Placing and Trading Update

Finsbury Food Group plc

Placing to raise over c.£3.9 million and Trading Update

Finsbury Food Group plc (AIM: FIF), a leading manufacturer of cake, bread and gluten free bakery goods, is pleased to announce a placing and subscription to raise approximately £3.9 million (before expenses). The net proceeds from the Placing will be used to fund capital investment projects within the Company's UK Cake business. Cenkos Securities plc is acting as broker to the Placing.

1. The Placing

The Company is pleased to announce that it has raised approximately £3.9 million, before expenses, through a placing and subscription of 10,364,277 new ordinary shares of 1 pence each ("Placing Shares") at a price of 38 pence per share (the "Placing Price") ("the Placing"). The Placing Price represents a discount of 5 per cent. to the closing middle market price of 40 pence per share at which the existing ordinary shares in the capital of the Company were quoted on AIM on 13 November 2012 (being the latest practicable date prior to this announcement).

It is expected that admission will occur, and dealings in the Placing Shares will begin, at 8.00 a.m. on 20 November 2012. The Placing Shares are being issued under the authorities granted to the Company at its annual general meeting held on 24 November 2011. The Placing is conditional upon, inter alia, admission becoming effective by 8.00 a.m. on 20 November 2012, or such later time and/or date as the Company and Cenkos Securities plc may agree (being not later than 8.00 a.m. on 30 November 2012). The Placing is also conditional on the placing agreement between the Company and Cenkos Securities plc not being terminated prior to admission in accordance with its terms. The Placing is not underwritten.

The Placing Shares will, when issued and fully paid, rank in full for all dividends and distributions declared, made or paid on the ordinary shares of the Company on or after the date of issue of the Placing Shares, and otherwise rank pari passu in all respects with the existing issued ordinary shares of the Company.

2. Use of Placing funds

The net proceeds of the Placing will be invested in new additional capital investment projects within the Company's UK Cake business. These projects will further develop the Company's product portfolio capability utilising proven technologies and automation, whilst also improving production efficiencies thereby reducing the cost of manufacture. Projects will be implemented in a phased fashion over the course of the next two years to avoid any exceptional charges. The directors of the Company believe the planned investment will deliver a final annualised benefit of some £2.0m.

3. Trading Update

The first three months of the new financial year have seen continued strong sales growth in our Bread and Free From Division offset by a small decline in our Cake division, mainly as a result of lower sales in our LBE export business as expected. A stronger operational performance, including previous pricing and efficiency improvements, result in trading being in line with expectations for the year.

4. Directors' and related parties participation in the Placing

As part of the Placing certain Directors of the Company have subscribed for Placing Shares as set out below:

In addition to the above, London Finance & Investment Group P.L.C. has agreed to subscribe for 958,000 Placing Shares pursuant to the Placing. Following completion of the Placing, London Finance & Investment Group P.L.C. will be interested in 8,958,000 ordinary shares of 1p each in the capital of the Company, representing 14.02 per cent. of the enlarged issued share capital. This interest in shares also reflects David Marshall's deemed interest in the shares of the Company.

London Finance & Investment Group P.L.C. is a "related party" (as defined by the London Stock Exchange's AIM Rules for Companies (the "AIM Rules")) of the Company by virtue of being an existing substantial shareholder in the Company and also due to David Marshall, Non-Executive Deputy Chairman of the Company, being a director and a substantial shareholder in London Finance & Investment Group P.L.C. Due to the size of the subscription by London Finance & Investment Group P.L.C. their subscription is deemed a "related party transaction" under the AIM Rules. The total aggregate subscription by London Finance & Investment Group P.L.C., John Duffy, Stephen Boyd and Paul Monk is also deemed a "related party transaction" under the AIM Rules. 

The Directors of the Company, save for David Marshall, John Duffy, Stephen Boyd and Paul Monk who are all subscribing for Placing Shares, consider, having consulted with Cenkos Securities plc, the Company's Nominated Adviser for the purposes of the AIM Rules, that the terms of the related party subscriptions are fair and reasonable insofar as the shareholders of the Company are concerned.

Commenting on the Placing, John Duffy, Chief Executive of Finsbury Food Group plc, said:

"We are really pleased with the support we have seen for the placing from both new and existing shareholders. We are committed to investing in the Company to build upon the foundations that are already in place and look forward to growing the business further over the coming years, in turn driving shareholder value."

ENDS

For further information:

Finsbury Food Group plc www.finsburyfoods.co.uk

John Duffy (Chief Executive) 029 20 357 500

Stephen Boyd (Finance Director)

Cenkos Securities plc

Bobbie Hilliam (Corporate Finance) 020 7397 8900

Alex Aylen (Sales)

Redleaf Polhill [email protected]

Rebecca Sanders-Hewett 020 7566 6720

Jenny Bahr

Publication quality photographs are available via Redleaf Polhill on the numbers shown above.