GENERAL: SGL: SGL Market Update

9 Feb 2010 10:28 am

SGL 09/02/2010 GENERAL

REL: 1028 HRS Speirs Group Limited

GENERAL: SGL: SGL Market Update

9 February 2010

Speirs Group Repositioning

- Nelson Speirs, chairman of Speirs Group Limited, today confirmed that, in accordance with its announced programme for the repositioning of the group within the fresh and functional food industries, the group has raised in excess of $5.9 million in equity and medium term debt, by way of:

- $2.82 million in 9% fully imputed convertible redeemable preference shares;

- $1.7 million in four year term debt; and - $1.38 million in equity in partly owned subsidiary Speirs Nutritionals Partners LP - see below.

- The group now offers a further $0.4 million in 9% fully imputed convertible redeemable preference shares to the public. The issue remains open until 12 March 2010 or until fully subscribed. - As part of the repositioning programme and consequent upon increasing activity in Speirs Nutritionals Partners LP, the group is seeking a suitable candidate to head its traditional Speirs Foods division.

Speirs Nutritionals Partners LP

The Board of Speirs Group Limited advise that its majority owned subsidiary Speirs Nutritionals:

- has changed its corporate structure to that of a limited liability partnership - Speirs Nutritionals Partners LP ("SNP") - following investors' due diligence, has issued $1.38 million (see above) by value of additional partnership interests (equity) to new investors - an 18.7% partnership interest. This funding was placed by Manawatu Investment Group Limited, a subsidiary of The Bio Commerce Centre Limited; and - has issued $2 million by value of additional partnership interests (equity) to Speirs Group Limited by way of repayment of $2 million loan financing.

Speirs Group Limited now holds a partnership interest in Speirs Nutritionals Limited of 59.61%. Nelson Speirs, Chairman of Speirs Group Limited, stated that:

".....the contribution by new investors confirms our belief in the positive future for the Speirs Nutritionals business following a recent independent professional valuation of the Speirs Nutritionals business at in excess of $7million".

Speirs Nutritionals operates in one of the fastest growing segments of the functional food ingredients market worldwide. Driven by mega-trends and fundamental societal changes (e.g. wealth, ageing) consumers are increasingly accepting the link between diet and health and seeking food products that contain health related fortification and benefits.

Omega-3 Fish Oils

Omega-3 is a polyunsaturated fatty acid and is an essential requirement for human health.

Speirs Nutritionals' proprietary technology masks the smell and taste of omega-3 fish oil, and stabilises the oil; this process allows large doses of the health giving oils, in the form of an emulsion, to be incorporated into a range of food products. Speirs Nutritionals offers omega-3 ingredient solutions to food companies globally to develop and market omega-3 fortified products to consumers.

Efficacy -

The benefits of regular consumption of essential polyunsaturated fatty acids, particularly marine omega-3, are well recognised within the scientific community. A substantial body of literature exists for health benefits relating to cardiovascular diseases, inflammatory diseases, diabetes (Type 2) and conditions of hyperactivity and depression. Further endorsement of the efficacy to a number of human ailments is provided by various governments and authoritative groups concerned with human nutrition.

Croda Europe Limited - Fish Oil Supplies and Global Market

Croda Europe Limited ("Croda") is a wholly owned subsidiary of Croda International Plc - a large and respected publicly listed UK company. Croda is a world leader in the global supply of natural chemicals and ingredients for the health care and nutrition industries. As an international leader in the process and supply of omega-3 fish oil, Croda supplies Speirs Nutritionals with fish oil concentrates for micro-encapsulisation at our Marton plant.

Speirs Nutritionals has entered a Product Development, Manufacturing, Supply and Distribution Agreement with Croda that plays to each party's strengths and, as such, the synergy allows the best opportunity to succeed. Our relationship with Croda affords Speirs Nutritionals the best possible opportunity to take our technology and product to the global marketplace. Effectively, Croda has accepted responsibility, on a partnership basis, to take the Speirs Nutritionals omega-3 products to the market - globally.

Croda brings a range of benefits to Speirs Nutritionals; in particular:

- a ready supply of concentrated, quality fish oil; - a global sales force located in every major country where sales are possible; - the resources to market to the types of food companies that are interested in our technology, coupled with Croda's ability to promote to and visit global customers in person; and - an inherent understanding of the health benefits of fish oil, so there is no learning curve on this aspect of the value proposition.

Reference to Croda's 2008 Annual Report and 2009 Interim Report (www.croda.com) provides detailed information as to the size and strength of Croda, and its capacity to deliver on its undertakings.

Croda represents Speirs Nutritionals' route to the global market. Speirs Nutritionals' agreement with Croda has a term of five years and contains minimum volume targets that Croda is obliged to meet. Croda has increased its sales and marketing resources to ensure that these minimum volume targets are achieved or exceeded.

It is clear that the omega-3 market is emerging and expanding. Consumers are becoming increasingly aware of the benefits provided by regular consumption of omega-3 oil. The market is led by Europe where consumer receptiveness is attracting food companies to launch new omega-3 fortified products. In the past five years more than 3,000 omega-3 products have been launched worldwide, the majority of these in Europe. This trend of consumer receptiveness in Europe is quickly developing in North America and Asia. Omega-3 products are the strongest growing sector in the US functional foods market.

Growth in omega-3 functional food products has been strongly dominated by dairy products (milk, yoghurt and drinks) but the number of product applications is spreading and now includes baked goods, food bars and juices.

Production -

Speirs Nutritionals operates a 'Production and Innovation Centre' (PIC) in Marton, New Zealand. The site is immediately adjacent to Speirs Foods processing facilities. The PIC contains full facilities to manufacture in excess of 2.7 million litres of product per year.

Speirs Nutritionals' operation is compliant with all regulatory requirements; accordingly, Speirs Nutritionals is able to carry out its business of manufacturing and exporting omega-3 products. Fundamental to maintaining regulatory compliance is Speirs Nutritionals' commitment to quality standards. The production facility is managed to a rigorous and professional standard.

For further information please contact: Nelson Speirs Chairman, Speirs Group Limited

Phone: 06 350 6003 Email: nelsons@speirs.co.nz

ENDS End CA:00190990 For:SGL Type:GENERAL Time:2010-02-09:10:28:43

More announcements for SGL