30th Jan 2007 07:02
Finsbury Food Group PLC30 January 2007 NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE IN THE UNITED STATES, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR AUSTRALIA Finsbury Food Group plc Proposed Acquisition of Lightbody Group Limited for £37.5m Proposed placing of 12.5 million new Ordinary Shares of 1 pence each at 85 penceper share to raise approximately £10 million (after expenses) for the Company in connection with the proposed acquisition Finsbury Food Group plc (AIM: FIF) today announces that it has agreed, subjectto certain conditions including shareholder approval at an extraordinary generalmeeting to be held at 9.30 a.m. on 22 February 2007, to acquire the whole of theissued share capital of Lightbody Group Limited for a total maximumconsideration of £37.5 million. The key details are: The Lightbody Group operates from two bespoke bakeries in Hamilton and a depotand European sales office in Rennes, France. The Lightbody Group is focused onthe celebration cake market, with a broad range of seasonal, novelty andlicensed character cakes. Their current range features products made underlicence from Disney and Thorntons, amongst others. The Lightbody Group alsomanufactures a range of chocolate enrobed cakes, cereal snacks and bite-sizedcakes for many of the large retail multiples in the UK. Finsbury Food Group is one of the UK's leading manufacturers of premium retailerbranded cakes and breads operating from sites across the UK. The Acquisition is expected to deliver a number of key benefits: it will transform the Group into the UK's leading premium cake business - the Enlarged Group will have sector-leading positions in premium retailer branded cakes and the celebration cake market segment, as well as a growing presence in chocolate enrobed cakes, cereal snacks and bite-sized cakes. This position will be supported by the Enlarged Group's portfolio of brands and licences. it diversifies the Enlarged Group's product range and offers opportunities to diversify the customer base. the Directors and the Proposed Directors expect that the Enlarged Group will have a platform to expand its share of the European market in a controlled fashion and will be a significant player in the UK market. the Directors and the Proposed Directors expect that the Acquisition will significantly enhance earnings in the first full financial year following Completion. Upon Completion, it is proposed that Martin Lightbody, the Managing Director ofLightbody, and Crawford Currie, the Finance Director of Lightbody, will join theboard of directors of the Enlarged Group as executive directors. Finsbury expects to raise (conditional on, amongst other things, theAcquisition) approximately £10 million after expenses in a placing of 12.5million new Ordinary Shares at a price of 85p per Ordinary Share in connectionwith the Acquisition. Finsbury will apply for the Existing Ordinary Shares to be re-admitted, and forthe New Ordinary Shares to be admitted, to trading on AIM and it is expectedthis will take place on 23 February 2007. Panmure Gordon is the broker, nominated adviser and sole bookrunner for theplacing. Dave Brooks, Chief Executive of Finsbury, commented, "The proposed acquisition of Lightbody will help create the UK's leading premiumcake business. With its market leading position in celebration cakes and strongmanagement team, it fits perfectly within our strategy to be 'The Best at WhatWe Do'. The opportunities for the new Group are excellent, and with theacquisition we will have a scale where we can drive our premium agenda with allof our major customers. I look forward to working with Martin and the Lightbodyteam over the coming months and years." Martin Lightbody, Managing Director of Lightbody, added: "One hundred years ago, John Lightbody opened his first bakery in Hamilton. In1995, I took the decision to sell off the Lightbody Group's retail shops andfocus on supplying multiple grocers with celebration cakes. The proposedacquisition of Lightbody by Finsbury marks another major milestone in thehistory of our company. Whilst it will be business as usual at Lightbody, weare attracted by the significant benefits that we believe will be delivered aspart of the Enlarged Group. We have watched the strong growth and performanceof Finsbury and believe that we will make a perfect partnership given thealignment of our strategic vision, and that together we will be able to drivesales of UK multiple grocers' premium brands and deliver even greater growth forour key licensing partners." For further information, please contact: Finsbury Food Group plc Redleaf Communications Panmure Gordon & Cowww.finsburyfoods.co.uk PR to Finsbury Tel.+ 44 (0) 29 2062 3351 Tel. + 44 (0)20 782 20200 Tel. +44 (0)20 7459 3600 Dave Brooks, Emma Kane Mark LanderChief Executive Lisa Morgan, Sanna Lehtinen Katherine RoeGroup Finance Director • Publication photographs are available from Redleaf Communications or www.redleafpr.com Expected Timetable of Principal Events Publication date of the Admission Document 30 January 2007Latest time and date for receipt of Forms of Proxy 9.30 a.m. on 20 February 2007Extraordinary General Meeting 9.30 a.m. on 22 February 2007Completion of the Acquisition 23 February 2007Admission and dealings in the Existing Ordinary Shares to recommence and 23 February 2007dealings in the New Ordinary Shares to commenceCREST stock accounts credited in respect of Consideration Shares and 23 February 2007Placing Shares (as applicable)Certificates despatched in respect of Consideration Shares and Placing 2 March 2007Shares (as applicable) Admission Statistics Price per Ordinary Share on 29 January 2007 95.5 pencePlacing Price 85 penceNumber of Existing Ordinary Shares 26,265,168Number of Consideration Shares 10,000,000Number of Placing Shares (excluding Lord Saatchi's Placing Shares) 12,500,000Enlarged Share Capital 48,765,168Percentage of Enlarged Share Capital represented by Existing Ordinary 53.9%SharesPercentage of Enlarged Share Capital represented by the Consideration 20.5%SharesPercentage of Enlarged Share Capital represented by Placing Shares 25.6%(excluding Lord Saatchi's Placing Shares) Introduction It was announced today that Finsbury has agreed, subject to certain conditionsincluding shareholder approval at an extraordinary general meeting to be held at9.30 a.m. on 22 February 2007, to acquire the whole of the issued share capitalof Lightbody Group Limited. The consideration for the Acquisition is £37.5million, to be satisfied, in each case at Completion, by the allotment of 10million new Ordinary Shares (credited as fully paid) and the payment of£18,375,150 in cash (subject to adjustment dependent on the Lightbody Group'snet debt and net working capital levels at Completion) and the issue ofguaranteed loan notes of the Company having a nominal value of £924,850,together with the payment of up to £9.7 million in cash and/or loan notes (whichwill not be guaranteed) on 31 July 2007. A summary of the principal terms of theAcquisition is set out in Part VI of the Admission Document sent to Shareholderstoday. The Company is also proposing, conditional, inter alia, on the Acquisition, toraise £10 million after expenses by way of the Placing which will be used tofund part of the initial cash consideration for the Acquisition. The remainderof the cash consideration will be funded by term loans, overdraft, commercialmortgage and asset loan facilities to be made available to the Company by HSBCBank plc, HSBC Asset Finance (UK) Limited and HSBC Equipment Finance (UK)Limited, particulars of which are set out in the Admission Document sent toShareholders today. In view of its size, the Acquisition constitutes a reverse takeover for Finsburyunder the AIM Rules and therefore requires the consent of the Shareholders, suchconsent to be sought pursuant to Resolution 1 at the EGM. At the EGM, theShareholders will also be asked, inter alia, to grant the necessary authoritiesrequired to complete the Transaction. Finsbury will apply for the ExistingOrdinary Shares to be re-admitted, and for the New Ordinary Shares to beadmitted, to trading on AIM on Completion. Upon Completion, it is proposed that Martin Lightbody, the Managing Director ofLightbody, and Crawford Currie, the Finance Director of Lightbody, will join theboard of directors of the Company as executive directors. Martin will remain asManaging Director of the Lightbody business until 1 May 2007, at which point hewill take on the role of Strategic Development Director for the Enlarged Group.Crawford will retain the position of Finance Director of Lightbody. The purpose of the Admission Document is, inter alia, to provide Shareholderswith details of the Transaction and to explain why the Board recommends thatShareholders vote in favour of all the Resolutions to be proposed at the EGM. Anotice convening the EGM is set out at the end of the Admission Document. Background to and reasons for the Acquisition The Lightbody Group is a family-run business, which trades as LightbodyCelebration Cakes. One of its main focuses is in the growing market ofcelebration cakes where it manufactures its own-brand cakes for the major retailmultiples in the UK, in addition to licensed products for Thorntons and Disney,among others. The Lightbody Group trades from bespoke premises in Hamilton and adepot and European sales office in Rennes, France. History of the Lightbody Group John Lightbody opened the first Lightbody bakery in Hamilton over 100 years ago.After the First World War, he was joined by his two sons who expanded thebusiness. Their nephew, Robert Lightbody, joined the business in 1956 andexpanded the business to 26 branches. In 1987 he was joined by his son, MartinLightbody, the current Managing Director, who took the decision in December 1995to relocate Lightbody's manufacturing operation to a bespoke bakery site inHamilton. The facility in Hamilton has achieved the Higher Level ApprovalCertificate of Inspection for the European Food Safety Inspectorate Service.Significant investment in plant technology and equipment, together with theexpansion of the factory from approximately 25,000 sq. ft. to around 90,000 sq.ft. has resulted in the employment of approximately 1,000 people. After morethan a century as a high street baker, the Lightbody Group sold the retailelement of the business and turned its confectionery and baking skills to fillthe needs of the growing celebration cakes niche market place, developing a widerange of products. The Lightbody Group has also invested in a training school,which includes a test bakery. In 2004, Lightbody entered into a lease withMartin Lightbody for the adjacent site to the bespoke bakery, which has acapacity of approximately 130,000 sq. ft. In the same year, Lightbody investedin one of the most modern cereal, confectionery and cake bar lines in Europe tofurther diversify the product range. This new facility also manufacturesproducts for other brands, in addition to supplying major UK retailers. Group structure Lightbody Group Limited is a non-trading holding company incorporated inScotland with registered number SC239942. On 6 March 2003, in order to effect ashareholder restructuring, Lightbody Group Limited acquired Lightbody HoldingsLimited for a consideration of £20,426,396. Lightbody of Hamilton Limited is themain trading subsidiary with Lightbody Celebration Cakes Limited andLightbody-Stretz Limited being dormant. Lightbody-Stretz Limited is 50 per cent.owned by Lightbody Holdings Limited, with Philippe Stretz owning the remaining50 per cent. Product range The Lightbody Group is focused on the celebration cake market, with a broadrange of seasonal, novelty and licensed character cakes. Their current rangefeatures products made under licence from Disney and Thorntons, amongst others.The Lightbody Group also manufactures a range of chocolate enrobed cakes, cerealsnacks and bite-sized cakes for many of the large retail multiples in the UK. Summary financials for the Lightbody Group Fourteen months Year ended Year ended Six months ended ended 30 April 30 April 30 April 31 October 2004 2005 2006 2006 £'000 £'000 £'000 £'000 Audited Audited Audited Unaudited Turnover 34,365 38,176 46,239 24,434 Gross margin 11,190 12,783 13,970 8,240 33% 33% 30% 34% Other income 274 215 17 4 Operating expenses (9,545) (9,896) (11,804) (6,001) Earnings before interest depreciation and 1,919 3,102 2,183 2,243amortisation Depreciation (734) (733) (950) (488) Amortisation (912) (781) (782) (390) Grant release 116 234 87 56 Earnings before interest and taxation 389 1,822 538 1,421 Source: Part IV Section B and Section C of the Admission Document. Note: The Lightbody Group gross margin of 30 per cent. for the year to 30 April2006 is calculated on a different basis to that of Finsbury in Part III of theAdmission Document, which indicates 40 per cent. for the year to 30 June 2006.On a like for like accounting basis, the Lightbody Group gross margin would beapproximately 35 per cent. Strategy for the future growth of the Enlarged Group's business The directors of the Enlarged Group intend to drive sales of UK multiplegrocers' premium brands and the celebration cake market and to maximise theEnlarged Group's share of bite-sized cakes in the in-store bakery market. Financial effects of the Acquisition on Finsbury The Directors and the Proposed Directors expect to achieve significant savingsfrom synergies resulting from the Acquisition. The directors of the EnlargedGroup will consider merging the California Cake Company into the Lightbody sitein Hamilton. The California Cake Company is currently based in Coatbridge, whichis close to Hamilton. In total, synergies of approximately £2 million couldresult from the bakery rationalisation programme and associated cost savings.Additionally, the Acquisition will transform the Group into the UK's leadingpremium cake business through the Enlarged Group's access to the LightbodyGroup's production facilities and management. The Enlarged Group will havesector-leading positions in premium retailer branded cakes and the celebrationcake market segment, as well as a growing presence in chocolate enrobed cakes,cereal snacks and bite-sized cakes, aided by the Lightbody Group's portfolio ofbrands and licences. The Acquisition also removes a competitor from the market, diversifies theEnlarged Group's product range and offers opportunities to diversify thecustomer base. The Directors and the Proposed Directors expect that the EnlargedGroup will have a platform to expand its share of the European market in acontrolled fashion and will be a significant player in the UK market. TheDirectors and the Proposed Directors expect that the Acquisition willsignificantly enhance earnings in the first full financial year followingCompletion. The Directors estimate that the gearing of the Enlarged Group as atJune 2007 will be 120 per cent. Principal terms and conditions of the Acquisition Under the terms of the Acquisition Agreement, the Company has conditionallyagreed to buy the entire issued share capital of Lightbody. The consideration isto be satisfied by: (a) an initial payment in cash on Completion of £18,375,150, to be adjusted dependent on the Lightbody Group's net debt and net working capital levels at Completion; (b) the allotment of 10 million new Ordinary Shares (credited as fully paid) on Completion to Martin Lightbody and Jessie Lightbody (two of the Sellers); (c) the allotment of £924,850 in nominal value of guaranteed loan notes of the Company to certain of the Sellers; (d) the payment of deferred consideration of a maximum of £8.7 million payable in cash and/or loan notes (which will not be guaranteed) on 31 July 2007. If the Adjusted EBIT of the Lightbody Group for the 12 months ending 30 April 2007 is less than £4.3 million, the deferred consideration will reduce by £6 per £1 of Adjusted EBIT less than £4.3 million; (e) the payment of additional consideration of up to £1 million payable in cash on 31 July 2007, calculated at £5 per £1 of Adjusted EBIT of the Lightbody Group during the period of 12 months ending on 30 April 2007 above £4.3 million; and (f) the assumption of an expected £8.0 million of the Lightbody Group's liabilities in respect of bank term loan facilities, finance leases, hire purchase contracts and loan notes issued by Lightbody. The Acquisition assumes normal levels of working capital at Completion. Issue of Consideration Shares as part consideration for Lightbody As mentioned above, it has been agreed that part of the consideration for theAcquisition shall be satisfied by the issue by Finsbury to Martin Lightbody andJessie Lightbody (two of the Sellers), credited as fully paid up, of 10 millionnew Ordinary Shares, which will comprise 20.5 per cent. of the Enlarged ShareCapital. Based on the Placing Price, the Consideration Shares are valued at £8.5million. The Consideration Shares will rank in full for all dividends or otherdistributions declared, made or paid on the issued ordinary share capital of theCompany after Admission and will rank pari passu in all other respects with allother Ordinary Shares in issue on Admission (including the Placing Shares). Shareholder approval is being sought for the issue of the Consideration Sharesas set out in the Admission Document sent to Shareholders today. Issue or transfer (as applicable) of Placing Shares Pursuant to the Placing Agreement, Panmure Gordon has agreed to act as theplacing agent of the Company and of Lord Saatchi and to use its reasonableendeavours to procure subscribers or applicants (as the case may be) for thePlacing Shares at the Placing Price and, to the extent that subscribers orapplicants (as the case may be) are not procured for any such shares, tosubscribe or apply itself for such shares. The Placing Shares will rank in fullfor all dividends or other distributions declared, made or paid on the issuedordinary share capital of the Company after Admission and will rank pari passuin all other respects with all other Ordinary Shares in issue on Admission(including the Consideration Shares). Shareholder approval is being sought for the issue of the Placing Shares (withthe exception of Lord Saatchi's Placing Shares, which are already in issue) asset out in the Admission Document sent to Shareholders today. The Placing is conditional on, inter alia, the Placing Agreement becomingunconditional and not having been terminated in accordance with its terms priorto Admission and Admission taking place on or before 23 February 2007 (or suchlater date as the Company and Panmure Gordon may agree, but in any event nolater than 16 March 2007). Further information on the Placing Agreement is setout in the Admission Document sent to Shareholders today. The Placing is intended to raise £10 million for the Company, after expenses. Dealings in the Placing Shares on AIM are expected to commence on 23 February2007. Settlement will be on a delivery versus payment basis against Panmure Gordon'sCREST account 83801 on 23 February 2007. In the case of Placees requesting theirPlacing Shares in certificated form, payment via CHAPS or BACs must be made toPanmure Gordon's account by no later than 23 February 2007. Provided payment hasbeen made, it is expected that certificates in respect of such shares will bedespatched by post not later than 2 March 2007. Pending despatch of definitiveshare certificates or crediting of CREST accounts, Capita Registrars willcertify any instrument of transfer against the register. Proposed Admission to AIM of the Enlarged Share Capital Application will be made to the London Stock Exchange for all of the ExistingOrdinary Shares to be re-admitted and for the New Ordinary Shares to be admittedto trading on AIM. It is expected that Admission will become effective anddealings in the Enlarged Share Capital will commence on 23 February 2007. TheEnlarged Share Capital will have ISIN number GB0009186429. The Articles permitFinsbury to issue Ordinary Shares in uncertificated form and the New OrdinaryShares will be issued pursuant to the Act. Lord Saatchi's Placing Shares arealready in issue. Application will be made by Finsbury's registrars andtransfer agent, Capita Registrars, for the New Ordinary Shares in issue atAdmission to be admitted to CREST. CREST is a voluntary system and shareholdersof the Company who wish to retain certificates will be able to do so. Directors and Proposed Directors of the Enlarged Group It is proposed that the following individuals will join the board of Finsburyfollowing Admission: Martin Wightman Lightbody, Managing Director of Lightbody Martin Lightbody, aged 43, is the current Managing Director of Lightbody. He isthe fourth generation of the Lightbody family to go into the family business. Heobtained a National Diploma in Food Technology at a leading bakery school,Hollings Faculty, where he won the top student award. He continued his studiesat Salford College, obtaining a further diploma on Practical Bakery andMembership of the Royal Institute of Public Health and Hygiene. Martin completedhis qualifications at the world renowned Richemont School in Switzerland. Hethen spent a year working for a number of leading bakeries and confectionersthroughout Europe before joining the family business in 1987. Under hismanagement he guided Lightbody to 'UK Independent Baker of the Year' in 1991.After a strategic review of Lightbody's future prospects, Martin took thedecision, in 1995, to refocus the business from retail bakery to wholesalesupply of celebration cakes to UK retail multiples. As part of this transition,the family retail business was sold and the proceeds were used to finance theconstruction of a state-of-the-art bakery. Using traditional bakery skills,superior innovation and improved customer service, the Lightbody Group hasgained a dominant share of the growing market for celebration and novelty cakes.Martin has managed and developed the business through this period ofunprecedented growth and has successfully led the business into Europe. David Crawford Currie, Finance Director of Lightbody Crawford Currie, aged 46, is the current Finance Director of Lightbody and wasappointed in November 1998. He qualified as a chartered accountant with ToucheRoss & Co in Glasgow and practised in audit for four years before commencing acareer in industry. Over a 12 year period he worked for two listed companies:Cookson Group and Smiths Industries. At Smiths Industries he progressed from theposition of Company Accountant to Director and Chief Accountant for fourEuropean subsidiaries with financial responsibility for group turnover ofapproximately £35 million. Before joining Lightbody, Crawford worked on severalacquisition projects from initial appraisal, through the acquisition process toultimate integration within the plc structure. The current directors of Finsbury, who will continue as directors on the boardof Finsbury following Completion, are as follows: Lord Maurice Saatchi, Non-executive Chairman Lord Saatchi, aged 60, was appointed Chairman of the Company in 1994. He foundedSaatchi & Saatchi in 1970 and is now a director in M&C Saatchi plc. He is aGovernor of the London School of Economics and a Director of the Centre forPolicy Studies. He was elevated to the peerage in 1996 and served as ShadowMinister for the Treasury and the Cabinet Office in the House of Lords between1999 and 2003. From 2003 to 2005 he was Co-Chairman of the Conservative Party. David Courtnall Marshall, Non-executive Deputy Chairman David Marshall, aged 62, was appointed to the Board in 1979 and was electedDeputy Chairman in 1994. He is also Chairman of a number of public listedcompanies, including London Finance & Investment Group P.L.C., which is asubstantial shareholder of Finsbury. In recent years he has been taking aleading role in the reorganisation and development of a number of medium-sizedlisted companies in the UK and overseas. He is a member of the remuneration andaudit committees of the Company. David Gary Brooks, Chief Executive Dave Brooks, aged 39, was appointed Chief Executive on 1 November 2002. He is achartered management accountant. Prior to his appointment as Chief Executive, hewas the Managing Director of Memory Lane Cakes for approximately three years andthe Commercial Director for approximately the previous two years. He wasinstrumental in the turn around of the Memory Lane Cakes business. Previously heworked with Brake Bros plc, initially as a cost accountant for a single site andsubsequently as divisional finance director. He is a member of the GeneralCouncil of the Biscuit, Cake, Chocolate and Confectionery Association. Since hisappointment as Chief Executive, Dave has led the growth of the Group viaacquisition, and also driven the strategic focus of the Group into the premiumand health sectors to create organic growth. Additionally, he has strengthenedthe management teams at subsidiary level to ensure the Group retains its focusand control. Lisa Margaret Wendy Morgan, Group Finance Director Lisa Morgan, aged 35, was appointed Group Finance Director on 1 October 2006.Prior to this she was Finance Director of Finsbury's subsidiary, Memory LaneCakes Limited. She had been with Memory Lane for nearly six years before herappointment as Group Finance Director and was an integral part of the team whichre-modelled that business during 2004 and 2005. Edward John Beale, Non-executive Director Edward Beale, aged 46, was appointed a director of the Company on 16 August2002. He is a chartered accountant and the Chief Executive of City Group P.L.C.,Finsbury's Company Secretary. He is the Chairman of the QCA's CorporateGovernance Committee and a member of the QCA's Accounting Standards Committee.He sits on the remuneration and audit committees of the Company. Ian Ross Farnsworth, Non-executive Director Ian Farnsworth, aged 68, has been a member of the Board since 1997. He joinedNational Westminster Bank (then Westminster Bank) in 1955 and retired in 1997having held various senior positions, including Chief Executive and DeputyChairman of Coutts & Co. He is Chairman of the remuneration and audit committeesof the Company. Paul John Monk, Non-executive Director Paul Monk, aged 49 was appointed a director of the Company on 9 December 2002.He has extensive experience in the food manufacturing industry. He was the chiefexecutive of Golden Wonder Limited and his other experience includes roles withMarks and Spencer plc and the Mars Corporation plc. He also holds othernon-executive roles within the food industry. Chairman's role Lord Saatchi has been the Chairman of the Finsbury Food Group for almost 5years, during which time he has overseen the Company's transformation into amajor player in the UK cake market. The Transaction takes the Company on to anew stage, and Lord Saatchi believes that this is an appropriate moment to beginto plan for his succession. With that in mind, Lord Saatchi intends to stepdown as Chairman in 12 months' time. On Completion, Martin Lightbody willpurchase 3.7 million Ordinary Shares from Lord Saatchi's existing holding ofapproximately 7.4 million Ordinary Shares and warrants in respect of OrdinaryShares, which together with the Consideration Shares to be issued to MartinLightbody as part consideration for the Acquisition, will result in ashareholding of approximately 28.1 per cent. following Completion. Thisdemonstrates amply his commitment to the Enlarged Group. It is the Directors'belief that Martin's experience will benefit the Enlarged Group. In order to help bring about an orderly transition, Paul Monk, with his wealthof industry experience, will be joining David Marshall as Deputy Chairman of theBoard from Completion. Lord Saatchi will obviously remain closely involved withthe Company over the coming year. Lord Saatchi intends to sell the balance of his existing shareholding in theCompany (amounting to 2,098,774 Ordinary Shares) pursuant to the Placing. Lock-in arrangements Following the Placing, the Directors and the Proposed Directors will together beinterested, in aggregate, in 21,879,326 Ordinary Shares, representing 44.9 percent. of the Enlarged Share Capital. The Directors and Martin Lightbody have agreed, pursuant to the PlacingAgreement, that, save in certain limited circumstances, they will not dispose ofcertain interests in the Company's share capital for a period of one year fromAdmission and the disposal of certain of their interests in the second yearfollowing Admission shall be effected only through the Company's broker and incircumstances so as to maintain an orderly market in the Company's shares. Thoserestrictions only apply to Martin Lightbody in relation to, firstly, theConsideration Shares issued to him as part consideration for the Acquisitionand, secondly, the 3,700,000 Ordinary Shares which will be transferred (underthe Placing Agreement) to him by Lord Saatchi, conditional on Admission, at aprice of 90 pence per Ordinary Share. Notwithstanding the above, MartinLightbody will also be permitted, under such arrangements, to sell such of hisConsideration Shares, during the restricted periods referred to above, as may benecessary in order for him to raise sufficient monies to meet his liability tosatisfy any claims made by the Company against him under the warranties in theAcquisition Agreement, where the value of such claim exceeds £10,000,000. Theselock-in arrangements will also apply to David Marshall in respect of the7,800,000 Existing Ordinary Shares in which he or his connected persons areindirectly interested through the holding of such shares by Lonfin InvestmentsLimited and Strand Nominees Limited, as further referred to in the AdmissionDocument sent to Shareholders today. Jessie Lightbody (one of the Sellers) has similarly agreed, pursuant to alock-in agreement with the Company and Panmure Gordon, (save in certaincircumstances) not to sell any of the Consideration Shares issued to her as partconsideration for the Acquisition during the first year from Admission and thatduring the second year from Admission any such disposals will only be madethrough the Company's broker and in circumstances so as to maintain an orderlymarket in the Company's shares. Extraordinary General Meeting An extraordinary general meeting will be held at the offices of Panmure Gordon &Co. Plc, Moorgate Hall, 155 Moorgate, London EC2M 6XB on 22 February 2007 at9.30 a.m. at which resolutions will be proposed to: (a) approve the Acquisition; (b) appoint Martin Wightman Lightbody as a director of the Company; (c) appoint David Crawford Currie as a director of the Company; (d) authorise the Directors pursuant to section 80 of the Act to allot the Placing Shares (other than Lord Saatchi's Placing Shares, which are already in issue) and the Consideration Shares and otherwise to allot relevant securities up to an aggregate nominal value of £162,550.56; (e) disapply Shareholders' pre-emption rights over Ordinary Shares to allow the allotment of the Placing Shares (other than Lord Saatchi's Placing Shares, which are already in issue) and otherwise to allow the allotment of equity securities up to an aggregate nominal amount of £24,382.58; and (f) amend the Articles of Association so as to increase the maximum number of persons who may be appointed as directors of the Company and to increase the fees that may be paid to the non-executive directors of the Company. Irrevocable undertaking London Finance & Investment Group P.L.C., a company of which David Marshall is adirector and substantial shareholder, has given an irrevocable undertaking toprocure that Lonfin Investments Limited and Strand Nominees Limited vote infavour of the Resolutions to be proposed at the EGM in respect of the 7,800,000Existing Ordinary Shares held by them in aggregate (representing approximately29.70 per cent. of the issued share capital of Finsbury). Recommendation The Board, which has been so advised by Panmure Gordon, considers that theTransaction is in the best interests of Finsbury's Shareholders as a whole. Inproviding this advice, Panmure Gordon has taken into account the Directors'commercial assessment of the Transaction. Accordingly the Board recommends thatShareholders vote in favour of the Resolutions to be proposed at the EGM as theDirectors intend to do so in respect of their own beneficial shareholdings,amounting to 6,178,100 Ordinary Shares, representing approximately 23.52 percent. of the issued share capital of Finsbury. APPENDIX IMPORTANT INFORMATION ON THE PLACING Definitions The following definitions apply throughout this announcement unless otherwisestated or the context otherwise requires: "Acquisition" The proposed acquisition by Finsbury of the entire issued share capital of Lightbody "Acquisition Agreement" The conditional share purchase agreement relating to the Acquisition dated 29 January 2007 between the Sellers and Finsbury, particulars of which are set out in Part VI of the Admission Document "Act" The Companies Act 1985 (as amended) "Adjusted EBIT" The consolidated profit of the Lightbody Group for the 12 month period ending on 30 April 2007 calculated in accordance with the Acquisition Agreement "Admission" The admission of the New Ordinary Shares and the re-admission of the Existing Ordinary Shares to trading on AIM becoming effective in accordance with the AIM Rules "Admission Document" The final form document to be issued by the Company in respect of Admission and complying with Rule 3 of the AIM Rules "AIM" The AIM Market of the London Stock Exchange "AIM Rules" The rules governing the admission to and operation of AIM published by the London Stock Exchange from time to time "Articles" or "Articles of The articles of association of FinsburyAssociation" "Board" or "Directors" The existing directors of the Company "Company" or "Finsbury" Finsbury Food Group plc, a company incorporated in England and Wales with registered number 204368 "Completion" The date on which the Acquisition Agreement becomes unconditional and is completed in accordance with its terms "Consideration Shares" 10 million new Ordinary Shares to be issued by Finsbury to Martin Lightbody and Jessie Lightbody (two of the Sellers), credited as fully paid, on Completion as part of the consideration for the Acquisition "CREST" The electronic share settlement system operated by CRESTCo Limited, which facilitates the transfer of title to shares in uncertificated form "Enlarged Group" The Company and its subsidiary undertakings following Completion "Enlarged Share Capital" The issued share capital of Finsbury immediately following Completion, including the Existing Ordinary Shares and the New Ordinary Shares "Existing Ordinary Shares" The Ordinary Shares in issue as at the date of the Admission Document "Extraordinary General Meeting" The extraordinary general meeting of Finsbury to be held at the offices of Panmureor "EGM" Gordon & Co. Plc, Moorgate Hall, 155 Moorgate, London EC2M 6XB at 9.30 a.m. on 22 February 2007, or any adjournment thereof, notice of which is set out at the end of the Admission Document "FSMA" The Financial Services and Markets Act 2000 (as amended) "Group" The Company and its subsidiaries "Lightbody" Lightbody Group Limited, a company incorporated in Scotland with registered number SC239942 "Lightbody Group" Lightbody and the Lightbody Subsidiaries "Lightbody Subsidiaries" Lightbody Holdings Limited, Lightbody of Hamilton Limited Lightbody-Stretz Limited, Lightbody Europe SARL, Lightbody Celebration Cakes Limited, Lightbody Europe s.r.o., Lightbody Europa, S.L. and Lightbody Polska Spo.z.o.o. "London Stock Exchange" London Stock Exchange plc "Lord Saatchi's Placing Shares" The 2,098,774 Ordinary Shares which have been conditionally placed by Panmure Gordon pursuant to the terms of the Placing Agreement "New Ordinary Shares" The Placing Shares (other than Lord Saatchi's Placing Shares) and the Consideration Shares "Notice of EGM" The notice of EGM which is set out at the end of the Admission Document "Ordinary Shares" Ordinary shares of 1p each in the capital of Finsbury "Panmure Gordon" or "Panmure Panmure Gordon (Broking) LimitedGordon & Co" "Placees" The subscribers for Placing Shares (other than Lord Saatchi's Placing Shares) and applicants for Lord Saatchi's Placing Shares pursuant to the Placing "Placing" The conditional placing by Panmure Gordon of the Placing Shares at the Placing Price on the terms and subject to the conditions set out in the Placing Agreement "Placing Agreement" The conditional agreement dated 30 January 2007 between the Company (1), Panmure Gordon (2) and the Directors and Proposed Directors (3) relating to the Placing, further details of which are contained in paragraph 9.1(b) of Part VIII of the Admission Document "Placing Price" 85 pence per Ordinary Share "Placing Shares" 12,500,000 new Ordinary Shares which have been conditionally placed by Panmure Gordon pursuant to the terms of the Placing Agreement and Lord Saatchi's Placing Shares "Proposed Directors" Martin Wightman Lightbody and David Crawford Currie "Resolutions" The resolutions set out in the Notice of EGM "Sellers" Martin Wightman Lightbody, Jessie Gwendoline Dobson Lightbody, David Crawford Currie, Deirdre Scott, Douglas Robeson, Lesley Ann Gray and Cornelius Stewart "Shareholder" The holders of Existing Ordinary Shares "Transaction" The Acquisition, the Placing and Admission "UK" The United Kingdom of Great Britain and Northern Ireland (1) The Placing Under the Placing Agreement, Panmure Gordon & Co. on behalf of Finsbury and onbehalf of Lord Saatchi, has agreed to act as placing agent of Finsbury and LordSaatchi and to use its reasonable endeavours to procure subscribers orapplicants (as the case may be) for 14,598,774 Placing Shares at the PlacingPrice to raise approximately £12.4 million and, to the extent that subscribersor applicants (as the case may be) are not procured for any such shares, tosubscribe or apply itself for such shares. The percentage of the Enlarged ShareCapital subject to the Placing is 29.9 per cent. Application will be made to the London Stock Exchange for all of the ExistingOrdinary Shares to be re-admitted and for the New Ordinary Shares to be admittedto trading on AIM. It is expected that Admission will become effective anddealings in the Enlarged Share Capital will commence on 23 February 2007 atwhich time it is also expected that the Placing Shares will be enabled forsettlement in CREST. (2) Terms and conditions of the Placing This announcement (which expression includes this appendix) contains importantinformation for Placees (as defined below) in the United Kingdom. Members of thepublic are not eligible to take part in the Placing. This announcement and theterms set out herein are directed only at persons in the United Kingdom selectedby Panmure Gordon who have professional experience in matters relating toinvestments and are "investment professionals" within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order2005 (as amended) (the "Order") (all such persons being referred to as "RelevantPersons"). Any investment or investment activity to which the Admission Documentrelates is only available to and will only be engaged in with (i) in the UnitedKingdom, Relevant Persons, and (ii) in any member state of the European EconomicArea other than the United Kingdom, qualified investors (as defined in Article2.1(e) (i), (ii), (iii), (iv) or (v) of the Directive 2003/71 of 4 November 2003of the European Parliament and of the Council) to whom this document may belawfully communicated. This announcement and appendix do not constitute an offer to sell or issue orsolicitation of an offer to buy or subscribe for New Ordinary Shares and/or LordSaatchi's Placing Shares in any jurisdiction, and any acquisition or applicationfor Ordinary Shares is only be made on the basis of information contained in theAdmission Document. If a Relevant Person chooses to participate in the Placing by making oraccepting an offer to acquire Placing Shares (each such Relevant Person whoseparticipation is accepted by Panmure Gordon in accordance with this appendixbeing hereinafter referred to as a "Placee" and together, as the "Placees") itwill be deemed to have read and understood the Admission Document and thisannouncement in their entirety and to be making or accepting such offer on suchterms and to provide the representations, warranties and acknowledgements,contained in this announcement. The New Ordinary Shares and Lord Saatchi's Placing Shares referred to in thisannouncement have not been and will not be registered under the United StatesSecurities Act of 1933 (as amended) (the "Securities Act") nor under thesecurities legislation of any state of the United States, and may not be offeredor sold, taken up, delivered or transferred (directly or indirectly) and willnot qualify for sale within the United States. There will be no public offer ofthe New Ordinary Shares and/or Lord Saatchi's Placing Shares in the UnitedStates. The New Ordinary Shares and Lord Saatchi's Placing Shares have not beenrecommended, approved or disapproved by any United States federal or statesecurities commission or regulatory authority. Furthermore, the foregoingauthorities have not confirmed the accuracy or determined the adequacy of theAdmission Document or this announcement. Any representation to the contrary is acriminal offence in the United States. The New Ordinary Shares and Lord Saatchi's Placing Shares will not be lodged orregistered with the Australian Securities and Investments Commission underAustralia's Corporations Law and are not being offered for subscription or saleand may not be directly or indirectly offered, sold or delivered in or intoAustralia or for the account or benefit of any person or corporation in (or witha registered address in) Australia. No document in relation to the New Ordinary Shares and/or Lord Saatchi's PlacingShares has been or will be lodged for registration with the Registrar ofCompanies in Canada. All subscribers or applicants (as the case may be) for NewOrdinary Shares and/or Lord Saatchi's Placing Shares must provide addressesoutside Canada for the receipt of certificates for New Ordinary Shares and/orLord Saatchi's Placing Shares. The New Ordinary Shares and Lord Saatchi'sPlacing Shares will not be offered, sold or delivered, directly or indirectly inthe Republic of Ireland. The relevant clearances have not been, and will not be obtained from theMinistry of Finance of Japan and no circular in relation to the New OrdinaryShares and/or Lord Saatchi's Placing Shares has been or will be lodged with orregistered by the Ministry of Finance of Japan. The New Ordinary Shares and LordSaatchi's Placing Shares may not therefore be offered or sold, directly orindirectly, in or into Japan, its territories and possessions and any areassubject to its jurisdiction. The approval of the South African Exchange Control Authorities has not been, andwill not be, obtained in relation to the New Ordinary Shares and Lord Saatchi'sPlacing Shares. The New Ordinary Shares and Lord Saatchi's Placing Shares maynot therefore be offered or sold directly or indirectly in or into South Africa. The Admission Document and this announcement do not constitute an offer to sell,or a solicitation to buy New Ordinary Shares and/or Lord Saatchi's PlacingShares in any jurisdiction in which such offer or solicitation is unlawful. Thedistribution of the Admission Document or this announcement (or copies thereof)and the placing and issue or transfer (as the case may be) of the Placing Sharesin certain jurisdictions may be restricted by law. Persons to whose attentionthis announcement has been drawn are required by Finsbury and Panmure Gordon toinform themselves about and to observe any such restrictions. In particular, the Placing is made on and subject to the following terms andconditions: 1. Panmure Gordon will arrange the Placing as agent for and on behalf of Finsbury and on behalf of Lord Saatchi. Participation will only be available to persons invited to participate by Panmure Gordon. Panmure Gordon will determine in its absolute discretion the extent of each Placee's participation in the Placing, which will not necessarily be the same for each Placee. 2. The price payable per Placing Share shall be the Placing Price. 3. A Placee's commitment to subscribe or apply (as the case may be) for a fixed number of Placing Shares will be agreed with and confirmed to it orally by Panmure Gordon (the "Placing Commitment") and a contract note (a "contract note") will be dispatched as soon as possible thereafter. The oral confirmation to the Placee by Panmure Gordon (the "Oral Confirmation") constitutes an irrevocable, legally binding contractual commitment to Panmure Gordon (as agent for Finsbury) to subscribe or apply (as the case may be) for the number of Placing Shares allocated to it on the terms and conditions set out in this announcement, in the Placing Agreement and in the Admission Document. 4. Commissions will not be paid to Placees in connection with the Placing. 5. Panmure Gordon's obligations under the Placing Agreement (and, consequently, the Placee's Placing Commitment) is conditional upon fulfillment (or waiver by Panmure Gordon) of certain conditions including, inter alia: (a) on or before Admission, the Acquisition Agreement having become unconditional in all respects (save as to Admission and save as to the Placing Agreement having become unconditional); (b) Admission occurring by not later than 8 a.m. on 23 February 2007 (or such later time and/or date as Finsbury and Panmure Gordon may agree in writing, being not later than 8 a.m. on 16 March 2007); and (c) the Placing Agreement becoming unconditional in all other respects and not having been previously terminated in accordance with its terms. Panmure Gordon has the right, inter alia, to terminate the Placing Agreement (in its absolute discretion) if: (i) prior to Admission, any of the warranties or undertakings contained in the Placing Agreement are untrue or misleading in any material respect in the context of the Placing and/or Admission; or (ii) prior to Admission there occurs an event of force majeure which in the opinion of Panmure Gordon (acting reasonably) is or will or is likely to be materially prejudicial to any member of the Group, to Admission, to the Placing or to the acquisition of Placing Shares. If the Placing Agreement is terminated prior to Admission, the Placing will lapse and the rights and obligations of the Placees hereunder shall cease and determine at such time and no claim can be made by any Placee in respect thereof. In such event, all monies (if any) paid by the Placees to Panmure Gordon at such time shall be returned to the Placees at their sole risk without any obligation on the part of Finsbury, Lord Saatchi or Panmure Gordon or any of their respective affiliates to account to the Placees for any interest earned on such funds. The Placees acknowledge and agree that Finsbury and Panmure Gordon may exercise their contractual rights to waive or to extend the time and/or date for fulfilment of any of the conditions in the Placing Agreement. Any such extension or waiver will not affect Placees' Placing Commitments or the representations and warranties Placees are deemed to give within this appendix. 6. The exercise of any right of termination of the Placing Agreement, any waiver of any condition to the Placing Agreement and any decision by Panmure Gordon whether or not to extend the time for satisfaction of any condition to the Placing Agreement or whether or not to enter into the Placing Agreement shall be within Panmure Gordon's absolute discretion. Neither Panmure Gordon nor Finsbury shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of the exercise of its contractual rights to waive or to extend the time and/or date for the satisfaction of any condition in the Placing Agreement or in respect of the Placing generally. 7. Each Placee acknowledges to, and agrees with, Panmure Gordon for itself and as agent for Finsbury, that except in relation to the information in the Admission Document, it has relied on its own investigation of the business, financial or other position of Finsbury in deciding to participate in the Placing. 8. Settlement of transactions in the Placing Shares following Admission will take place within CREST, subject to certain exceptions. Panmure Gordon reserves the right to require settlement for and delivery of the Placing Shares to the Placees by such other means that it deems necessary if delivery or settlement is not possible within CREST within the timetable set out in the Admission Document or would not be consistent with the regulatory requirements in the jurisdictions of such Placees. 9. Settlement will take place on the date set out in the contract note. On that date each Placee must settle the full amount owed by it in respect of the Placing Shares allocated to it. Panmure Gordon may (after consultation with Finsbury) specify a later settlement date at its absolute discretion. Payment must be made in cleared funds. The payment instructions for settlement in CREST and settlement outside of CREST will be set out in the contract note. The trade date of the Placing Shares will be set out in the contract note. Interest is chargeable daily on payments to the extent that value is received after the due date at the rate per annum of 2 percentage points above the Barclays Bank plc base rate. If a Placee does not comply with these obligations, Panmure Gordon may sell the Placing Shares allocated to such Placee (as agent for such Placee) and retain from the proceeds, for its own account, an amount equal to the Placing Price plus any interest due. The relevant Placee will, however, remain liable, inter alia, for any shortfall below the Placing Price and it may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties) which may arise upon the sale of its Placing Shares on its behalf. Time shall be of the essence as regards the obligations of Placees to settle payment for the Placing Shares and to comply with their other obligations under this announcement. 10. If Placing Shares are to be delivered to a custodian or settlement agent of a Placee, the relevant Placee should ensure that its contract note is copied and delivered immediately to the relevant person within that organisation. Insofar as Placing Shares are to be registered in the name of a Placee or that of its nominee, such Placing Shares will, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax. (3) Representations and Warranties by Placees By participating in the Placing, each Placee (and any persons acting on itsbehalf): 1. represents and warrants that it has read the Admission Document in its entirety (including the risk factors set out in Part II) and acknowledges that its participation in the Placing will be governed by the terms set out in this announcement, that document and the Placing Agreement; 2. represents, warrants and undertakes that it will subscribe or apply (as the case may be) for the Placing Shares allocated to it in the Placing and pay up for the same in accordance with the terms set out in this announcement failing which the relevant Placing Shares may be placed with other subscribers or applicants or sold as Panmure Gordon determines and without incurring liability to such Placee; 3. undertakes and acknowledges that its obligations under the Placing and the Placing Commitment are irrevocable; 4. represents and warrants that it is entitled to subscribe or apply (as the case may be) for the Placing Shares under the laws of all relevant jurisdictions which apply to it and that it has fully observed such laws and obtained all such governmental and other guarantees and other consents which may be required thereunder and complied with all necessary formalities; 5. acknowledges that it is not entitled to rely on any information, or any representations, warranties, agreements or undertakings (express or implied, written or oral) or statements made at any time by Finsbury or Panmure Gordon or by any subsidiary, holding company, branch or associate of Finsbury or Panmure Gordon, or any of their respective officers, directors, agents, employees or advisers, or any other person in connection with the Placing, or relating to Finsbury and its subsidiaries (including the Lightbody Group) (including, without limitation, any information contained in any management presentation given in relation to the Placing) other than information contained in the Admission Document and this announcement; 6. represents and warrants that the issue or transfer (as the case may be) to the Placee, or the person specified by such Placee for registration as holder of the Placing Shares, will not give rise to a liability under any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depositary receipts and clearance services); 7. represents and warrants that it has complied with its obligations in connection with money laundering under the Criminal Justice Act 1993, the Proceeds of Crime Act 2002 and the Money Laundering Regulations 2003 (the "Regulations") and, if it is making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations; 8. represents and warrants that it is a person at or to whom this announcement, the Admission Document or any other communication that is a "financial promotion", as referred to in FSMA, may lawfully be issued, directed or otherwise communicated without the need for such communication to be approved, made or directed by an "authorised person" as referred to in FSMA and, in particular, is a person who has professional experience in matters relating to investments and who therefore is an "investment professional" falling within Article 19(5) of the Order and undertakes that it will acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business; 9. represents and warrants that it has complied and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the Placing Shares in, from or otherwise involving the United Kingdom and will not sell or offer to sell the Placing Shares in a manner which will result in an offer to the public in the United Kingdom within the meaning of FSMA; 10. represents and warrants that its obligations under the Placing are valid, binding and enforceable and that it has all necessary capacity and authority, and has obtained all necessary consents and authorities to enable it to commit to participation in the Placing and to perform its obligations in relation thereto and will honour its obligations (including, without limitation, in the case of any person on whose behalf it is acting, all necessary consents and authorities to agree to the terms set out or referred to in this announcement); 11. acknowledges that Panmure Gordon is acting solely for Finsbury and that participation in the Placing is on the basis that it is not and will not be a client or customer of Panmure Gordon or any of its affiliates and that Panmure Gordon and its affiliates have no duties or responsibilities to it for providing the protections afforded to their clients or customers or for providing advice in relation to the Placing or in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement nor for the exercise or performance of any of Panmure Gordon's rights and obligations thereunder, including any right to waive or vary conditions or exercise any termination right; 12. undertakes and agrees that (i) the person whom it specifies for registration as holder of the Placing Shares will be (a) the Placee or (b) a nominee of the Placee, (ii) neither Panmure Gordon nor Finsbury or any of their respective affiliates will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement and (iii) the Placee and any person acting on its behalf agrees to subscribe or apply (as the case may be) on the basis that the Placing Shares will be allotted or transferred (as the case may be) to the CREST stock account of Panmure Gordon who will act as settlement agent in order to facilitate the settlement process; 13. acknowledges that any agreements entered into by it pursuant to these terms and conditions shall be governed by and construed in accordance with the laws of England and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter arising out of any such contract; 14. acknowledges that the Placing Shares have not been and will not be registered under the Securities Act or under the relevant securities laws of any state of the United States, any of Australia, Japan, the Republic of Ireland or South Africa or any state or territory within any such country and, subject to certain limited exceptions, may not be directly or indirectly offered, sold, renounced, transferred, taken-up or delivered in, into or within those jurisdictions; 15. represents and warrants that (i) it is not resident within the United States, Canada, Australia, the Republic of South Africa or Japan (a "Restricted Jurisdiction ") and it is not a citizen of a Restricted Jurisdiction, (ii) it has not offered, sold or delivered and will not offer, sell or deliver any of the Placing Shares directly or indirectly, into a Restricted Jurisdiction or any other jurisdiction where the distribution of the Admission Document may be restricted by law, (iii) neither it, its affiliates, nor any persons acting on its behalf, have engaged or will engage in any directed selling efforts with respect to the Placing Shares, (iv) except pursuant to any exemption under relevant local law, it is not taking up the Placing Shares for resale in or into a Restricted Jurisdiction or any other jurisdiction where the distribution of the Admission Document may be restricted by law, and (v) it will not distribute any offering material, directly or indirectly, in or into a Restricted Jurisdiction or any other jurisdiction where the distribution of the Admission Document may be restricted by law or to any persons resident in such countries; 16. represents, warrants and acknowledges that it is outside the United States and will only offer and sell the Placing Shares outside the United States in offshore transactions in accordance with Regulation S of the Securities Act; 17. represents, warrants and undertakes and agrees that neither it nor its affiliates (as defined in Rule 501(b) of the Securities Act) nor any person acting on its or their behalf have engaged in or will engage in any 'general solicitation or general advertising' (within the meaning of Regulation D under the Securities Act) or 'directed selling efforts' (as defined in Regulation S under the Securities Act) in connection with any offer or sale of the Placing Shares; 18. acknowledges that the agreement to settle each Placee's subscription (and/or the subscription or application (as the case may be) of a person for whom it is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to a subscription by it and/or such person direct from Finsbury, or to a transfer to it and/or such person direct from Lord Saatchi, for the Placing Shares in question. Such agreement assumes that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to transfer the Placing Shares into a clearance service. If there were any such arrangements, or the settlement related to another dealing in the Placing Shares, stamp duty or stamp duty reserve tax may be payable, for which none of Finsbury, Lord Saatchi nor Panmure Gordon nor any of their respective affiliates will be responsible. If this is the case, the relevant Placee should take its own advice and notify Panmure Gordon accordingly. In addition, Placees should note that they will be liable for any capital duty, stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the UK by them or any other person on the acquisition by them of any Placing Shares or the agreement by them to acquire any Placing Shares; and 19. acknowledges that any monies of any Placee or any person acting on behalf of the Placee held or received by Panmure Gordon will not be subject to the protections conferred by the Financial Services Authority's Client Money Rules. As a consequence, these monies will not be segregated from the monies of Panmure Gordon and may be used by Panmure Gordon in the course of its business, and the relevant Placee or any person acting on its behalf will therefore rank as a general creditor of Panmure Gordon. The acknowledgements, undertakings, representations and warranties referred toabove are given to each of Finsbury and Panmure Gordon (for their own benefitand, where relevant, the benefit of their respective affiliates) and areirrevocable. Finsbury and Panmure Gordon will rely upon the truth and accuracyof the foregoing acknowledgements, undertakings, representations and warranties. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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