Acquisition Of New Zealand Coffee Assets

28 July 2011 Acquisition Of New Zealand Coffee Assets Evolution Coffee Roasters Roasted Addiqtion Coffee Dealers Evil Child Beverage Co.

Leading Australian retail food brand manager and franchisor, Retail Food Group Limited (RFG or the Company), today announced that it has entered into a Sale & Purchase Agreement (SPA) to acquire the business and intellectual property assets of the New Zealand domiciled Evolution Coffee Roasters Group comprising:

Evolution Coffee Roasters: operator of a state-of-the-art coffee roasting facility in Auckland that presently manufactures and distributes approximately 170 tonnes annually of premium coffee products on a wholesale and contract roasting basis throughout New Zealand (including 60 tonnes presently supplied to RFG’s Esquires Coffee Houses franchise system), Asia and the Middle East.

Roasted Addiqtion Coffee Dealers: merchandiser of a range of proprietary premium coffee blends and syrups (under the ‘Roasted Addiqtion’ brand) to an existing customer base of approximately 150 cafes, restaurants and supermarkets throughout New Zealand.

Evil Child Beverage Co.: manufacturer of premium drinking chocolate powders and frappe blends (under the ‘Evil Child Beverages’ brand) supplying cafes, restaurants and supermarkets throughout New Zealand. RFG CEO Tony Alford said, “the transaction delivers upon strategic growth initiatives previously advised to the market by adding value accretive businesses well able to provide additional revenues, synergies, scale and intellectual property expansion to the Company’s retail food franchise system portfolio”.

“Without limitation, it will provide RFG with its own manufacturing facility and coffee roasting capability in New Zealand thus complimenting the Company’s recent acquisition of the Esquires Coffee House assets and intellectual property for New Zealand and Australia”, Mr Alford said. The businesses, which have been established for over 10 years, provide to RFG: an established wholesale and retail customer base, New Zealand based merchandising and production skill set, complimented by the ongoing engagement of the founders,

security of quality coffee supply for our New Zealand franchise networks,

dedicated New Zealand based training, research and development facility, and

the opportunity to further leverage the Company’s intellectual property resources for the benefit of all stakeholders including franchisees.

“Pleasingly, the transaction represents the first negotiated by the Company’s Strategy, Acquisitions & Emerging Markets Department which was recently established in order to more effectively drive development of international markets and acquisitive opportunity”, Mr Alford said.

The Company confirms that:

the SPA is subject to normal contractual terms and finalisation of due diligence enquiries;

the acquisition will be EPS accretive (consistent with RFG’s acquisition philosophy);

the transaction is scheduled to complete on or before 1 September 2011;

acquisition pricing (NZD$4.00m) represents an EV/EBITDA multiple (upon integration) of circa 4 times; and that

the consideration payable will be funded from existing cash reserves.

About Retail Food Group Limited Retail Food Group is a leading Australian retail food brand manager and franchisor. It is the franchisor and intellectual property owner of the Donut King, Michel’s Patisserie, Brumby’s Bakeries, Esquires Coffee Houses and bb’s café franchise systems.

ENDS

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