RGD.L Regulatory News (RGD)

27 Jul 2005 07:01

Real Good Food Company Plc (The)27 July 2005 For immediate release Part 1 of 2 Not for release, publication or distribution in or into or from the United States, Canada, Australia, the Republic of Ireland or Japan 27 July 2005 The Real Good Food Company plc Recommended all share offer for Napier Brown Foods Plc to be made by Numis Securities Limited on behalf of The Real Good Food Company plc. Summary • The boards of NBF and RGFC are pleased to announce the terms of a recommended all share offer for the whole of the issued and to beissued share capital of NBF. • The Offer will be 1.6236 RGFC Shares for every NBF Share. On this basis, the Offer values each NBF share at approximately 220 penceand the entire existing issued and to be issued ordinary share capital of NBF(assuming full exercise of the options and warrants granted under the NBF ShareOption Schemes) at approximately £67.74 million, based on the Closing Price of135.5 pence per RGFC Share on 26 July 2005, the last dealing day prior to thedate of this announcement. • The Offer represents a premium of (i) approximately 26.44 per cent. over the Closing Price of 174 pence per NBF Share on 17 June 2005, the last dealing day prior to the date on which RGFC announced that it wasin discussions with NBF concerning a potential offer for NBF and (ii)approximately 22.22 per cent. over the Closing Price of 180 pence per NBF Shareon 7 March 2005, the last dealing day prior to the announcement by NBF that ithad received a proposal regarding a possible offer for NBF. • In view of its size the Offer is conditional, inter alia, on the approval of RGFC Shareholders at an extraordinary general meetingto be convened shortly. • Shareholder approval of the Offer is also necessary in order to obtain from the Panel dispensation from the requirement for NB.Ingredients to make a mandatory offer for the Company pursuant to Rule 9 of theCode. • The RGFC Directors, who have been so advised by Numis Securities Limited, believe that both the terms of the Offer and the waiver ofthe Rule 9 obligation are fair and reasonable and in the best interests of theCompany and the Shareholders. Accordingly, the RGFC Directors will beunanimously recommending that shareholders vote in favour of the Offer and infavour of the waiver of the Rule 9 obligation as they have irrevocablyundertaken to do in respect of their aggregate shareholdings of 2,500,000Existing Ordinary Shares, representing approximately 17.74 per cent. of theExisting Ordinary Shares. • The NBF Independent Directors, who have been so advised by John East & Partners Limited, consider the terms of the Offer to befair and reasonable. In providing advice to the NBF Independent Directors, JohnEast & Partners Limited has taken account of the NBF Independent Directors'commercial assessments. • Accordingly, the NBF Independent Directors will be unanimously recommending that NBF Shareholders accept the Offer as they haveirrevocably undertaken to do so in respect of their own aggregate beneficialinterest in NBF (comprising, in aggregate, 209,092 NBF Shares and representingapproximately 0.74 per cent. of the existing issued ordinary share capital ofNBF). Such undertakings will cease to be binding in the event of a highercompeting offer, or if the Offer lapses or is withdrawn. • Patrick Ridgwell and NB. Ingredients Limited have given irrevocable undertakings to accept the Offer in respect of their entire beneficial holdings of 13,736,361 NBF Shares, representing 48.63 per cent. ofthe issued share capital of NBF. Such undertakings will cease to be binding onlyif the Offer lapses or is withdrawn. • Furthermore, Agman Holdings Limited have given an irrevocable undertaking to accept the Offer in respect of their entirebeneficial holding of 2,790,697 NBF Shares, representing 9.88 per cent. of theissued share capital of NBF. Such undertaking will cease in the event of ahigher competing offer, or if the Offer lapses or is withdrawn. • In addition, RGFC has also received irrevocable undertakings to accept the Offer from certain other shareholders (details ofwhich are set out in Part 2) in respect of their entire holdings of, inaggregate, 4,161,230 NBF Shares, representing approximately 14.73 per cent. ofNBF's existing issued ordinary share capital. Such undertakings will cease to bebinding only if the Offer lapses or is withdrawn. • In aggregate, RGFC has received irrevocable undertakings to accept the Offer in respect of 20,897,380 NBF Shares, representing approximately 73.98 per cent. of NBF's existing issued ordinary share capital. • The formal documentation relating to the Offer is expected to be despatched to NBF Shareholders (other than certain Overseas Shareholders) shortly. • Commenting on the Offer, Jeremy Hamer, the Senior Independent Director of NBF said: "Since the Company's admission to AIM in December 2003, it hasbeen the Board's intention to seek to broaden the Company's base into valueadded areas within the food industry. This offer follows our stated strategy andenables Napier Brown Foods Shareholders to hold shares in a broader based foodgroup." • Commenting on the Offer, Pieter Totte, Non-executive Chairman of RGFC said: "I am delighted to announce the recommended offer for Napier Brown Foods plc.This transaction will significantly increase our critical mass and will provideus with the opportunity to build The Real Good Food Company plc into a majorforce in the food sector in the years ahead" This summary should be read in conjunction with the full text of the followingannouncement. Appendix II contains the sources and bases for certain informationset out in this announcement. Appendix III to this announcement containsdefinitions of certain expressions used in this summary and in thisannouncement. Enquiries: Andrew DawberNick WestlakeNumis Securities Limited Tel: 020 7776 1500(Financial Adviser to RGFC) Simon ClementsDavid WorlidgeJohn East & Partners Limited Tel: 020 7628 2200(Financial Adviser to NBF) Emma KaneDuncan McCormickRedleaf Communications Ltd Tel: 020 7955 1410(PR Adviser to RGFC) Numis Securities Limited, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting exclusively for RGFC andno one else in connection with the Offer and will not be responsible to anyoneother than RGFC for providing the protections afforded to clients of NumisSecurities Limited nor for providing advice in relation to the Offer or inrelation to the contents of this announcement or any transaction or arrangementreferred to herein. John East & Partners Limited, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting exclusively for NBF andno one else in connection with the Offer and will not be responsible to anyoneother than NBF for providing the protections afforded to clients of John East &Partners Limited nor for providing advice in relation to the Offer or inrelation to the contents of this announcement or any transaction or arrangementreferred to herein. The Offer will not be made, directly or indirectly, and this announcement shouldnot be sent, in or into or from the United States, Canada, Australia, Republicof Ireland or Japan or by use of the mails or by any means or instrumentality(including, without limitation, telephonically or electronically) of interstateor foreign commerce of, or any facilities of a national securities exchange of,any of these jurisdictions and doing so may render invalid any purportedacceptance of the Offer. Accordingly, copies of this announcement and any otherdocument relating to the Offer are not being, and must not be, mailed orotherwise distributed or sent in or into the United States, Canada, Australia,Republic of Ireland or Japan. Any person (including, without limitation,custodians, nominees and trustees) who may have contractual or legalobligations, or may otherwise intend, to forward this announcement to anyjurisdiction outside the United Kingdom should read the relevant provisions ofthe Offer Document before taking any action. The availability of the Offer to persons not resident in the United Kingdom maybe affected by the laws of the relevant jurisdictions in which they are located.Persons who are not resident in the United Kingdom should inform themselvesabout and observe any applicable requirements. This announcement is not intended to and does not constitute, or form part of,an offer or any solicitation of an offer or an invitation to purchase anysecurities. The Offer will be subject to the City Code. Under the rules of the City Code,there are certain dealing disclosure requirements which apply in respect ofdealings in relevant securities during an offer period. An offer period wasdeemed to have commenced by virtue of the announcement on 8 March 2005 that NBFhad received a proposal regarding a possible offer for NBF. As a result, anyperson who, alone or acting together with any other person(s) pursuant to anagreement or understanding (whether formal or informal) to acquire or controlsecurities of RGFC or NBF, owns or controls, or becomes the owner or controller,directly or indirectly of one per cent. or more of any class of securities ofRGFC or NBF is generally required under the provisions of Rule 8 of the CityCode to notify a Regulatory Information Service and the Panel of every dealingin such securities until such time as the offer period ends for the purposes ofthe City Code. If required, any disclosures should be made on an appropriateform by no later than 12 noon London time on the business day following the dateof the dealing transaction. These disclosures should be sent to a RegulatoryInformation Service with a copy sent (by fax or email) to the Panel (fax number+44 (0)20 7236 7013, email: monitoring@disclosure.org.uk). This announcement contains certain statements that are or may beforward-looking. These statements typically contain words such as "intends", "expects", "anticipates", "estimates" and words of similar import. By theirnature, forward-looking statements involve risk and uncertainty because theyrelate to events and depend on circumstances that will occur in the future.There are a number of factors that could cause actual results and developmentsto differ materially from those expressed or implied by such forward-lookingstatements. These factors include, but are not limited to, factors identifiedelsewhere in this announcement as well as the following possibilities: futurerevenues are lower than expected; costs of difficulties relating to theintegration of the businesses of RGFC and NBF, or of other future acquisitions,are greater than expected; expected cost savings from the transaction or fromother future acquisitions are not fully realised or not realised within theexpected time frame; competitive pressures in the industry increase; generaleconomic conditions or conditions affecting the relevant industries, whetherinternationally or in the places where RGFC and NBF do business, are lessfavourable than expected; and/or conditions in the securities market are lessfavourable than expected. Part 2 of 2 Not for release, publication or distribution in or into or from the United States, Canada, Australia, Republic of Ireland or Japan FOR IMMEDIATE RELEASE 27 July 2005 The Real Good Food Company plc Recommended all share offer for Napier Brown Foods Plc to be made by Numis Securities Limited on behalf of The Real Good Food Company plc. • The Offer will be 1.6236 RGFC Shares for every NBF Share. • RGFC has received undertakings to accept the Offer in respect of approximately 20,897,380 NBF Shares, representing approximately 73.98per cent., in aggregate, of the existing issued ordinary share capital of NBF.Undertakings in respect of 17,897,591 NBF Shares, representing 63.36 per cent.,in aggregate, of the existing issued ordinary share capital of NBF will cease tobe binding only if the Offer lapses or is withdrawn. Undertakings in respect of2,999,789 NBF Shares, representing 10.62 per cent., in aggregate, of theexisting issued ordinary share capital of NBF cease in the event of a highercompeting offer, or if the Offer lapses or is withdrawn. 1. Introduction The boards of RGFC and NBF are pleased to announce a recommended all shareoffer, to be made by Numis Securities Limited for and on behalf of RGFC, toacquire the entire issued and to be issued share capital of NBF. 2. Terms of the Offer The Offer, which will be made on the terms and subject to the conditions set outbelow and in Appendix 1 to this announcement, and subject to the further termsto be set out in the Offer Document and in the Form of Acceptance, will be madeon the following basis: for every NBF Share 1.6236 New RGFC Shares The Offer values each NBF Share at 220 pence, based on the Closing Price of135.5 pence per RGFC Share on 26 July 2005, the last dealing day prior to theannouncement of the Offer and values the whole of NBF's existing issued sharecapital at approximately £67.74 million. On the same basis, the Offer represents: • a premium of approximately 22.22 per cent. to the Closing Price of 180 pence per NBF Share on 7 March 2005 (the last dealing day before NBF's announcement that it was in talks regarding a possible offer for NBF); • a premium of approximately 26.44 per cent. to the Closing Price of 174 pence per NBF Share on 17 June 2005 (the last dealing day prior to the date on which RGFC announced that it was in discussions with NBF concerning a potential offer for NBF); and • a price in excess of any Closing Price per NBF Share since it joined AIM on 18 December 2003. The Offer extends to all NBF Shares unconditionally allotted or issued and fullypaid on the date of the Offer. The Offer also extends to any NBF Shares whichare unconditionally allotted or issued and fully paid while the Offer remainsopen for acceptance (or by such earlier date as RGFC may, subject to the CityCode or with the consent of the Panel, determine) including any NBF Shares whichare so unconditionally allotted or issued and fully paid pursuant to theexercise of rights granted under the NBF Share Option Schemes. The NBF Shares will be acquired free from all liens, charges and encumbrancesand together with all rights now and here-after attaching thereto including theright to receive and retain all dividends and other distribution declared, madeor paid after 26 July, 2005 other than the right to receive and retain thesecond interim dividend of 2p per NBF Share payable on 31 August 2005. Fractions of New RGFC Shares will not be issued to Accepting NBF Shareholders.Accepting NBF Shareholders will be issued with whole numbers of New RGFC Shares,with any fractional entitlements rounded down to the nearest whole New RGFCShare. 3. Background to and reasons for the Offer RGFC was established to build, through acquisition and organic growth, a foodgroup with a spread of activity across the retail, food services and industrialsectors of the food market. It has also been the stated aim of the NBF Board to seek to diversify into othergrowth areas in the food industry away from NBF's traditional product base. The Offer will provide the Enlarged Group with critical mass, reduce operationalrisk as it will dilute the exposure to reliance upon key customers or particularproduct ranges and enable both companies to achieve their stated strategicgoals. 4. Irrevocable undertakings to accept the Offer RGFC has received irrevocable undertakings from Patrick Ridgwell, non-executiveChairman, and NB. Ingredients Limited, a company in which Patrick Ridgwell andAnthony Ridgwell are interested, to accept, or to procure the acceptance of, theOffer in respect of their entire beneficial holdings of 13,736,361 NBF Sharesrepresenting, in aggregate, approximately 48.63 per cent. of the existing issuedshare capital of NBF. Such undertakings will cease to be binding only if theOffer lapses or is withdrawn. In addition, RGFC has received irrevocable undertakings from the NBF IndependentDirectors to accept, or to procure the acceptance of, the Offer in respect oftheir entire beneficial holdings of 209,092 NBF Shares, representing, inaggregate, approximately 0.74 per cent. of the existing issued share capital ofNBF. Such undertakings will cease to be binding in the event of the announcementof a higher competing offer, or if the Offer lapses or is withdrawn. RGFC has also received irrevocable undertakings to accept the Offer from certainother shareholders in respect of their entire holdings of, in aggregate,6,951,927 NBF Shares, representing approximately 24.62 per cent. of NBF'sexisting issued ordinary share capital. Further details are set out below. Shareholder Number of NBF Shares % of existing issued share capital of NBF Agman Holdings Limited* 2,790,697 9.88 Rathbone Nominees Limited 803,409 2.84 Rathbone Income and Growth Fund 272,727 0.97 Rathbone Smaller Companies Fund 363,637 1.28 Rathbone Special Situations Fund 454,545 1.61 Rathbone Spenser Fund 72,727 0.26 Citygate Nominees 923,635 3.27 Brewin Dolphin Securities Ltd. 644,890 2.28 JM Finn Nominees Limited 140,600 0.50 David Reynolds 153,485 0.54 Marcus Reynolds 149,985 0.53 P Reynolds 39,700 0.14 C Reynolds 32,000 0.11 Kate Reynolds 15,950 0.05 Charles and Kate Reynolds 3,940 0.01 Weighbridge Trust Limited as 90,000 0.32trustees of the Rowan Trust The undertaking marked with an * relate to a beneficial holding of shares andwill cease to be binding in the event of a higher or competing offer, or if theOffer lapses or is withdrawn. All other undertakings will cease to be bindingonly if the Offer lapses or is withdrawn. 5. The Offer for Subscription RGFC has raised approximately £5.1 million, before expenses, under the Offer forSubscription, which is conditional upon the Offer becoming or being declaredunconditional in all respects. 6. Information on RGFC RGFC was established to build, through acquisition and organic growth, a foodgroup focusing on the supply of a range of chilled, frozen and ambient productsto food retailers, the food services market and industrial customers. The Directors seek to integrate businesses acquired into existing groupoperations to achieve operational improvements, so that trading margins andprofitability are enhanced and also to exploit cross selling opportunitieswithin the Group's customer base. Its current trading divisions are: Haydens Bakeries Haydens Bakeries supplies and produces high value bakery products and dessertswith strong production skills in hand finishing, laminated yeasted doughproducts, and utilising quality fresh fruit in those products sold to groceryretail customers ("Haydens Bakeries"). The business operates from a 6,721m(2)factory in Devizes, Wiltshire and employs approximately 300 people. Five Star Fish Five Star Fish supplies value-added, prepared frozen fish to the food servicesector ("Five Star Fish"). The business is based in Grimsby, Lincolnshire anddelivers to over 100 customers nationwide and employs approximately 200 people. Seriously Scrumptious Seriously Scrumptious is engaged in high quality cake manufacturing andindividual portion bakery products for the retail and food service sectors.These products are produced at the Devizes factory ("Seriously Scrumptious"). Detailed financial information on RGFC for the accounting period fromincorporation until 31 December 2004 will be set out in the Offer Document whichwill be despatched to NBF Shareholders shortly. The summarised historicalresults of RGFC set out below have been extracted from the audited consolidatedaccounts of RGFC: 16 months 7 months ended ended 31 December 31 August 2004 2003 £'000 £'000Turnover 44,608 3,723 Gross profit/operating income 12,782 873 Exceptional items and loss on disposal of discontinued operation (net of tax) (1,712) - Goodwill amortisation and impairment (666) (6) Net interest charge (435) (13) Loss before taxation (2,803) (232) Taxation 973 - Loss attributable to shareholders (1,830) (232) Total assets 34,506 7,431 Net current liabilities (3,215) (1,280) Net debt (9,007) (512) Shareholders' funds 11,863 1,176 Loss per ordinary share (16.7p) (7.4p) Earnings/(Loss) per ordinary share before goodwill amortisation, impairment and exceptional items 5.0p (7.2p) 7. Information on NBF NBF is the holding company of a group of companies which is focussed on thesupply of sugar, value-added sugar and nut products and dairy powders andassociated food products. NBF trades through its subsidiary, Napier Brown &Company which, in turn, operates the businesses of each of its (now dormant)subsidiaries, Garrett, Sefcol and James Budgett, together with the businessacquired from Renshaw Scott, in two trading divisions, the Ingredients andRenshaw divisions. Napier Brown & Company, including the James Budgett business is the largestindependent, non-refining, distributor of sugar in the UK. It also suppliessugar, dairy products, blends and associated ingredients to the food industry.Through its Renshaw division, it is a supplier of value-added sugar and nutproducts. The Renshaw Scott business, part of the Renshaw division, is the UK'sleading manufacturer of marzipans, for the retail and industrial sectors andalso a manufacturer of ready to roll icings, baking chocolate and jam to theindustrial sector. The NBF Group's administrative headquarters is based in St Katharine's Dock onthe edge of the City of London. Napier Brown & Company's Ingredients division operates from a freehold factoryand rented warehouse space in Normanton, near Leeds, where it mills, sieves andpacks brown and white sugars and provides a blending facility for the Group andits customers and from a sales office in Thornbury (ex Garrett). The Renshaw division operates from Runcorn, Cheshire, where it manufactures itsrange of products from a freehold factory with associated warehousing and theRenshaw Scott business operates from two factories in Liverpool and Carluke,Scotland. Detailed financial information on NBF for the three financial periods ended 3April 2005 will be set out in the Offer Document which will be despatched to NBFShareholders shortly. The summarised historical results of NBF set out belowhave been extracted from financial information which will be set out in theOffer Document. 53 week period ended Year ended Year ended 3 April 28 March 31 March 2005 2004 2003 £'000 £'000 £'000 Turnover 269,985 194,256 185,397Gross Profit 18,407 13,922 12,845Gross Margin % 6.8% 7.2% 6.9%Operating Profit 5,951 667 4,757Operating Margin % 2.2% 0.3% 2.6% 8. Current Trading and Prospects RGFC Overall sales levels and operating profit across the RGFC Group are in line withthe RGFC Directors' expectations for the first six months of 2005. Both of theRGFC Group's principal businesses, Haydens Bakeries and Five Star Fish, aretrading well above the same period a year ago and their gross margins haveimproved in comparison with the same period in 2004. On 27 May 2005, the Company announced the closure of its Coolfresh Distributionbusiness due to unsuccessful discussions in relation to a possible acquisitionin this sector and the business having a negative cash effect on the RGFC Group.The production unit ceased substantive production in early June and is due tovacate the site at the end of July 2005. A wide range of new product development activity is in place with the RGFCGroup's major customers which the Board expect to give rise to a significantuplift in volumes in the second half of the year.* Haydens Bakeries revenues for the first six months of the year are up 17 percent. on last year, with profits generated versus losses in the first half ofthe year. Product development programmes continues to deliver new listings and amajor re-launch of their cream cake range has already been implemented forWaitrose in May. New customer listings have been secured with Budgens and plansare in place for new launches to new customers in the Autumn. Capital investmenton the new frying line will increase capacity and efficiency at the end of theyear. With the restructuring of the senior management team now virtuallycomplete, the business has decided to integrate the Seriously Scrumptiouscommercial and operation functions into the spare capacity at the HaydensBakeries site. As a consequence the Glastonbury site will close during thesummer, with the company seeking to re-assign the lease. Whilst the foodservice market remains slow, reflecting the downturn in consumerspending, Five Star Fish's commitment to product development and excellentcustomer service puts the business in a strong position to increase marketshare. Revenues for the first six months of the year are 13 per cent. up on thesame period last year, which were the highest ever achieved, with a positivetrend into higher added value product ranges and an increasingly broadercustomer base. The Board believe that the underlying performance of its two principal businessunits, Haydens Bakeries and Five Star Fish, is strong and both are performingwell in their respective market places. (* Note: This statement does not constitute a profit forecast nor should it beinterpreted to mean that future earnings per RGFC Share following the Offerbecoming or being declared unconditional in all respects will necessarily matchor exceed historical earnings per RGFC Share.) NBF The following is extracted from the Chairman's statement which forms part of theaudited preliminary results for the 53 week period ended 3 April 2005 asannounced today: "It gives me great pleasure to present the group's first set of full yearresults for the 53 week period ended 3 April 2005. We have had a busy year and, as I reported in the interim statement, much hasbeen achieved. The integration of the three companies purchased at the time of the flotation into Napier Brown & Company ("NBC") was completed at the end of last year andtherefore these results include a full year of trading as one company. Thebenefits of the integration are continuing to accrue as the businesses work moreclosely together selling a broader range of products across a larger customerbase. This was followed by the acquisition of James Budgett Sugars Limited ("JBS") on7 July 2004 for £17.4 million. JBS has been a supplier of sugar in the UK since1857 and its addition to the group expands our sugar operations. At the time ofthe interim report I reported that we had planned to integrate JBS into NBCimmediately but this plan was delayed by the decision of the Office of FairTrading to refer the merger to the Competition Commission. I am pleased toreport that, in March 2005, the Competition Commission allowed us to continuewith our acquisition of JBS. Following the announcement, we have within a veryshort space of time, closed all of JBS's operations and integrated them into theIngredients division of NBC. As previously announced, the delay in integratingJBS has resulted in additional administrative costs of £0.6 million in the yearunder review. On 2 September 2004, the Company acquired the trade and certain assets ofRenshaw Scott Limited ("Renshaw"), which has two manufacturing sites, Liverpooland Carluke. At the Liverpool site the company manufactures icings and marzipanfor the baking industry. These operations were very similar to those performedat our Runcorn production site and on 30 September 2004 we announced that themajority of the Runcorn site would be closed, leaving only nut production in adedicated plant, while all manufacturing of icings and marzipan would betransferred to the Liverpool site. The transfer of the Runcorn business was inaccordance with the Board's action plan and all production has now beentransferred to the Liverpool site. The freehold manufacturing units at Runcorn,which previously housed those activities that have now been moved to theLiverpool site, is currently being actively marketed and a number of partieshave shown interest. The Board have received an offer of £2.2 million for theseunits. As a result of bringing together the two businesses at the Liverpool sitethe Board expects significant production efficiencies to emerge over the coming12-18 months. The Carluke site manufactures baking chocolate and retail jams and remains astandalone production unit. Greater focus has been given to the site since ouracquisition and I look forward to reporting increased levels of business fromthis site together with the launch of new product ranges in my next statement. Following the acquisition of Renshaw we have formed two divisions within NBC,the Ingredients and Renshaw divisions, both of which work closely together. Thecreation of two divisions is for operational purposes only. We continue to haveone business activity being the supply of sugar related products to the foodindustry. I am delighted to propose a second interim dividend of 2 pence per share whichwill be payable on 31 August 2005, to those shareholders on the register on 5August 2005. This will bring the total dividend payable for the year to 3 penceper share which is in line with our stated policy (based on the Company'snormalised profit) at the time the Company was admitted to trading on AIM. Trading Results The trading results for the 53 week period ended 3 April 2005 were in line withmanagement expectations showing a profit before exceptional items and taxationof £4.8 million (2004: £1.2 million). Exceptional items in the period, whichrelated to costs of reorganising the business and closure of an acquiredbusiness, amounted to £1.7 million (2004: £0.4 million). Operating profit before exceptional items, the additional JBS costs andamortisation of goodwill for the 53 week period ended 3 April 2005 was £10.6million (2004: £1.9 million) as follows: 2005 2004 £'million £'million Operating profit 5.9 1.1Amortisation of goodwill 2.4 0.4Exceptional items 1.7 0.4JBS additional costs 0.6 - 10.6 1.9 The comparative figures are for the period from 7 July 2003 and only includeNBC's trading results for the period from 18 December 2003. The results for the53 week period ended 3 April 2005 show a full year of NBC's trading togetherwith two significant acquisitions. Consequently, the group has changedsignificantly in the last year and as such the Directors no longer consider itappropriate to include a pro forma profit and loss account. The basic earnings per share for the year under review rose from 4.56 pence to4.78 pence. Before taking into account amortisation of goodwill, the basicearnings per share was 13.74 pence (2004: 9.47 pence) and before goodwillamortisation and exceptional items basic earnings per share was 20.21 pence(2004: 13.91 pence). The gearing of the group at the year end was 168 per cent. This has continued ata high level in part due to the additional costs associated with the CompetitionCommission Inquiry and as stated in previous reports the Board had not expectedany significant change in the levels of gearing by the year end. In the period under review the business has generated an operating cash flow(before financing costs) of £8 million. The group continues to be cashgenerative and this along with further facilities available will enable thegroup to manage its debt and reduce gearing levels in the future. Interest cover for the 53 week period ended 3 April 2005 was 2.9 times operatingprofit before amortisation of goodwill (2004: 4.8 times). Hedging Following a review of the previous hedging arrangements the company has takensteps to hedge its interest rate exposure on borrowings. During the period thecompany entered into two interest rate swaps, which cover £36 million of thegroups borrowing. Staff I started my statement by saying it has been an exceptionally busy time for thegroup and how much has been achieved in the last year. It is a credit to ourstaff that so much has been achieved in such a short period and I would like tothank them for their efforts over the year. Outlook Current trading is in line with management expectations. The group now has a 'clear run' ahead of it. The integration of all theacquisitions has been completed and a structure is now in place to enable theboard to operate the group more efficiently. Consequently, the Board believesthat we can now more readily take advantage of the production synergies and thecross selling opportunities offered by the enlarged group. The Company announced on 27 June 2005 that the European Commission has announcedits proposals for the reform of the EU sugar regime. In summary, the EUCommission proposes to reduce EU sugar production over a four year period,commencing in July 2006. Consequently, it is expected that EU prices willeventually be 39 per cent. lower than current pricing levels, which would bringthem more into line with world market levels. As a result of the changes, the Board expects that certain EU producers andrefiners will cease to trade, while others have acknowledged that their profitmargins will be reduced. Furthermore, these changes are expected to increase theamount of imported sugars from the developing world to compensate for theproposed reduction in EU sugar production. The Company welcomes these proposed changes and the Board believes they willstrengthen its position in the sugar market, particularly as the Company is nota sugar refiner and sources its sugars from a number of producers. Earlier today, The Real Good Food Company plc ("RGFC") announced the terms of anall share recommended offer for the Company. As you will have read in theCompany's AIM prospectus and my previous statements it was always the intentionof the Company to seek to broaden its base into valued added areas within thefood industry. This offer, given the trading activities of RGFC, will allow usto follow our stated strategy and enable shareholders to hold shares in abroader based food group. If our shareholders decide to accept the offer, as I and my family interestshave undertaken to do, I look forward to working closely with the managementteam of RGFC. Shareholders will note that under the terms of the offer, Christopher Thomas andI will remain actively involved at board level to oversee the integration of thetwo businesses and the development of the trading activities of the enlargedgroup." 9. Further terms of the Offer Due to the size of the Acquisition of NBF, RGFC will require the approval ofRGFC Shareholders, which will be sought at an extraordinary general meeting ofRGFC to be held on or about 23 days after the Prospectus is posted. The RGFCDirectors whose aggregate holdings of Ordinary Shares amount to 17.74 per cent.of RGFC's existing ordinary share capital, have each irrevocably undertaken tovote in favour of each of the EGM resolutions. The New RGFC Shares will be issued credited as fully paid and free from allliens, equities, charges, encumbrances and other interests. The New RGFC Shareswill be identical to and rank pari passu in all respects with the existingissued RGFC Shares, including the right to receive and retain all dividends andother distributions declared, made or paid thereafter. The Offer will also be subject to the conditions and further terms set out inAppendix I to this announcement and the further terms and conditions to be setout in the Offer Document and Form of Acceptance. 10. Directors Upon the Offer becoming or being declared unconditional in all respects, PatrickRidgwell, will join the Board as non-executive deputy Chairman and ChristopherThomas will join as a non-executive director. Biographies of the Directors andProposed Directors are set out below: Pieter Willem Totte (Non-executive Chairman), aged 54, has considerableknowledge of the food sector and has acted as a corporate finance adviser in alarge number of transactions within the food industry over the last 20 years andmore recently has been retained as an advisor to various companies operating inthe food sector including acting on the flotation of Glisten Plc and on variousacquisitions for Finsbury Food Group Plc. Patrick George Ridgwell (Non-executive Chairman of NBF and proposedNon-executive Deputy Chairman of the Company), aged 59, has extensive experienceof the sugar industry and other food sectors, having acquired and developed anumber of food businesses during his career. He joined Napier Brown & Company in1964, becoming a director in 1969 and managing director in 1972, following itsacquisition by his family interests in 1970. He is chairman of Napier BrownHoldings which is controlled by his family interests. John Frederick Gibson (Chief Executive), aged 53, has spent his entire workinglife in the food industry. He has been employed in both sales and operationalroles for a number of the UK's leading food producers including GrandMetropolitan, Unigate Plc (renamed Uniq Plc) and Muller UK Limited. Since 1998he has worked as chief executive officer or chief operating officer for a numberof smaller unquoted and publicly quoted companies including Elizabeth the ChefLimited and S Daniels Plc, several of which have been in turnaround situations.He has also worked with several companies which have been engaged in acquisitiveexpansion programmes. Lee Mark Camfield (Finance Director), aged 37, qualified as a managementaccountant in 1991. He has held a number of financial appointments with foodmanufacturing companies including Coca-Cola & Schweppes Beverages Limited, TheCheese Company Limited, H.J. Heinz Limited and more recently Golden West FoodsLimited. Positions held have included group financial controller, financecontroller, and business planning and development manager. Peter Cecil Salter (Non-executive Director), aged 57, was formerly chiefexecutive partner at Horwath Clark Whitehill, Chartered Accountants. Prior tothis he was a tax specialist at the firm. Following this he has spent six yearsin international corporate consultancy advising on mergers and acquisitions. Hehas wide experience of working with financial institutions and companies andheads the Company's Audit and Remuneration Committees. Richard Gradowski-Smith (Non-executive Director), aged 39, has gained a wealthof experience at a senior management level within the hospitality industry. Hehas been involved in brands such as TGI Fridays, Pret a Manger as well assuccessfully establishing the Seattle Coffee Company which was acquired as aresult by Starbucks Coffee. Richard is currently an executive director ofWelcome Break. James Campbell Mitchell (Non-executive Director), aged 56, was formerly managingdirector of Eurofoods and Nicholas & Harris Limited (the former holding companyof Eurofoods). He has over 30 years of experience in the food sector duringwhich time he has established trading links with many of the major retailers. Hehas a strong management background with companies who specialise in themanufacture of high quality cakes, prestige bakery goods and allied products andis recognised as one of the leading developers of the quality celebration cakemarket in the UK. Christopher Owen Thomas (Chief Executive of NBF and proposed Non-executiveDirector of the Company), aged 60, qualified as a chartered accountant withHarmood Banner, a predecessor firm of PricewaterhouseCoopers in 1969. In 1973,after working abroad, he joined Breakmate Limited, a vending business, which wasadmitted to the Unlisted Securities Market in 1984. Following a sale of thebusiness he worked as a financial consultant. In 1992 he joined the NBF Group asgroup finance director. For the last thirteen years he has been directlyinvolved with the day-to-day operations of the individual businesses within theNBF Group. 11. NBF Share Option Schemes The Offer extends to any NBF Shares issued or unconditionally allotted and fullypaid (or credited as fully paid) whilst the Offer remains open for acceptance(or, subject to the City Code, by such earlier date as RGFC may decide),including NBF Shares issued pursuant to the exercise of options or rightsgranted under the NBF CSOP, NBF Non-Approved Plan, the NBF SIP and the NBFWarrants or otherwise. All options over NBF Shares issued under the NBFNon-Approved Plan becomes exercisable upon the Offer becoming or being declaredwholly unconditional. If this occurs, persons who hold such options willtherefore be in a position to exercise their options and accept the Offer inrespect of the NBF Shares issued to them. In so far as they are not exercisedwithin the compulsory acquisition period pursuant to sections 428 to 430 of theAct (in respect of all options), such options will lapse. It is proposed thatRGFC will make appropriate proposals to the relevant participants in the NBFCSOP, NBF Non-Approved Plan, NBF SIP and NBF Warrants to roll over or exchangetheir options and warrants over NBF Shares for equivalent options and warrantsover RGFC Shares the terms of which new options and warrants will be set out inthe Prospectus. 12. Inducement fee At the start of RGFC's negotiations with NBF regarding a possible offer forNBF, RGFC agreed to pay NBF an inducement fee of £200,000 in the event of theproposed offer lapsing or being withdrawn or not being financed, made ordeclared unconditional by a specified date, or if the RGFC Board did notrecommend RGFC Shareholders to vote in favour of the proposed offer. The dateoriginally specified has now passed and although it has not formally waived itsrights, NBF has not sought to recover payment and it is expected that theinducement fee will not be payable if the Offer (as referred to in thisannouncement) is declared unconditional in all respects. 13. Loan Note Arrangements NB. Ingredients Limited, which is ultimately controlled by interests of theRidgwell family and of which Patrick Ridgwell and Anthony Ridgwell are bothdirectors, holds £9.3 million of NBF loan notes, which were due to have beenredeemed by NBF as to £6.5 million on 31 December 2005 and £2.8 million on 31December 2006 ("Loan Notes"). RGFC has agreed to take an assignment of both LoanNotes and to pay to NB. Ingredients the full amount of the Loan Notes plusinterest as provided therein under the terms of an assignment agreement to beentered into between NB. Ingredients and RGFC (the "Loan Note Assignment").Under the terms of the Loan Note Assignment £6.5 million will be paid to NB.Ingredients as soon as practicable following the Offer becoming or beingdeclared unconditional in all respects and the balance together with interest intranches of at least £250,000 out of the proceeds of any equity fundraising orfrom the proceeds of exercise of options or warrants under the NBF Share OptionSchemes or on 31 December, 2006, if earlier. As the redemption of the December 2005 loan notes will be, and the repayment ofthe December 2006 loan notes may be, in advance of the scheduled redemptiondates and the loan notes are held by NB. Ingredients which will be given specialrights over RGFC, these arrangements are deemed to be a special arrangementunder the City Code. John East & Partners Limited has advised the NBFIndependent Directors that the terms of the early redemption of the December2005 and 2006 loan notes are fair and reasonable in so far as other NBFShareholders are concerned. In providing its advice to the NBF IndependentDirectors, John East & Partners Limited has taken account of their commercialassessments. 14. Compulsory acquisition and cancellation of admission NBF Shareholders should note that if RGFC receives acceptances under the Offerin respect of, and/or otherwise acquires 90 per cent. or more of, the NBF Sharesto which the offer relates, RGFC intends to exercise its rights under sections428 to 430F of the Act to compulsorily acquire the remaining NBF Shares. NBF Shareholders should also note that RGFC intends to procure that NBF appliesto AIM for the cancellation of the admission of NBF Shares to trading on AIM notless than 15 business days following the date on which the Offer becomes or isdeclared unconditional in all respects. NBF Shareholders should note thatcancellation of such admission would significantly reduce the liquidity andmarketability of any NBF Shares in respects of which acceptances of the Offerare not validly made. RGFC also intends to procure the re-registration of NBF asa private company under the relevant provisions of the Act. 15. Overseas Shareholders The availability of the Offer to Overseas Shareholders may be affected by thelaws of the relevant jurisdictions. Overseas Shareholders should informthemselves about and observe any applicable requirements in relation to theOffer. The Offer is not being, and will not be, made, directly or indirectly, in orinto, or by use of the mails of, or by any means or instrumentality (including,without limitation, facsimile transmission, telex, telephone or e-mail) ofinterstate or foreign commerce of, or by any facilities of a national securitiesexchange of, the United States, Canada, Australia, Republic of Ireland or Japanand cannot be accepted by any such use, means, instrumentality or facility orfrom within the United States, Canada, Australia, Republic of Ireland or Japan.Accordingly, copies of this document and the Form of Acceptance and any otherdocuments related to the Offer are not being, and must not be, mailed orotherwise distributed or sent in or into the United States, Canada, Australia,Republic of Ireland or Japan. 16. City Code The Offer gives rise to certain considerations under the City Code. Pursuant to Rule 9 of the City Code, any person who acquires shares, which, whentaken together with shares already held by him or shares held or acquired bypersons acting in concert with him, carry 30 per cent, or more of the votingrights of a company subject to the City Code, is normally required to make ageneral offer to all shareholders in that company in cash to acquire theremaining shares in the company not already held by them at the highest pricepaid for any shares in that company in the previous 12 months by the personrequired to make the offer or any person acting in concert with him. Where any person or persons acting in concert already hold more than 30 percent., but not more than 50 per cent., of the voting rights of such a company, ageneral offer will be required if any further shares are acquired. Both Patrick Ridgwell and Anthony Ridgwell are directors of NB. Ingredients andare therefore deemed to be acting in concert with NB. Ingredients. Followingcompletion of the Offer, NB. Ingredients will hold a maximum of 34.5 per centand Patrick Ridgwell will hold a maximum of 0.3 per cent of the issued votingshare capital of the Company. The concert party will accordingly hold in total amaximum of 34.8 per cent. of the Enlarged Issued Share Capital and therefore anyfurther increase in that aggregate shareholding will be subject to theprovisions of Rule 9. The Panel has agreed however to waive the obligation to make a general offerthat would otherwise arise on completion of the Offer, subject to the approvalof the Shareholders. Accordingly, a resolution is being proposed at theExtraordinary General Meeting of RGFC and will be taken on a poll. To bepassed, the resolution will require the approval of a simple majority of votescast on that poll. 17. Recommendation The NBF Independent Directors, who have been so advised by John East & PartnersLimited, consider the terms of the Offer to be fair and reasonable. Inproviding advice to the NBF Independent Directors, John East & Partners Limitedhas taken account of the NBF Independent Directors' commercial assessments.Accordingly, the NBF Independent Directors will be unanimously recommending thatNBF Shareholders accept the Offer as they have irrevocably undertaken to do soin respect of their own aggregate beneficial interest in NBF (comprising, inaggregate, 209,092 NBF Shares and representing approximately 0.74 per cent. ofthe existing issued ordinary share capital of NBF.) The RGFC Directors, who have been so advised by Numis Securities Limited,believe that both the terms of the Offer and the waiver of the Rule 9 obligationare fair and reasonable and in the best interests of the Company and theShareholders. Accordingly, the RGFC Directors will be unanimously recommendingthat shareholders vote in favour of the Offer and in favour of the waiver of theRule 9 obligation as they have irrevocably undertaken to do in respect of theiraggregate shareholdings of 2,500,000 Existing Ordinary Shares, representingapproximately 17.74 per cent. of the Existing Ordinary Shares. 18. Disclosure of interests in NBF Other than pursuant to the undertakings referred to in paragraph 4 of thisannouncement, neither RGFC nor, so far as RGFC is aware, any party acting inconcert with RGFC for the purposes of the City Code, owns or controls, or holdsany option over or has entered into any derivative referenced to, securities ofNBF which remain outstanding on 26 July 2005, being the last dealing day priorto the announcement of the Offer. 19. General The Offer will be open for at least 21 days from the date of the Offer Document.It is expected that the Offer Document will be despatched to NBF Shareholdersshortly. This announcement is not intended to and does not constitute an offer or aninvitation to purchase any securities. The conditions and principal furtherterms of the Offer are set out in Appendix I to this announcement. The Offerwill be subject to the further terms and conditions set out in the OfferDocument and the Form of Acceptance. The definitions of terms used in this announcement are contained in Appendix IIIto this announcement. Andrew DawberNick WestlakeNumis Securities Limited Tel: 020 7776 1500(Financial Adviser to RGFC) Simon ClementsDavid WorlidgeJohn East & Partners Limited Tel: 020 7628 2200(Financial Adviser to NBF) Emma KaneDuncan McCormickRedleaf Communications LtdTel: 020 7955 1410(PR Adviser to RGFC) Numis Securities Limited, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting exclusively for RGFC andno one else in connection with the Offer and will not be responsible to anyoneother than RGFC for providing the protections afforded to clients of NumisSecurities Limited nor for providing advice in relation to the Offer or inrelation to the contents of this announcement or any transaction or arrangementreferred to herein. John East & Partners Limited, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting exclusively for NBF andno one else in connection with the Offer and will not be responsible to anyoneother than NBF for providing the protections afforded to clients of John East &Partners Limited nor for providing advice in relation to the Offer or inrelation to the contents of this announcement or any transaction or arrangementreferred to herein. The Offer will not be made, directly or indirectly, and this announcement shouldnot be sent, in or into or from the United States, Canada, Australia, Republicof Ireland or Japan or by use of the mails or by any means or instrumentality(including, without limitation, telephonically or electronically) of interstateor foreign commerce of, or any facilities of a national securities exchange of,any of these jurisdictions and doing so may render invalid any purportedacceptance of the Offer. Accordingly, copies of this announcement and any otherdocument relating to the Offer are not being, and must not be, mailed orotherwise distributed or sent in or into the United States, Canada, Australia,Republic of Ireland or Japan. Any person (including, without limitation,custodians, nominees and trustees) who may have contractual or legalobligations, or may otherwise intend, to forward this announcement to anyjurisdiction outside the United Kingdom should read the relevant provisions ofthe Offer Document before taking any action. The availability of the Offer to persons not resident in the United Kingdom maybe affected by the laws of the relevant jurisdictions in which they are located.Persons who are not resident in the United Kingdom should inform themselvesabout and observe any applicable requirements. This announcement is not intended to and does not constitute, or form part of,an offer or any solicitation of an offer or an invitation to purchase anysecurities. The Offer will be subject to the City Code. Under the rules of the City Code,there are certain dealing disclosure requirements which apply in respect ofdealings in relevant securities during an offer period. An offer period wasdeemed to have commenced by virtue of the announcement on 8 March 2005 that NBFhad received a proposal regarding a possible offer for NBF. As a result, anyperson who, alone or acting together with any other person(s) pursuant to anagreement or understanding (whether formal or informal) to acquire or controlsecurities of RGFC or NBF, owns or controls, or becomes the owner or controller,directly or indirectly of one per cent. or more of any class of securities ofRGFC or NBF is generally required under the provisions of Rule 8 of the CityCode to notify a Regulatory Information Service and the Panel of every dealingin such securities until such time as the offer period ends for the purposes ofthe City Code. If required, any disclosures should be made on an appropriateform by no later than 12 noon London time on the business day following the dateof the dealing transaction. These disclosures should be sent to a RegulatoryInformation Service with a copy sent (by fax or email) to the Panel (fax number+44 (0)20 7236 7013, email: monitoring@disclosure.org.uk). This announcement contains certain statements that are or may beforward-looking. These statements typically contain words such as "intends", "expects", "anticipates", "estimates" and words of similar import. By theirnature, forward-looking statements involve risk and uncertainty because theyrelate to events and depend on circumstances that will occur in the future.There are a number of factors that could cause actual results and developmentsto differ materially from those expressed or implied by such forward-lookingstatements. These factors include, but are not limited to, factors identifiedelsewhere in this announcement as well as the following possibilities: futurerevenues are lower than expected; costs of difficulties relating to theintegration of the businesses of RGFC and NBF, or of other future acquisitions,are greater than expected; expected cost savings from the transaction or fromother future acquisitions are not fully realised or not realised within theexpected time frame; competitive pressures in the industry increase; generaleconomic conditions or conditions affecting the relevant industries, whetherinternationally or in the places where RGFC and NBF do business, are lessfavourable than expected; and/or conditions in the securities market are lessfavourable than expected. The financial information set out in this announcement relating to RGFC does notconstitute statutory accounts within the meaning of section 262 of the Order.Horwath Clark Whitehill LLP, Chartered Accountants, have given an unqualifiedaudit report on the statutory accounts of RGFC for the period from incorporationon 13 February 2003 until 31 December 2004. Statutory accounts of the RGFCGroup for the financial period ended 31 December 2004, have been delivered tothe Registrar of Companies in England and Wales.