FIF.L Regulatory News (FIF)

7 Apr 2008 07:01

Finsbury Food Group PLC07 April 2008 Date: 7th April 2008On behalf of: Finsbury Food Group plc ("Finsbury" or "the Group")Embargoed until: 0700hrs Finsbury Food Group plcAcquisition of Yorkshire Farm Bakery and A & P Foods Finsbury Food Group plc (AIM: FIF), a leading manufacturer of premium andcelebration cakes, low fat cake slices and artisan, organic and gluten freebread and morning goods, is pleased to announce today the acquisition of thetrade and assets of Yorkshire Farm Bakery ("YFB") and A & P Foods ("A & P"). YFB is the one of the UK's leading manufacturers of gluten free breads andmorning goods, and is located on a freehold site in Hull. A & P Foods shares thesame site, and produces gluten free pre-mixes for YFB as well as United CentralBakeries Ltd ("UCB"), which is part of the existing Finsbury Group. Both newlyacquired businesses have been purchased from the Arnett family, three of whomwill be remaining with the business. The YFB business started trading in 1983 as a general wholesale bakery. In 2000,the business entered the gluten free market and has now developed into adedicated gluten free site. A & P has been trading since 2005. The businessesemploy over 100 people and primarily focus their sales upon the UK's majormultiple grocers, from where they derive over two thirds of total sales. Combined YFB and A & P sales in the year ended March 2007 were £7.30m, withforecast sales for the year to March 2008 being no less than £8.50m. Pro formaEBITDA for the year to March 2007 was £0.70m, and for the year to March 2008 isnot expected to be less than £ 1.40m. Acquired net assets are valued at £3.66m. Finsbury has created a new trading company, Livwell Ltd, to complete theacquisition of the assets and undertaking of YFB and A & P for a total maximumdebt-free consideration of £8.90m. £4.80m is payable on completion, with theremainder payable in stage payments. The final payment of £2.50m is due to bemade in July 2010, with the balance over four broadly equal stage payments insix-monthly intervals from July 2008 to January 2010. The initial considerationwill be funded by a commercial mortgage of £0.80m and a £4.00m term loanprovided by the Group's bankers, HSBC Bank plc, internal funding and an extendedoverdraft facility. According to Mintel, the Free From market was worth £180m at retail prices in2007 and is forecast to nearly double by 2012. Approximately one half of theFree From market is gluten free. Combined with UCB, the Group believes it hasaround 20% of this part of the market and is now the market leader in the bakerysegment. The acquisition complements the Group's health sector - an area where it hasalready experienced strong growth and foresees further significant potential, aswell as offering the greatest degree of protection from a downturn in theeconomy. The Directors remain confident that the existing Group is on course to meetmarket expectations for the current year, and can confirm that the newlyacquired businesses will be earnings enhancing during the Group's first fullyear of ownership. Commenting on the acquisitions, Dave Brooks, Finsbury Food Group plc's ChiefExecutive, said: "Finsbury Food Group is delighted to welcome the Arnett family and theirbusinesses into the Group. Our trading relationship goes back to late 2005 whenthe Group acquired UCB, and we look forward to continuing our growth together.The UK retail market offers huge scope for growth as more and more consumerschoose a wheat free diet, and the UK medical prescription market, which is twicethe size of the retail market, brings new opportunity. There is also significantscope to develop a stronger export business as awareness grows in Europe. Thesebusinesses perfectly fit our acquisition criteria, and their acquisition isfurther evidence of our Group's confidence in our market positioning and tradingperformance." Commenting on their new partnership with Finsbury Food Group, Tony Arnett said: "Over the last five years, our growth in the Free From market has beensignificant, and during 2007 the family came to the view that it was time forthe business to be grown within a larger concern to ensure the potential we hadcreated was fully developed. Our team in Hull have been fantastic workcolleagues over those years and we now look forward to the next exciting phaseof Livwell with Finsbury." - Ends - For further information: Finsbury Food Group Plc www.finsburyfoods.co.ukDave Brooks (Chief Executive) 07831 787 382 Panmure Gordon & CoNominated advisor and brokerMark Lander / Grant Harrison 0207 459 3600 Redleaf Communications finsbury@redleafpr.comEmma Kane/Sanna Sumner 020 7822 0200 • Publication quality photographs are available via Redleaf Communications Notes to Editors: • Finsbury Food Group is the number 2 player in the UK cake industry a market valued at £1.51bn (TNS, January 2008) • Its strategy is to build a significant food group in core areas, both organically and by acquisition • Finsbury's aim is to be "The Best at What We Do" This information is provided by RNS The company news service from the London Stock Exchange