business, defenceprocurement and military operations. Derek was a non-executive director of BovisHomes Limited between 1992 and 1994. Bovis Homes Limited was a subsidiary of theP&O Group plc. He is currently a non-executive director of the AIM quoted HaiKeChemical Group Limited, based in the Shandong Province. Derek graduated from theRoyal College of Defence Studies, London and the NATO Defence College, Rome andholds an MA from The Queen's College, Oxford. Subject to and with effect fromAdmission, Mr Marsh has entered into a letter of appointment with the Company,details of which are set out in the Admission Document. It is intended that a further director shall be appointed as soon as practicablefollowing Admission, such appointee to be subject to the prior approval of theChairman of the Company. Following Completion, the New Board will review the composition of the Board ona regular basis. Senior Management In addition to the Directors and Proposed Directors, details of key seniormanagement personnel within the Enlarged Group immediately following Completionare set out below: Lin Qi Lin Qi, aged 38, graduated with a law degree from the East China University ofPolitics and Law in 1991. Before joining Fu-Rich, he worked in Xinjiang KorlaJustice Bureau from 1990 to 1992. He then worked in the condiments industry andsubsequently was one of the founders of Fu-Rich in 2001. He has over ten yearsof experience in the condiments industry from production to sales and marketing.He is currently the General Manager of Fu-Rich in charge of the day-to-dayoperations, strategic planning, product development, food technology. He iscurrently pursuing his Executive-MBA with Tsing Hua University. Feng Lei Feng Lei, aged 37, is an economics graduate from Shandong University of Financein 1992. In 1992, he was the assistant to the director of Zhucheng CottonPlaiting Factory before being promoted to assistant factory director in 1995. In1997, he joined Fuss Feed as a Sales and Marketing Manager and became the DeputyGeneral Manager in 2002. He also completed a part-time management course atTsing Hua University in 2004. Sang Ming Gang Sang Ming Gang is a certified public accountant of the PRC. Mr Sang graduatedfrom the Shandong Economics University in 1989. He started his career with theTreasury Bureau of Fang Zi district in 1989 until 1993. He also served as anofficer in the tax, finance and price investigation offices of Fang Zi districtfrom 1993 to 1995. From 1995 to 2002, he worked in a CPA firm. Before joiningthe Full Fortune Group, Mr Sang was the department head of the asset managementdepartment of Shandong Dong Liang Group. He is currently the Full Fortune GroupChief Accountant. Yin Hui Yin Hui, aged 37 graduated from Dongbei University of Finance & Economics with abachelor of accounting in 1992. She worked in the accounting department in theShandong Huarun Group from 1992 to 1996 and joined Fu-Rich as its FinanceManager in 1997. She is now the Financial Controller of the Full Fortune Group. Employees The New Board has confirmed that, except in relation to Raphael Tham, Feng Boand Frank Chau and certain senior management of the Full Fortune Group who willbe entering into new service agreements as mentioned above and as set out in theAdmission Document, it intends to retain the services of all the othermanagement and employees of the Full Fortune Group on terms that will remainunchanged following Completion. On Completion, Vestpa will move its Head Office to Singapore where Raphael Thamand Frank Chau will be based, whilst Feng Bo will oversee operations in Shandongin the PRC. The Company's Registered Office will remain in London where thenon-executive directors will be based. The majority of Board meetings will beheld outside the UK. 7. Principal Terms of the Acquisition Pursuant to the Acquisition Agreement, the Company has agreed conditionally topurchase the entire issued ordinary share capital of Full Fortune from theSellers for an aggregate consideration of approximately £25.17 million, to besatisfied through the issue of the Acquisition Shares (as described below) tothe Sellers together with a cash payment of £5 million to Main World who willalso be receiving Acquisition Shares. On Completion, the Sellers will receive, in aggregate, 40,333,333 New OrdinaryShares (equivalent to 1,613,333,320 Existing Ordinary Shares), representingapproximately 60.74 per cent. of the Enlarged Share Capital. Under the Acquisition Agreement, the Sellers and other parties have givenwarranties and indemnities relating to, inter alia, title to the Full FortuneOrdinary Shares and certain persons have given warranties relating to the duediligence information provided to the Company and other matters (subject tocertain limitations) appropriate to a transaction of the size and nature of theAcquisition. The warranties are given to the Company on trust for the benefit ofthe Shareholders immediately prior to Admission. The warranties in the Acquisition Agreement are given, inter alia, with thefollowing limitations as to liability (which do not apply where the claim is theconsequence of fraud or deliberate non-disclosure): • notice of any claim in respect of the general warranties must be givento the warrantors on or before the date that is three months after theannouncement of the audited consolidated accounts of the Enlarged Group for theyear ending 31 December 2009; • the aggregate amount of any claim(s) must exceed £50,000; and • generally, the maximum sum that can be recovered under the warrantiesis capped at the consideration payable by the buyer under the AcquisitionAgreement. The Company is giving warranties to the Sellers, inter alia, in respect of itscapacity to issue the Acquisition Shares and the contents of the AdmissionDocument published today. The Company's warranties are given, inter alia, withthe following limitations as to liability: • notice of any claim must be given to the Company on or before the datethat is three months after the announcement of the audited consolidated accountsof the Enlarged Group for the year ending 31 December 2008; • the aggregate amount of any claim must exceed £50,000; and • generally the maximum sum that can be recovered under the Company'swarranties is £2 million. The Acquisition Agreement is conditional, inter alia, on: 1. the passing of those of the Resolutions at the General Meeting necessaryto approve the purchase of the shares in Full Fortune, to appoint the ProposedDirectors and to authorise the Company to issue the Acquisition Shares; and 2. Admission. Pursuant to the Acquisition Agreement, certain of the warrantors have agreedthat they shall not dispose of their New Ordinary Shares for a period of timefrom the date of their issue for the purpose of settlement of any claims made bythe Company under the terms of the Acquisition Agreement. The Acquisition Agreement also contains provisions granting Albany a right toappoint one person to the board of directors for such time as Albany holds notless than 10 per cent. of the issued share capital, with John McLean being thecurrent appointee. It also contains provisions relating to the grant of theXianka Option in favour of the Company to acquire all of the issued sharecapital of Xian Meishen Technology which will operate the Xianka Business. Theconsideration for the exercise of the Xianka Option shall be the book value ofXian Meishen Technology subject to a maximum consideration of RMB80 million.Pursuant to this option, the Company shall also be entitled to appoint not lessthan two persons to the board of Xian Meishen Technology. Further details of the Acquisition Agreement are set out in the AdmissionDocument. 8. Details of the Subscriptions and Re-Admission The Company is raising £5 million (£4.1 million after expenses) through theissue of 16,666,667 Subscription Shares at 30 pence for each Subscription Sharepursuant to the Subscription Agreements. The gross proceeds of the Subscriptions, together with the Company's existingcash resources, will be used to fund the cash element of the consideration forthe Acquisition and the expenses of the Acquisition. The Subscriptions are being carried out by the Company. Strand Partners is notacting as subscription agent to the Subscriptions but has agreed, pursuant tothe terms of the Re-Introduction Agreement, to procure re-admission of theEnlarged Share Capital to AIM. The obligations of Strand Partners areconditional upon, inter alia, Admission taking place by 8.30 a.m. on 6 December2007 (or such later time and date, being not later than 24 December 2007, as maybe agreed by Strand Partners). The Re-Introduction Agreement contains provisionsentitling Strand Partners to terminate the Re-Introduction Agreement at any timeprior to Admission in certain circumstances. In addition to the 16,666,667Subscription Shares detailed above, Strand Partners will apply £75,000 of itsfees arising under the Re-Introduction Agreement in subscribing for cash for150,000 Subscription Shares as part of the Subscriptions. Further details of the Re-Introduction Agreement are set out in the AdmissionDocument published today. Albany has undertaken to subscribe for 7,178,342 Subscription Shares firm underthe Subscriptions, and Albany has further undertaken to subscribe for thebalance of 9,488,325 Subscription Shares, subject to claw back to satisfyapplications for Subscription Shares principally from Shareholders. Followingthe publication of the Admission Document, Shareholders other than Albany willbe offered the opportunity to subscribe for in aggregate 4,954,965 SubscriptionShares in proportion to their respective shareholdings in the Company. The Subscription Shares will be issued fully paid and will, in aggregate,represent approximately 25.33 per cent. of the Enlarged Share Capital. On Completion, the New Board will hold approximately 0.05 per cent. in aggregateof the Enlarged Share Capital. This excludes the 14,772,883 shares, or 22.25 percent. to be held by Main World of which Feng Bo's husband, Mr Fu Guoping, is thesole shareholder. On 12 November 2007, Main World entered into an agreement withthe Company which states the number of New Ordinary Shares to be held by MainWorld, and sets out the terms by which Main World will conduct business with theCompany. Further details of this agreement are set out in the Admission Documentpublished today. The New Ordinary Shares to be issued under the Subscriptions will, on Admission,rank pari passu in all respects with the Existing Ordinary Shares and theAcquisition Shares, including the right to receive all dividends and otherdistributions thereafter declared, made or paid in respect of the ordinary sharecapital of the Company. 9. Capital Reorganisation In order to make the number of Ordinary Shares in issue more manageable and theshare price more attractive to potential investors, the Company proposes, bymeans of the Capital Reorganisation and subject to Shareholder approval at theGeneral Meeting, to effect the Share Consolidation to reduce the number ofauthorised and issued Ordinary Shares. It is anticipated that New Ordinary Share certificates will be issued anddispatched by 14 December 2007 and that CREST holders will have their CRESTaccounts credited with their new holdings on 6 December 2007. On despatch of thenew certificates, any existing certificates will become valueless and should bedestroyed. Temporary documents of title will not be issued and, pending dispatchof definitive share certificates, transfers of New Ordinary Shares held incertificated form will be certified against the register. The effect of the Capital Reorganisation will be to consolidate every 40Existing Ordinary Shares into one New Ordinary Share. To avoid overallfractional entitlements, Albany subscribed for 38 Ordinary Shares at a price of1.875p per share on 9 November 2007, being the closing mid market price of theOrdinary Shares on that date. Accordingly, the total number of Ordinary Sharesin issue as at the date of this announcement is 370,000,040. Following completion of the Capital Reorganisation and the proposed increase inthe Company's authorised share capital as set out in the notice of GeneralMeeting at the back of the Admission Document being posted today, the authorisedshare capital of the Company will be £4 million, consisting of 100,000,000 NewOrdinary Shares. 10. The City Code on Takeovers and Mergers The Acquisition and the issue of the Acquisition Shares to certain of theSellers give rise to certain considerations under the City Code. Brief detailsof the Panel and the City Code, and the protections they afford to Shareholders,are described below. The City Code is issued and administered by the Panel pursuant to the CompaniesAct 2006. The City Code applies to all takeovers and merger transactions,however effected, where the offeree company is, inter alia, a listed or unlistedpublic company resident in the UK, the Channel Islands or the Isle of Man and tocertain categories of private limited companies. As a public limited companyregistered in England and with its central place of management and control inthe UK, Vestpa is currently subject to the provisions of the City Code and itsShareholders are entitled to the protections afforded by the City Code. Under Rule 9 of the City Code ("Rule 9"), any person who acquires an interest inshares which, taken together with shares in which he is already interested andin which persons acting in concert with him are interested, carry 30 per cent.or more of the voting rights of a company which is subject to the City Code, isnormally required to make a general offer to all the remaining shareholders toacquire their shares. Under Rule 9, when any person or group of persons acting in concert individuallyor collectively are interested in shares which in aggregate carry not less than30 per cent. of the voting rights of a company but does not hold shares carryingmore than 50 per cent. of the voting rights of a company and such person or anyperson acting in concert with him acquires an interest in any other shares,which increases the shares carrying voting rights in which he is interested,then that person or group of persons is normally required by the Panel to make ageneral offer in cash to all shareholders of that company at the highest pricepaid by them for any interest in shares in that company during the previoustwelve months. Under the City Code, a concert party arises where persons acting togetherpursuant to an agreement or understanding (whether formal or informal) activelyco-operate to obtain or consolidate control of a company or to frustrate thesuccessful outcome of an offer for a company. Control means the holding, oraggregate holdings, of interests in shares carrying 30 per cent. or more of thevoting rights of the company, irrespective of whether the holding or holdingsgive de facto control. In the context of the Acquisition, certain of the Sellers are currentlyconsidered to be persons acting in concert for the purposes of the City Code inrelation to the Company. The members of this Concert Party currently have noshareholdings in the Company. Following completion of the Proposals, the ConcertParty will hold, in aggregate, 35,739,071 New Ordinary Shares representingapproximately 53.82 per cent. of the voting rights attaching to the EnlargedShare Capital. As set out above, under Rule 9, the Concert Party would normally be obliged insuch circumstances to make a general offer to all shareholders at not less thanthe highest price paid by any member of the concert party, or any person actingin concert with it, within the preceding twelve months for shares of that class. However, the Panel has discretion to waive this requirement for the ConcertParty to make a mandatory offer under Rule 9 that would ordinarily arise as aresult of the Acquisition if holders of shares carrying more than 50 per cent.of the voting rights state in writing that they would not accept such an offerif it were made. The Panel has exercised its discretion to grant such a waiverbecause Albany, a holder of 59.16 per cent. of the voting rights of theCompany, has confirmed to the Panel in writing that Albany would not accept suchan offer if it were made. As a result, no approval of the waiver of theobligation that would otherwise arise under Rule 9 for the members of theConcert Party to make a mandatory offer as a result of the Acquisition is beingsought in this case. Non City Code Status following Completion Following Completion, the central place of management and control will no longerbe in the UK. As a result, following the Acquisition the City Code will notapply to any offer made to shareholders in the Company to acquire their shares. Shareholders should note that, if the Acquisition is completed, they will notreceive the protections afforded by the City Code in the event of a subsequentoffer to acquire their shares in the Company. The City Code The City Code and the Panel operate principally to ensure that shareholders aretreated fairly and are not denied an opportunity to decide on the merits of atakeover and that shareholders of the same class are afforded equivalenttreatment by an offeror. The City Code also provides an orderly framework withinwhich takeovers are conducted. In addition, it is designed to promote, inconjunction with other regulatory regimes, the integrity of the financialmarkets. The general principles and rules of the City Code The City Code is based on a number of general principles which are essentiallystatements of standards of commercial behavior. These are set out in theAppendix to this announcement and apply to all transactions with which the CityCode is concerned. They are expressed in broad terms and the City Code does notdefine the precise extent of, or the limitations on, their application. They areapplied by the Panel in accordance with their spirit to achieve their underlyingpurpose. In addition to the general principles, the City Code contains a series of rules,of which some are effectively expansions of the general principles and examplesof their application and others are provisions governing specific aspects oftakeover procedure. Although most of the rules are expressed in more detailedlanguage than the general principles, they are not framed in technical languageand, like the general principles, are to be interpreted to achieve theirunderlying purpose. Therefore, their spirit must be observed as well as theirletter. The Panel may derogate or grant a waiver to a person from theapplication of a rule in certain circumstances. Giving up the protection of the City Code A summary of key points regarding the application of the City Code to takeoversgenerally is set out in the Appendix to this announcement. Shareholders areencouraged to read this information carefully as it outlines certain importantprotections which they will be giving up if the Acquisition is completed. 11. Change of Company Name To reflect the proposed changes to the Company, its management and operations asa result of the Acquisition, it is proposed that, conditional on Completion, theCompany will change its name to China Food Company Plc. 12. Lock-in and orderly market arrangements On 25 May 2007, the Company entered into two separate lock-in agreements withBlue Oar Securities Plc and each of Thomas Vaughan and Albany Capital Plc.Pursuant to these agreements and Rule 7 of the AIM Rules, Thomas Vaughan andAlbany agreed, inter alia, not to dispose of shares in the Company for a periodof twelve months from the date of the Company's admission to AIM save in limitedcircumstances permitted by the AIM Rules and are subject to orderly marketprovisions for a further twelve months. These lock-in arrangements with Blue OarSecurities Plc will continue on Admission. On Completion, Albany and Chang Kuan Teck and Wee-Foo Sze Chew (Vincent) areexpected respectively, to be interested in approximately 19.05 per cent. and2.01 per cent of the Enlarged Share Capital. Albany Capital and Chang KuanTeck and Wee-Foo Sze Chew (Vincent) have undertaken to the Company and StrandPartners not to dispose of their Ordinary Shares in the Company for a period oftwelve months from Admission, save as permitted by the AIM Rules. For thefollowing twelve months, they may only dispose of Ordinary Shares with the priorwritten consent of the Company's nominated adviser and broker from time to time,subject to orderly market arrangements. On Completion, the Sellers will be interested in approximately 63.88 per cent.of the Enlarged Share Capital. The New Board and the Sellers have undertaken tothe Company and Strand Partners that, they will not dispose of any interest inthe New Ordinary Shares held by them for a period of twelve months from the dateof Admission. For the following twelve months, they may only dispose of OrdinaryShares with the prior written consent of the Company's nominated adviser andbroker from time to time, subject to orderly market arrangements. Main World,may, at the election of the Company, dispose of its shares during the lock-inperiod to satisfy any warranty and/or indemnity claims brought by the Companypursuant to the Acquisition Agreement. In aggregate, 56,525,843 New Ordinary Shares representing approximately 85.13per cent. of the Enlarged Share Capital will be subject to the lock-in andorderly market agreements referred to above. Further details of the lock-in andorderly market agreements are set out in the Admission Document. 13. General Meeting In order to give effect to the Acquisition and to appove the other elements ofthe Proposals, a General Meeting is being convened for 11.00 a.m. on 5 December2007. 14. Irrevocable Undertakings The Company has received irrevocable undertakings from certain of the Directorsand Albany to vote in favour of the Acquisition and the other resolutions to beproposed at the General Meeting. Further details of these irrevocable undertakings are set out in the AdmissionDocument. 15. Admission Document The Admission Document setting out details of the Proposals and including anotice of the General Meeting, accompanied by the form of proxy, will be postedto Shareholders today. Copies of the admission document will be available to thepublic free of charge from today at the offices of Fasken Martineau StringerSaul LLP, 17 Hanover Square, London W1S 1HU during normal business hours on anyweekday (other than Saturdays and public holidays), until one month followingthe date of admission. 16. Expected timetable of principal events Publication of the Admission Document 12 November 2007Payment to be received from Subscribers pursuant to the 12.00 noon on 23 November 2007Subscriptions in cleared funds Latest time and date for receipt of forms of proxy 11.00 a.m. on 3 December 2007General Meeting 11.00 a.m. on 5 December 2007Latest date for dealings in Ordinary Shares and for registration close of business on 5 December 2007of transfersRecord date for the Capital Reorganisation close of business on 5 December 2007Admission effective and dealings in the Enlarged Share Capital 6 December 2007expected to commence on AIM Completion of the Acquisition 6 December 2007CREST accounts expected to be credited with the New Ordinary 6 December 2007Shares, including the Acquisition Shares and Subscription Shares(where applicable)Definitive share certificates for the New Ordinary Shares, 14 December 2007including the Acquisition Shares and Subscription Shares (whereapplicable) to be despatched by Each of the times and dates in the above timetable is subject to change. Allreferences are to London time unless otherwise stated. Temporary documents oftitle will not be issued. Enquiries: Vestpa PlcJohn McLean, Executive Director Tel: +44 (0)7768 031 454 Strand Partners LimitedJames Harris Tel: +44 (0) 20 7409 3494Matthew Chandler Hansard GroupAdam Reynolds Tel: +44 (0) 20 7245 1100John Bick The Subscriptions are not being made, directly or indirectly, in or into theUnited States, Canada, Japan, the Peoples' Republic of China, Australia or theRepublic of South Africa or any other jurisdiction in which such Subscriptionsor solicitation is unlawful. Accordingly, this announcement is not being andshould not be released or otherwise distributed or sent in, into or from theUnited States, Canada, Japan, the Peoples' Republic of China, Australia or theRepublic of South Africa or any other jurisdiction where to do so would be inbreach of any applicable law and/or regulation. The New Ordinary Shares to beallotted pursuant to the Acquisition and the Subscriptions have not been andwill not be registered under the Securities Act of 1933 (as amended) ("Securities Act"), or under the relevant securities laws of any state or otherjurisdiction of the United States, Canada, Japan, Singapore, the Peoples'Republic of China, Australia or the Republic of South Africa. Accordingly, theNew Ordinary Shares to be allotted pursuant to the Acquisition and theSubscriptions may not (unless an exemption under the Securities Act, or otherrelevant securities laws is available) be offered, sold, re-sold or delivered,directly or indirectly, in, into or from the United States, Canada, Japan,Singapore, the Peoples' Republic of China, Australia or the Republic of SouthAfrica or any other jurisdiction where this would constitute a violation of therelevant laws of, or require registration thereof in, such a jurisdiction or to,or for the account or benefit of, any US persons or a person in, or resident ofCanada, Japan, Singapore, the Peoples' Republic of China, Australia or theRepublic of South Africa. This announcement is not being and should not be released or otherwisedistributed or sent in, into or from the United States, Canada, Singapore, thePeoples' Republic of China, Australia, Republic of South Africa, or any otherjurisdiction where to do so would be in breach of any applicable law and/orregulation. The New Ordinary Shares to be allotted pursuant to the Acquisitionhave not been and will not be registered under the Securities Act, or under therelevant securities laws of any state or other jurisdiction of the UnitedStates, Canada, Singapore, the Peoples' Republic of China, Australia, Republicof South Africa or Japan. Accordingly, the New Ordinary Shares to be allottedpursuant to the Acquisition may not (unless an exemption under the SecuritiesAct, or other relevant securities laws is available) be offered, sold, re-soldor delivered, directly or indirectly, in, into or from the United States,Canada, Singapore, the Peoples' Republic of China, Australia, Republic of SouthAfrica, Japan or any other jurisdiction where this would constitute a violationof the relevant laws of, or require registration thereof in, such a jurisdictionor to, or for the account or benefit of, any US persons or a person in, orresident of Singapore, the Peoples' Republic of China, Canada, Australia,Republic of South Africa or Japan. The New Ordinary Shares to be issued pursuant to the Subscriptions will beoffered in Singapore pursuant to the private placement exemption under Section272B (Private Placement) of Part XIII of the Securities and Futures Act (Chapter289) of Singapore (the "Singapore Act"). Any person to whom an offer is made inSingapore pursuant to the private placement is deemed to have represented to theCompany that it is, or intends to subscribe for or purchase the New OrdinaryShares to be issued pursuant to the Subscriptions for its own account and not asnominee or transferee or otherwise on behalf of any other person or persons andif it is a company or corporation that it is not established or incorporatedspecifically solely for the purpose of the proposed subscriptions or purchase ofNew Ordinary Shares to be issued pursuant to the Subscriptions or the proposedinvestment in the Company. Strand Partners Limited, which is authorised and regulated in the United Kingdomby the Financial Services Authority, is acting as financial and nominatedadviser and broker to the Company in connection with the Acquisition,Subscriptions and proposed admission of the Enlarged Share Capital to trading onAIM. Its responsibilities as the Company's nominated adviser and broker underthe AIM Rules are owed solely to the London Stock Exchange and are not owed tothe Company or to any Director or Proposed Director or to any other person inrespect of their decision to acquire shares in the Company in reliance on anypart of this announcement. Strand Partners Limited is acting exclusively forVestpa and for no one else and will not be responsible to anyone other than theCompany for providing the protections afforded to their clients or for providingadvice in relation to the contents of this announcement or the Acquisition,Subscriptions or the proposed admission of the Enlarged Share Capital to tradingon AIM. No representation or warranty, express or implied, is made by StrandPartners Limited as to the contents of this announcement, without limiting thestatutory rights of any person to whom this announcement is issued. Theinformation contained in this announcement is not intended to inform or berelied upon by any subsequent purchasers of New Ordinary Shares (whether on oroff exchange) and accordingly no duty of care is accepted in relation to them. DEFINITIONS The following definitions apply throughout this announcement, unless the contextrequires otherwise: "Acquisition" the proposed acquisition by the Company of the entire issued ordinary share capital of Full Fortune pursuant to the Acquisition Agreement;"Acquisition Agreement" the conditional agreement between the Company (1), certain warrantors (2) and the Sellers (3) relating to the Acquisition, further details of which are set out in the Admission Document;"Acquisition Shares" the 40,333,333 New Ordinary Shares to be issued following the Capital Reorganisation to the Sellers pursuant to the Acquisition Agreement upon completion of the Acquisition;"Additives" refers to vitamins, minerals or drugs added to animal feed as nutritional supplements;"Admission" the effective admission of the Enlarged Share Capital to trading on AIM in accordance with Rule 6 of the AIM Rules for Companies;"Admission Document" the document posted to Shareholders today;"AIM" the market known as AIM operated by the London Stock Exchange;"AIM Rules" the rules applicable to companies whose securities are traded on AIM and their advisers, as published by the London Stock Exchange from time to time;"Albany Capital" or "Albany" Albany Capital Plc, a company incorporated in England and Wales with registered number 03995223, whose registered office is at 17 Hanover Square, London W1S 1HU;"Board" the board of directors of the Company from time to time;''bouillon'' refers to stock or broth for soup and sauces produced by cooking, either separately or in any combinations, vegetables, poultry, meat or fish in water, strained and thereafter dried and packed in the form of granules or cubes;"CA 1985" or "Act" the Companies Act 1985, as amended;"CA 2006" or "2006 Act" the Companies Act 2006;"Cambie Worldwide" Cambie Worldwide Investment Limited, a company incorporated in the British Virgin Islands with registration number 1003755, whose registered office is at P.O. Box 901, Road Town, Tortola, British Virgin Islands, being one of the Sellers;"Capital Reorganisation" or " the proposed 1 for 40 Ordinary Share consolidation, details of which areShare Consolidation" set out in the Admission Document;"certificated" or "in the description of a share or other security which is not incertificated form" uncertificated form (that is, not in CREST);"China" or "the PRC" The Peoples' Republic of China (for the purposes of this announcement, excluding Hong Kong, Macau and Taiwan);"City Code" the City Code on Takeovers and Mergers;"Company" or "Vestpa" Vestpa Plc, a company incorporated in England and Wales with registered number 06077223 whose registered office is 17 Hanover Square, London W1S 1HU;"Completion" completion of the Proposals (other than Admission) in accordance with their terms;"Compound Feed'' a feed that contains Energy Sources, Protein Sources and Additives and represents a nutritionally complete meal for animals;"Concentrate Feed'' a subset of Compound Feed that contains Protein Sources and Additives but lacks Energy Sources;"Concert Party" Main World, Sound Venture and Cambie Worldwide, being certain of the Sellers;''condiment'' a substance applied to food, usually in the form of a garnish, powder or sauce to enhance or improve the flavour;"CREST" the computerised settlement system (as defined in the CREST Regulations) operated by Euroclear UK & Ireland Limited which facilitates the transfer of title to shares in uncertificated form;"CREST Regulations" the Uncertificated Securities Regulations 2001, including (i) any enactment or subordinate legislation which amends or supersedes those regulations and (ii) any applicable rules made under those regulations or any such enactment or subordinate legislation for the time being in force;"Directors" the existing directors of the Company at the date of this announcement;"EBITDA" the amount arrived at after adding back the taxation charge, interest payable, depreciation of property, plant and equipment and amortisation of intangible assets to the profit after tax, less interest receivable"Energy Sources'' this usually refers to coarse grains like oats, wheat and maize which act as the staple carbohydrates for animals; "Enlarged Group" the Company and, following completion of the Acquisition, the Full Fortune Group;"Enlarged Share Capital" the issued ordinary share capital of the Company following Completion comprising the New Ordinary Shares arising pursuant to the Share Consolidation, the Acquisition Shares and the Subscription Shares;"Existing Ordinary Shares" the 370,000,040 Ordinary Shares in issue at the date of this announcement, which will become 9,250,001 New Ordinary Shares pursuant to the Capital Reorganisation;''fermentation'' typically refers to the conversion of one substance to another substance using micro-organisms through a bio-chemical process over a course of time;"Full Fortune" Full Fortune Holdings Pte. Limited, a company incorporated in Singapore with registered number 200507198G, whose registered office is at No. 36, Robinson Road, #18-00 City House, Singapore 068877;"Full Fortune Directors" the Proposed Directors other than Derek Marsh;"Full Fortune Group" Full Fortune and any subsidiary of Full Fortune;"Full Fortune Ordinary Shares" the ordinary shares in the capital of Full Fortune;"Fu-Rich" Shandong Fu-Rich Co. Limited (formerly Shandong Wanxiangyuan Food Co. Limited), a wholly owned operating subsidiary of Full Fortune involved in the manufacture and sale of condiments and other food products;"Fuss Biotech" Shandong Fuss Biotech Co. Limited, a wholly owned subsidiary company of Full Fortune which holds certain land use rights in the PRC;"Fuss Feed" Fuss Feed (Weifang) Co., Limited, a wholly owned subsidiary company of Full Fortune involved in the manufacture and sale of animal feed;"General Meeting" the general meeting of the Company, notice of which is set out at the end of the Admission Document;"IFS" IFS Capital Assets Pte Limited, an investment holding company incorporated in Singapore with registration number 198700828M whose registered office is at 7 Temasek Boulevard, #10-01 Suntec Tower One, Singapore, 038987, being one of the Sellers;"Issue Price" 50 pence per Acquisition Share;"Lam Soon" Lam Soon Realty (Pte) Limited, an investment holding company incorporated in Singapore with registration number 197300347N whose registered office is at 15 Scotts Road, #05-01 Thong Teck Building, Singapore 228218, being one of the Sellers;"London Stock Exchange" London Stock Exchange plc;"Main World" Main World Investments Limited, a company incorporated in the British Virgin Islands with registration number 1060682 whose registered office is at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands, being one of the Sellers;''MSG'' Mono Sodium-Glutamate (flavour enhancer)."New Articles" means the new articles of association of the Company to be adopted by the Company pursuant to the Proposals as further described in the Admission Document;"New Board" John McLean and the Proposed Directors;"New Ordinary Shares" the proposed new ordinary shares of 4 pence nominal value each in the capital of the Company to be created pursuant to the Capital Reorganisation;"Official List" the Official List of the Financial Services Authority of the UK;"Ordinary Shares" the ordinary shares of 0.1 pence nominal value each in the capital of the Company in issue prior to the Capital Reorganisation;"Panel" the Panel on Takeovers and Mergers, the regulatory body that administers the City Code;''Premix'' a subset of Compound Feed that consists of Additives but lacks Energy Sources and Protein Sources;"Proposals" together, the Acquisition, the Subscriptions, the Capital Reorganisation, the appointment of the Proposed Directors, the change of name, Admission and the Resolutions each as described in the Admission Document;"Proposed Directors" Raphael Tham, Frank Chau, Feng Bo and Derek Marsh;''Protein Sources'' this usually refers to oilseeds like soya beans, sunflower seeds and rapeseeds which provide the necessary protein required by animals for their nutrition;"Re-Introduction Agreement" the conditional agreement dated 12 November 2007 between the Company (1), the Directors (2), the Proposed Directors (3), Main World (4) and Strand Partners (5), further details of which are set out in the Admission Document;"Regulations" the Uncertificated Securities Regulations 2001 (SI 2001/No. 3755);"Resolutions" the resolutions to be proposed at the General Meeting, as set out in the notice of General Meeting at the end of the Admission Document and reference to a Resolution is to the relevant resolution set out in the notice of General Meeting;"RMB" or "Renminbi" the legal currency of the PRC from time to time;"Sellers" Sound Venture, Main World, Cambie Worldwide, IFS and Lam Soon;"Shareholders" holders of Ordinary Shares or, following the Capital Reorganisation, New Ordinary Shares;"Sound Venture" Sound Venture Holdings Inc., a company incorporated in the British Virgin Islands with registration number 1382937 whose registered office is at Sea Meadow House, Blackburne Highway, P.O. Box 116, Road Town, Tortola, British Virgin Islands, being one of the Sellers;''soya bean'' a species of legume native to Eastern Asia."Strand Partners" Strand Partners Limited, the Company's financial and nominated adviser and broker;"Sterling" or "£" pounds sterling, the lawful currency of the UK from time to time;"Subscribers" the subscribers for Subscription Shares pursuant to the Subscriptions;"Subscriptions" the conditional subscriptions for the Subscription Shares pursuant to the Subscription Agreements;"Subscription Agreements" the subscription agreements between the Company and the Subscribers;"Subscription Price" 30p per Subscription Share;"Subscription Shares" the 16,666,667 New Ordinary Shares to be subscribed for cash by the Subscribers immediately following the Capital Reorganisation pursuant to the Subscriptions and the 150,000 New Ordinary Shares to be subscribed by Strand Partners on Admission as part of its fees for acting as nominated adviser to the Company as is more fully described in the Admission Document;"subsidiary" or "subsidiary have the meanings given to them by CA 2006;undertaking""UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland;"uncertificated" or "in recorded on the relevant register of the share or security concerned asuncertificated form" being held in uncertificated form in CREST and title to which may be transferred by means of CREST;"US" or "United States" the United States of America, its territories and possessions, any state of the United States of America and the district of Columbia and all other areas subject to its jurisdiction;"US person" a citizen or permanent resident of the United States, as defined in Regulation S promulgated under the Securities Act 1933;''Xian Meishen Technology'' Xian Meishen Technology Co. Limited, a company incorporated in the PRC and having its registered address at Flat 4S-D, No. 5 Xie Tong Building, New Tech District, Gaoxin Road, Xi'an, Shaanxi, China 710000;''Xianka Business'' the business of a new type of flavour enhancing product carried on by Xian Meishen Technology; and"Xianka Option" the option in favour of the Company to acquire all of the issued share capital of Xian Meishen Technology which will operate the Xianka Business pursuant to and on the terms of the Acquisition Agreement. For the purposes of this announcement the exchange rate used is RMB15.6 to £1. APPENDIX General Principles and Application of the City Code A. The General Principles of the City Code 1. All holders of the securities of an offeree company of the same classmust be afforded equivalent treatment; moreover, if a person acquires control ofa company, the other holders of securities must be protected. 2. The holders of the securities of an offeree company must havesufficient time and information to enable them to reach a properly informeddecision on the bid; where it advises the holders of securities, the board ofthe offeree company must give its views on the effects of implementation of thebid on employment, conditions of employment and the locations of the company'splaces of business. 3. The board of an offeree company must act in the interests of thecompany as a whole and must not deny the holders of securities the opportunityto decide on the merits of the bid. 4. False markets must not be created in the securities of the offereecompany, of the offeror company or of any other company concerned by the bid insuch a way that the rise or fall of the prices of the securities becomesartificial and the normal functioning of the markets is distorted. 5. An offeror must announce a bid only after ensuring that he/she canfulfil in full any cash consideration, if such is offered, and after taking allreasonable measures to secure the implementation of any other type ofconsideration. 6. An offeree company must not be hindered in the conduct of its affairsfor longer than is reasonable by a bid for its securities. B. Detailed application of the City Code The following is a summary of key provisions of the City Code which apply totransactions to which the City Code applies. Shareholders should note that, ifthe Acquisition is completed, they will be giving up the protections afforded bythe City Code. Equality of treatment General Principle 1 of the City Code states that all holders of securities of anofferee company of the same class must be afforded equivalent treatment.Furthermore, Rule 16 requires that, except with the consent of the Panel,special arrangements may not be made with certain shareholders in the Company ifthere are favourable conditions attached which are not being extended to allshareholders. Information to shareholders General Principle 2 requires that holders of securities of an offeree companymust have sufficient time and information to enable them to reach a properlyinformed decision on a bid. Consequently, a document setting out full details ofan offer must be sent to the offeree company's shareholders. The opinion of the offeree board and independent advice The board of the offeree company is required by Rule 3.1 of the City Code toobtain competent independent advice on an offer and the substance of such advicemust be made known to its shareholders. Rule 25.1 requires that the board of theofferee company must circulate its opinion on the offer and its reasons forforming that opinion. That opinion must include the board's views on: theeffects of implementation of the offer on all the company's interests,including, specifically, employment; and on the offeror's strategic plans forthe offeree company and their likely repercussions on employment and thelocations of the offeree company's places of business. The circular from the offeree company must also deal with other matters such asinterests and recent dealings in the securities of the offeror and the offereecompany by relevant parties and whether the directors of the offeree companyintend to accept or reject the offer in respect of their own beneficialshareholdings. Rule 20.1 states that information about the companies involved inthe offer must be made equally available to all offeree company shareholders asnearly as possible at the same time and in the same manner. Optionholders and holders of convertible securities or subscription rights Rule 15 of the City Code provides that when a City Code offer is made for votingequity share capital or other transferable securities carrying voting rights andthe offeree company has convertible securities outstanding, the offeror mustmake an appropriate offer or proposal to the stockholders to ensure theirinterests are safeguarded. Rule 15 also applies in relation to holders ofoptions and other subscription rights. If the Acquisition is completed, theseprotections will be lost. END This information is provided by RNS The company news service from the London Stock Exchange
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