Proposed acquisition, fundraising, notice of GM

RNS Number : 7851I

Fulham Shore PLC (The)

30 March 2015

 



The Fulham Shore plc

("Fulham Shore" or the "Company")

Proposed acquisition of the Franco Manca pizzeria business, fundraising of £4.75 million, notice of General Meeting and trading update

The Board of Fulham Shore is pleased to announce that the Company has conditionally agreed to acquire 99 per cent. of the issued share capital of Rocca Limited ("Target"), the owner of the Franco Manca restaurant group (the "Acquisition"). Franco Manca specialises in Neapolitan sourdough pizza and currently has ten restaurants in London. One of these restaurants, on Tottenham Court Road, is currently operated by the Company under a franchise agreement with Target.

The aggregate consideration for the Acquisition is approximately £27.5 million, to be satisfied as to approximately £6.2 million in cash and the balance of approximately £21.3 million by the issue of 193,457,975 new Ordinary Shares at 11p per share.

The Board also announces that the Company has conditionally raised a total of £4.75 million via a placing and subscription of new ordinary shares at 11p per share (the "Fundraising").

The Acquisition and Fundraising are subject to the approval of certain resolutions (the "Resolutions") to be put to shareholders at a general meeting of the Company, to be held at 10.00 a.m. at the offices of Allenby Capital Limited, 3 St Helen's Place, London EC3A 6AB, on 20 April 2015 (the "General Meeting").

The Company will today post to shareholders a circular (the "Circular") containing a notice of general meeting and, inter alia, background information on the Target, details of the Acquisition and the Fundraising, and the reasons the directors of the Company believe the Acquisition and the Fundraising are in the best interests of the Company and its shareholders as a whole. Extracts from the Circular have been set out below and a copy of the Circular will be available for download from the Company's website, www.fulhamshore.com, later today.

David Page, Chairman of the Company, commented:

"We're delighted to have agreed to acquire Franco Manca, an excellent growing business. The success to date of our franchise on Tottenham Court Road encouraged the Board to pursue this acquisition. Alongside The Real Greek, we believe we are creating a portfolio of exciting and well regarded restaurant brands.

"We believe that the staff working at our restaurants are key to the success of our business. As such we intend to gift shares in the Company to a share incentive scheme, which will be used to provide each and every member of our staff with 1,500 shares in Fulham Shore."

Contacts:

The Fulham Shore plc	www.fulhamshore.com
David Page	07836 346 934
Allenby Capital Limited
Nick Naylor / Jeremy Porter / James Reeve	020 3328 5656

The following has been extracted from, and should be read in conjunction with, the Circular.

Timetable of principal events

	2015
Announcement of the Fundraising and Acquisition	30 March
Posting of the Circular along with Forms of Proxy	30 March
Latest time and date for receipt of Forms of Proxy	10.00 a.m. on 16 April
General Meeting	10.00 a.m. on 20 April
Admission effective and dealings in the New Ordinary Shares expected to commence on AIM	8.00 a.m. on 21 April
Date for crediting of New Ordinary Shares in uncertificated form to CREST stock accounts	21 April
Date of despatch of share certificates in respect of the New Ordinary Shares in certificated form	by 5 May

Information on Franco Manca

Description of the business

Franco Manca has been developed from an idea by Giuseppe Mascoli, one of the Majority Vendors. The strategy has been to develop a pizza restaurant business based on a number of core values:

●      to serve sourdough pizza;

●      to keep the menu simple, focusing on pizza;

●      to make the pizza sourdough daily in each pizzeria and prepare all food freshly every day;

●      to source fresh ingredients - organic where possible - from selected local suppliers;

●      to stock a small range of beverages, including beers and organic wines;

●      to operate from simple, low maintenance but stylish interiors; and

●      to provide good value for money: currently all Franco Manca pizzas are priced at less than £8.

Franco Manca restaurants offer a choice of six sourdough pizzas on the menu, supplemented by two daily special pizzas and, at times, some light side orders. All pizzas are cooked in wood-burning brick ovens. The restaurants operate a high turnover of diners due to the limited menu and fast service. The restaurants also sell takeaway pizza; currently this is as a collection service only.

Franco Manca has a growing customer base and the restaurants enjoy many favourable reviews from customers and restaurant critics alike. The Directors believe this is attributable principally to food quality, keen pricing, committed staff and the inviting atmosphere of the Franco Manca restaurants.

In the Directors' opinion, Franco Manca's short, simple menu can support good restaurant margins. This has been demonstrated by the Group's existing franchise at Tottenham Court Road which has been operating for over a year.

Franco Manca restaurants

The first Franco Manca restaurant was opened in 2008 in Brixton Market. There are currently ten Franco Manca restaurants in operation, all of which are in London and in a range of location types: residential areas, an office district, a shopping mall and neighbourhood shopping streets. The restaurants are as follows:

Location	Year of opening	Number of covers
Brixton Market*	2008	78
Chiswick	2010	116
Westfield Stratford	2011	Shared "food court" dining area
Northcote Road	2012	90
Balham	2013	78
Tottenham Court Road**	2013	106
Broadway Market	2014	94
Southfields	2014	84
South Kensington	2014	68
East Dulwich	2014	100

* lease renewal discussions ongoing

** franchised restaurant, owned by the Company

Target has secured further sites at Belsize Park, Broadgate, Soho, Bermondsey Street and Ealing Broadway in London, which are currently in development and are targeted for opening in 2015. Other sites are under consideration and negotiation for openings in 2016 and beyond.

Franco Manca's property strategy is to select small sites of between 1,000-2,000 square feet in total, typically with the capacity for about 70 covers or more. Preference is given to simple, 'box type' units, but any workable configuration will be considered. Franco Manca's restaurants are currently all leasehold, but freehold premises will also be considered.

Financial information on Target

At the date of the Circular, Target owns assets other than Franco Manca restaurants which are not to be acquired by the Company. Immediately before Admission, and following a company re-organisation, Target's only asset will be 100 per cent. of Franco Manca 2 UK Limited, the company that owns and operates Franco Manca restaurants, and its subsidiary FM6 Limited (the "FM Group"). For the purposes of the Circular, Target's audited financial results for the financial year ended 27 April 2014 have been adjusted to reflect this and those unaudited management accounts for the FM Group show revenue of £5.75 million, EBITDA before opening costs of £1.2 million and profit before tax of £0.6 million for the year to 27 April 2014, with net assets at that date of £4.5 million. As at 27 March 2015, Target had net debt of £1.3 million.

Reasons for the Acquisition

The Acquisition is in line with the strategy stated by the Company at the time of its admission to AIM and the Directors believe that it represents a major step forward in the implementation of that strategy. They further believe that, as part of the Group, Franco Manca will represent a successful, cash generative platform on which to support the further development of Fulham Shore.

Fulham Shore already owns and operates a Franco Manca restaurant on Tottenham Court Road, London, through a franchise agreement with Target, which has traded successfully since its opening in December 2013. Its performance has encouraged the Board to pursue the Acquisition.

Target has opened Franco Manca restaurants steadily since launch of the first restaurant in Brixton in 2008 and profits have increased over the last three years as more restaurants have been opened and the existing restaurants have gained more customers.

The Directors believe that Franco Manca's current estate of ten restaurants provides a firm base on which to expand, initially in London and then, in time, elsewhere in the UK. They further believe that, supported by the Company, Franco Manca has the potential to grow to at least 40 restaurants in the UK over the next five years.

Current trading and prospects of the Enlarged Group

Fulham Shore

Trading in the period since the Company's interim results for the half year to 28 September 2014 has met Directors' expectations, with The Real Greek restaurants, which were acquired on 20 October 2014, performing well. The Real Greek saw a seasonal increase in turnover in the weeks running up to Christmas and trading has remained steady and in line with seasonal expectations since. The eighth The Real Greek restaurant on Berwick Street, Soho, London, opened on 5 March 2015 and a further restaurant is due to open in central London later this year. The Company's Franco Manca restaurant on Tottenham Court Road has also continued to perform well.

At 27 March 2015, the Company had net funds of circa £3.0 million. The Company has now entered into new banking facilities, as announced today, which provide a £6 million revolving credit facility and a £0.5 million overdraft facility. These new facilities may be used for various purposes including refinancing the existing loan facility acquired with Kefi Limited (owner of The Real Greek) in October 2014, investment in the Company's existing restaurants, funding the expansion of The Real Greek restaurants and funding future acquisitions and expansion of any acquired brands.

The Directors believe that the prospects of the Group, as enlarged by the Acquisition, are positive. According to Mintel (June 2014), the UK eating out market as a whole is forecast to grow 16 per cent. in value over the next five years to £38.9 billion.

Franco Manca

Franco Manca's profits have grown in the three years ended 27 April 2014 and as noted above, the FM Group reached an adjusted profit before tax of £0.6 million (unaudited) for the financial year ended 27 April 2014 on adjusted turnover of £5.75 million (unaudited). Trading since then has been ahead of the previous year, partly as a result of new restaurant openings. Three restaurants have been opened since 27 April 2014 and two more are currently being fitted out. At 27 March 2015, Target had net debt of £1.3 million.

Seeking further acquisitions

The Directors will continue to evaluate opportunities for acquisitions of either individual restaurants, or multiple restaurants under the same name, focusing on the value for money and casual dining sector. The Enlarged Group's current intention is to work towards operating up to three distinct restaurant businesses under its ownership. Restaurant businesses to be considered by the Company are likely to be popular operations, capable of expansion to 40 or more restaurants, simple to operate and with a good reputation for service and food quality. The Directors are likely to prefer opportunities that have two or more restaurants already in operation, retaining and incentivising existing management where possible and aiding an expansion programme with both restaurant management and financial input. The Directors will also consider backing chefs and entrepreneurs with compelling and novel food ideas to open start-ups. The Directors will, where possible, seek to use Ordinary Shares, either in full or in part, as consideration for future acquisitions.

Principal terms and conditions of the Acquisition

On 27 March 2015 the Company entered into the Majority SPA and Minority SPA to acquire approximately 99 per cent. of Target for an aggregate consideration of £27,465,054.34 to be satisfied as to £6,184,676.97 in cash and £21,280,377.37 through the issue and allotment of the Consideration Shares at 11p per share. Following Admission David Page and Nabil Mankarious will each retain approximately 0.5 per cent. of the Target Shares.

Majority SPA

On 27 March 2015, the Majority Vendors and the Company entered into the Majority SPA under which the Company agreed to acquire approximately 70.9 per cent. of the Target Sale Shares (the "Majority Shareholding"). The principal terms of the Majority SPA are as follows:

a)      the aggregate price for the Majority Shareholding is £19,474,597.54;

b)      the consideration payable for the Majority Shareholding is to be satisfied in cash as to £4,426,870.46 and as to the balance by the issue of an aggregate of 136,797,519 Consideration Shares credited as fully paid up at 11p per Consideration Share;

c)      completion of the acquisition of the Majority Shareholding is conditional, inter alia, on the passing of Resolutions 1, 2, 3 and 5 and Admission;

d)      the Majority SPA is to be completed simultaneously with completion of the Minority SPA (described below), which is also conditional on the passing of Resolutions 1, 2, 3 and 5 and Admission;

e)      warranties and tax indemnities are given by the Majority Vendors on a joint and several basis in respect of Target;

f)       the Majority Vendors have entered into restrictive covenants in favour of the Company; and

g)      the 136,797,519 Consideration Shares are subject to the lock-in arrangements described in the Circular.

Minority SPA

On 27 March 2015, the Minority Vendors and the Company entered into the Minority SPA under which the Company agreed to acquire all the Target Shares held by the Minority Vendors which represent approximately 29.1 per cent. of Target Sale Shares (the "Minority Shareholding"). The principal terms of the Minority SPA are as follows:

a)      the aggregate price for the Minority Shareholding is £7,990,456.80;

b)      the consideration payable for the Minority Shareholding is to be satisfied in cash as to £1,757,806.51 and as to the balance by the issue of an aggregate of 56,660,456 Consideration Shares credited as fully paid up at 11p per Consideration Share;

c)      completion of the acquisition of the Minority Shareholding is conditional, inter alia, on the passing of Resolutions 1, 2, 3 and 5 and Admission;

d)      the Minority SPA is to be completed simultaneously with completion of the Majority SPA (described above), which is also conditional on the passing of Resolutions 1, 2, 3 and 5 and Admission; and the 56,660,456 Consideration Shares are subject to the orderly market arrangements described in the Circular.

At the time Target acquired the Franco Manca business in December 2010, it entered into a consultancy arrangement with the Substantial Shareholder, pursuant to which the Substantial Shareholder receives payments linked to the number of sites opened by Target. This agreement will continue between Target and the Substantial Shareholder until July 2016.

In addition, IT services are provided to Target by Restaurants IT Limited ("RIT") and office services and group finance function services are provided to Target by Room 307 Limited ("R307"). These services are provided to Target on similar terms to the services provided by RIT and R307 to the Company, further details of which are contained in the Company's admission document dated 30 September 2014. Nicholas Wong is a director of RIT. Nicholas Wong, David Page and Nabil Mankarious are shareholders in RIT, together owning 60 per cent. of RIT. David Page, Nabil Mankarious and Nicholas Wong are shareholders in R307, together owning 75 per cent. of R307. Nabil Mankarious and Nicholas Wong are directors of R307. These arrangements will remain in place following Admission.

Details of the Fundraising and use of proceeds

The Fundraising is comprised of the Subscription and the Placing and is expected to raise of a total of £4.75 million before expenses. The net proceeds of the Fundraising (being approximately £4.25 million after the costs associated with the Acquisition and Fundraising) will be applied by the Company to: 1) fund in part the Acquisition; and 2) support the opening of new Franco Manca and The Real Greek restaurants.

Under the Subscription the Company has conditionally raised approximately £2.75 million before expenses from the issue of 25,000,000 Subscription Shares to existing and new investors in the Company at a price of 11p per Subscription Share. Of this, £165,935.55 has been subscribed by certain Directors (including their immediate families) as detailed below. The participation by the Directors in the Subscription is a Related Party Transaction as detailed below.

Under the Placing, the Company has conditionally raised approximately £2 million (before expenses) through a placing of 18,181,818 Placing Shares at 11p per share with institutional and other investors. The Company has entered into a Placing Agreement under which Allenby Capital has agreed to use its reasonable endeavours to procure subscribers for the Placing Shares at the Issue Price. The Placing has not been underwritten.

The Placing Agreement contains, inter alia, customary undertakings and warranties given by the Company in favour of Allenby Capital as to the accuracy of information contained in the Circular and other matters relating to the Company, Target and their business and an indemnity from the Company in favour of Allenby. Allenby Capital may terminate the Placing Agreement in specified circumstances prior to Admission, including, inter alia, for material breach of the Placing Agreement or any of the warranties contained in it and in the event of force majeure.

The Placing and Subscription are conditional, inter alia, upon:

a)      the passing of Resolutions 1, 2, 3 and 5;

b)      the Acquisition Agreements becoming unconditional in all respects save in respect of any interconditionality with the Placing Agreement;

c)      the Placing Agreement becoming unconditional in all respects (other than Admission) and not having been terminated in accordance with its terms; and

d)      Admission occurring by not later than 8.00 a.m. on 21 April 2015 (or such later time and/or date as the Company and Allenby Capital may agree, not being later than 8.00 a.m. on 5 May 2015).

If any of the above conditions is not satisfied or, if applicable, waived, the Placing and Subscription will not proceed.

The Placing Shares and Subscription Shares, when issued and fully paid, will rank pari passu in all respects with the Existing Ordinary Shares and therefore rank equally for all dividends or other distributions declared, made or paid after the date of issue of the Placing Shares and Subscription Shares.

Application will be made to the London Stock Exchange for the Placing Shares and the Subscription Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings in the New Ordinary Shares will commence at 8.00 a.m. on 21 April 2015.

Directors' and employees' interests

Target shareholdings

David Page, Nabil Mankarious, Nicholas Donaldson and Nicholas Wong, each a Director, will have the following interests in the share capital of Target immediately before Admission:

Director	Number of Target Shares (including exercise of Target Warrants before Admission)	% of Target Shares
David Page	7,037,752	9.48
Nicholas Donaldson	523,696	0.71
Nabil Mankarious	10,905,961	14.70
Nicholas Wong	324,626	0.44

Under the terms of the Acquisition Agreements, following Admission, David Page and Nabil Mankarious will each retain 0.5 per cent. of the Target Shares. 

As David Page, Nabil Mankarious, Nicholas Donaldson and Nicholas Wong, directors of the Company, and the Substantial Shareholder are shareholders in Target (and David Page, Nabil Mankarious and the Substantial Shareholder are directors of Target), the Acquisition represents a Related Party Transaction, as further detailed below, and, as explained below and the Notice, section 190 of the Act applies. As a result, all decisions of the Company relating to the Acquisition have been delegated to a committee, comprising the Independent Director, Martin Chapman. In evaluating the Acquisition, the Independent Director has taken into account recent comparable transactions in the sector, the current run-rate and schedule for opening of new Franco Manca restaurants and the prospects for the sector and the Enlarged Group. Martin Chapman has no shareholding or involvement in Target.

Transfer of shares to employees

The Board places great importance on ensuring that employees are suitably incentivised via a combination of short and long-term financial and equity rewards. In this regard it is proposed that, David Page, Nabil Mankarious and three other shareholders of Target will, immediately following Admission, gift up to 750,000 Consideration Shares, in aggregate, to the Fulham Shore SIP to be awarded to employees of the Enlarged Group on a similar terms basis according to the rules of the Fulham Shore SIP.

Shareholdings on Admission

Assuming the passing of Resolutions 1, 2, 3, and 5 at the General Meeting, the Directors will be issued Consideration Shares and subscribe for Subscription Shares as set out below and will have the following interests in the Enlarged Issued Share Capital immediately following Admission:

	At the date of this Circular				Immediately following Admission
Director	Number of Ordinary Shares held	% of Ordinary Shares in issue	Number of Consideration Shares3	Number of Subscription Shares	Number of Ordinary Shares held	% of Ordinary Shares in issue
David Page	72,072,600	21.68	15,920,131	-	87,992,731	15.46
Martin Chapman	585,000	0.18	-	181,818	766,818	0.13
Nicholas Donaldson	11,264,500	3.39	1,406,073	373,764	13,044,337	2.29
Nabil Mankarious	76,639,5001	23.05	35,187,392	927,255	112,754,1472	19.81
Nicholas Wong	7,470,000	2.25	871,589	25,668	8,367,257	1.47
Total	168,031,600	50.53	53,385,185	1,508,505	222,925,290	39.16

1 Includes the following Ordinary Shares, the legal and beneficial interest in which are held by: (i) Teresa Mankarious (400,000); and (ii) Eleanor Mankarious (667,000). Nabil Mankarious holds the legal and beneficial interest in 75,572,500 Ordinary Shares at the date of the Circular. 75,972,500 of these shares are registered in the name of Rock Nominees Limited.

2 Includes the following Ordinary Shares, the legal and beneficial interest in which are held by: (i) Teresa Mankarious (1,000,000); and (ii) Eleanor Mankarious (994,255). Nabil Mankarious will hold the legal and beneficial interest in 110,759,892 Ordinary Shares on Admission. 111,759,892 of these shares are registered in the name of Rock Nominees Limited.

3 After the proposed gifting of Consideration Shares to the Fulham Shore SIP immediately following Admission as set out immediately above.

Share incentive schemes

In order to incentivise management and employees of the Enlarged Group and, if appropriate, those of any other business or company that the Company may acquire, the Directors had adopted the EMI Scheme and the Unapproved Scheme and now intend to adopt the CSOP and Fulham Shore SIP, a summary of the proposed terms of which are set out in the Circular.

The following options over Ordinary Shares are in existence and proposed to be granted to the Directors on Admission subject to, inter alia, the passing of Resolution 2 at the General Meeting:

	Ordinary Shares under existing Options	Ordinary Shares under proposed Options	Exercise price of proposed Options	Scheme
Director
David Page	5,003,014	-		EMI Scheme
	1,647,256	4,732,795	11p	Unapproved
				Scheme
Martin Chapman	3,325,135	2,366,399	11p	Unapproved
				Scheme
Nicholas Donaldson	6,650,270	4,732,795	11p	Unapproved
				Scheme
Nabil Mankarious	5,003,014	-	-	EMI Scheme
	1,647,256	4,732,795	11p	Unapproved
				Scheme
Nicholas Wong	4,445,028	-	-	EMI Scheme
	2,205,242	4,732,795	11p	Unapproved
				Scheme
Total	29,926,215	21,297,577

In addition, options over a total of 4,400,000 Ordinary Shares under the Fulham Shore Option schemes are proposed to be granted to employees and consultants of the Enlarged Group on Admission, which will represent approximately 0.8 per cent. of the Enlarged Issued Share Capital.

The Board wishes to make further grants to employees and Directors of the Company in the future, as appropriate, in order to continue to motivate key personnel. Since the number of Fulham Shore Options granted to date, including the proposed grants set out above, is equivalent to approximately 9.8 per cent. of the Issued Share Capital (as increased by the issue of the Ordinary Shares which are subject to the Options), a resolution will be proposed at the General Meeting to increase the number of options which may be granted by the Company to an amount not exceeding 15 per cent. of the Issued Share Capital (as so increased).

Significant Shareholders

Insofar as the Company is aware, the issue of the New Ordinary Shares will result in the following changes to the Company's Significant Shareholders, excluding the shareholdings of the Directors:

	At the date of this Circular		On Admission
	Number of Ordinary Shares held	Percentage of Issued Share Capital	Number of Ordinary Shares held	Percentage of Issued Share Capital
Significant Shareholder
Sami Wasif	48,422,000	14.56	84,870,4141	14.91
Paulo Solari	21,761,250	6.55	22,670,250	3.98
Giuseppe Mascoli	12,830,000	3.86	30,589,7461	5.37
David Sykes	1,600,000	0.48	19,252,7091	3.38
Jawaid & Karen Akhtar	10,085,000	3.03	17,635,836	3.10

1 After the proposed gifting of Consideration Shares to the Fulham Shore SIP immediately following Admission as set out above.

Lock-in and orderly market arrangements

Each of the Majority Vendors, Nick Donaldson and Nick Wong have entered into a lock-in agreement with the Company and Allenby Capital pursuant to which they have agreed, conditional upon Admission, not to sell, transfer or dispose of any Consideration Shares held by him or any related parties for a period of 12 months following Admission save for certain exceptions. In addition, each of the Majority Vendors, Nick Donaldson and Nick Wong have agreed that, for a further 12 months, any disposal of Consideration Shares by him or by certain persons connected with him, will be conducted: (i) so as to ensure an orderly market for the Ordinary Shares: and (ii) through the Company's broker (provided the prices, costs and expenses proposed to be charged by such broker are no higher than those charged by other brokers) and in accordance with the requirements of such broker.

Each of the Minority Shareholders has undertaken that for a period of 12 months after Completion any disposal of Consideration Shares held by them or by certain persons connected with them, will be conducted: (i) so as to ensure an orderly market for the Ordinary Shares, and (ii) through the Company's broker (provided the prices, costs and expenses proposed to be charged by such broker are no higher than those charged by other brokers) and in accordance with the requirements of such broker.

Takeover Code

The Takeover Panel has confirmed that David Page, Nabil Mankarious, Nicholas Donaldson, Nicholas Wong, Sami Wasif and certain other Shareholders (the "Concert Party") are acting in concert for the purposes of the Takeover Code. On Admission the Concert Party will between them hold in excess of 307,028,886 Ordinary Shares representing not less than 53.94 per cent. of the Enlarged Issued Share Capital. Shareholders should note that, with effect from Admission, the Concert Party will be entitled to increase its interests in the voting rights of the Company without incurring an obligation under Rule 9 of the Takeover Code to make a general offer.

Related Party Transactions

As David Page, Nabil Mankarious, Nicholas Donaldson and Nicholas Wong (who are directors of the Company) and the Substantial Shareholder are all shareholders of Target (and David Page, Nabil Mankarious and the Substantial Shareholder are directors of Target), the Acquisition is a Related Party Transaction. In addition the participation of the Directors (save for David Page) and their connected persons in the Subscription and the proposed grant of options to Directors as set out above, are also deemed, in aggregate, to be Related Party Transactions under the AIM Rules. As all of the Directors have either an interest in the Acquisition, a participation in the Subscription or a participation in the proposed option grants, there are no directors who are independent in respect of all of these Related Party Transactions who can provide the statement as to their fairness and reasonableness as required under the AIM Rules for Companies.

Allenby Capital, the Company's nominated adviser, considers that the terms of the Acquisition, the Directors' participation in the Subscription and the proposed grant of options to Directors are fair and reasonable insofar as Shareholders are concerned. In addition, Resolution 2 will be proposed at the General Meeting for the purposes of approving the Acquisition, the Directors' participation in the Subscription and the proposed option grants to Directors for the purposes of rule 13 of the AIM Rules for Companies as Related Party Transactions.

General Meeting

The Circular contains a notice convening the General Meeting, which is to be held at the offices of Allenby Capital, 3 St Helen's Place, London, EC3A 6AB, at 10.00 a.m. on 20 April 2015, for the purpose of considering, and if thought fit, passing the Resolutions. Resolutions 1, 2, 3 and 4 will be proposed as ordinary resolutions and resolution 5 will be proposed as a special resolution.

Resolution 1 is to approve the Acquisition for the purposes of section 190 of the Act, which requires shareholder approval to be given for the acquisition by the Company of any substantial non cash asset from one of its directors. In this case approval is required for the purchase of Target Shares from each of David Page, Nabil Mankarious, Nicholas Donaldson and Nicholas Wong.

Resolution 2 is, in the absence of an independent director for the purposes of a Related Party Transaction, to approve the Acquisition, the Directors' participation in the Subscription and the proposed option grants to Directors for the purposes of rule 13 of the AIM Rules for Companies as Related Party Transactions.

Resolution 3 is to grant the Directors an authority to allot and issue Ordinary Shares up to a nominal value of £5,212,165.00 for the purposes of section 551 of the Act.

Resolution 4 - is to increase the number of share options that may be granted by the Company to an amount not exceeding 15 per cent. of the Issued Share Capital as so increased.

Resolution 5 is to authorise the Directors pursuant to section 570 of the Act to allot and issue Ordinary Shares up to a nominal value of £1,285,549.00 for cash without first making a pre-emptive offer to the Company's shareholders under section 561 of the Act.

Irrevocable undertakings

The Company has received indications from Shareholders, including the Directors, representing, in aggregate, approximately 50.53 per cent. of the Existing Share Capital to vote in favour of the Resolutions at the General Meeting.

Recommendation

The Board (and in the case of the Acquisition, the Independent Director) considers the Acquisition and the Fundraising to be in the best interests of the Company and Shareholders as a whole and therefore the Independent Director recommends that Shareholders vote in favour of Resolution 1 and the Board unanimously recommends that Shareholders vote in favour of Resolutions 2, 3, 4 and 5. All of the Directors intend to vote in favour of all of the Resolutions in respect of their own beneficial holdings of 168,031,600 Ordinary Shares, representing approximately 50.53 per cent. of the Existing Ordinary Shares.

DEFINITIONS

"Acquisition"	the Company's proposed acquisition of Target Sale Shares pursuant to the terms of the Acquisition Agreements;
"Acquisition Agreements"	the Majority SPA and the Minority SPA, details of which are set out above;
"Act"	the Companies Act 2006 (as amended);
"Admission"	admission of the Subscription Shares, the Placing Shares and the Consideration Shares to trading on AIM and such admission becoming effective in accordance with Rule 6 of the AIM Rules for Companies;
"AIM"	the market of that name operated by the London Stock Exchange;
"AIM Rules"	together, the AIM Rules for Companies and the AIM Rules for Nominated Advisers;
"AIM Rules for Companies"	the AIM Rules for Companies, as published and amended from time to time by the London Stock Exchange;
"AIM Rules for Nominated Advisers"	the AIM Rules for Nominated Advisers, as published and amended from time to time by the London Stock Exchange;
"Allenby Capital"	Allenby Capital Limited, a company incorporated in England and Wales with company number 06706681 and which is authorised and regulated by the FCA;
"Cash Consideration"	£6,184,676.97 paid to the holders of 16,543,326 Target Sale Shares pursuant to the Acquisition Agreements;
"Circular"	the circular to Shareholders dated 30 March 2015 with details of, inter alia, the Acquisition and Fundraising;
"Company" or "Fulham Shore"	The Fulham Shore plc, a company incorporated in England and Wales with company number 7973930;
"Consideration Shares"	the 193,457,975 new Ordinary Shares to be issued to the Vendors, on Completion, pursuant to the terms of the Acquisition Agreements;
"CSOP"	the share option plan to be adopted by the Board on Admission for the grant of options pursuant to Schedule 4 ITEPA entitled the Fulham Shore Company Share Option Plan and further described in the Circular;
"CSOP Options"	share options granted under the CSOP;
"Directors" or "Board"	the directors of the Company at the date of this announcement, including any duly authorised committee of the board of directors of the Company;
"EMI Options"	share options granted under the EMI Scheme;
"EMI Scheme"	the enterprise management incentive share option scheme adopted by the Company;
"Enlarged Group"	the Group as enlarged by the Acquisition;
"Enlarged Issued Share Capital"	the issued ordinary share capital of the Company following Completion comprising: (i) the Existing Ordinary Shares; (ii) the Subscription Shares; (iii) the Placing Shares; and (iv) the Consideration Shares;
"Existing Ordinary Shares"	the 332,513,500 Ordinary Shares in issue at the date of the Circular;
"Form of Proxy"	the form of proxy relating to the General Meeting being sent to Shareholders with this Circular;
"Franco Manca"	the chain of Neapolitan pizzerias of that name, owned and operated (and franchised in the case of the Tottenham Court Road restaurant) by Target;
"Fulham Shore SIP"	the share incentive plan to be adopted by the Board on Admission for the grant of options pursuant to Schedule 2 ITEPA and entitled the Fulham Shore Share Incentive Plan and further described in the Circular;
"Fulham Shore Options" or "Options"	EMI Options, CSOP Options and Unapproved Options (as the case may be);
"Fundraising"	together, the Placing and the Subscription;
"Fundraising Shares"	the Placing Shares and the Subscription Shares;
"General Meeting"	the general meeting of the Company to be held on 20 April 2015 to approve the Resolutions;
"Group"	the Company and its subsidiaries, being Kefi Limited, The Real Greek Food Company Limited, FM98 LTD Limited, The Real Greek Wine Company Limited, Souvlaki and Bar Limited, CHG Brands Limited, Café Pitfield Limited and 10DAS Limited;
"Independent Director"	Martin Chapman;
"Issue Price"	11p per New Ordinary Share;
"Issued Share Capital"	the entire issued share capital of the Company from time to time;
"ITEPA"	the Income Tax (Earnings and Pensions) Act 2003;
"London Stock Exchange"	London Stock Exchange Group plc;
"Majority SPA"	the agreement dated 27 March 2015 between the Company and the Majority Vendors under which the Company agreed, conditionally on Admission, to acquire 70.9 per cent. of the Target Sale Shares, which will (following the exercise of the Target Warrants) represent 70.2 per cent. of Target Shares in issue immediately before Admission;
"Majority Vendors"	David Sykes, Jawaid Akhtar, George Jones, Nabil Mankarious, Giuseppe Mascoli, David Page, Sami Wasif and Lombra Limited;
"Minority SPA"	the agreement dated 27 March 2015 between the Company and the Minority Vendors under which the Company agreed, conditionally on Admission, to acquire 29.1 per cent. of the Target Sale Shares, which will (following the exercise of the Target Warrants) represent 28.8 per cent. of the Target Shares in issue immediately before Admission;
"Minority Vendors"	the holders of Target Shares (other than the Majority Vendors);
"New Ordinary Shares"	together, the Subscription Shares, the Placing Shares and the Consideration Shares;
"Notice"	the notice set out at the end of the Circular convening a general meeting of the Company to be held at the offices of Allenby Capital Limited at 3 St Helen's Place, London, EC3A 6AB at 10.00 a.m. on 20 April 2015;
"Ordinary Shares"	ordinary shares of £0.01 each in the capital of the Company;
"Placees"	the subscribers for Placing Shares pursuant to the Placing;
"Placing"	the issue of the Placing Shares to the Placees at the Issue Price;
"Placing Agreement"	the agreement between the Company (1) and Allenby Capital (2) dated 27 March 2015 relating to the Placing;
"Placing Shares"	the 18,181,818 New Ordinary Shares to be issued pursuant to the Placing;
"Related Party Transaction"	a related party transaction for the purposes of rule 13 of the AIM Rules for Companies;
"Resolutions"	the resolutions to be put to the General Meeting as set out in the notice of General Meeting as contained in the Circular;
"Shareholder"	a holder of Ordinary Shares;
"Significant Shareholders"	Shareholders owning 3 per cent. or more of the Issued Share Capital;
"Subscribers"	the subscribers for Subscription Shares pursuant to the Subscription;
"Subscription"	the issue of the Subscription Shares to the Subscribers at the Issue Price;
"Subscription Shares"	the 25,000,000 new Ordinary Shares to be issued pursuant to the Subscription;
"Substantial Shareholder"	Sami Wasif, a holder of more than 10 per cent. of the Issued Share Capital for the purposes of a Related Party Transaction and at the date of the Circular is the holder of approximately 14.56 per cent. of the Issued Share Capital;
"Takeover Code"	the City Code on Takeovers and Mergers;
"Target"	Rocca Limited, incorporated in England and Wales with company number 06690296;
"Target Sale Shares"	98.98 per cent. of the Target Shares to be purchased by the Company pursuant to the Acquisition Agreements and all of the Target Shares to be issued pursuant to the exercise of Target Warrants before completion of the Acquisition);
"Target Shares"	ordinary shares of £0.000003 each in the capital of Target;
"Target Warrants"	the warrants issued by Target and outstanding at the date of the Circular to subscribe for an aggregate of 1,216,053 Target Shares;
"The Real Greek"	the chain of Mediterranean restaurants of that name, owned and operated by the Company;
"Unapproved Options"	options granted under the Unapproved Scheme;
"Unapproved Scheme"	the unapproved share option scheme of the Company;
"Vendors"	the Majority Vendors and the Minority Vendors;
"Warrants"	warrants to subscribe for Ordinary Shares.

 

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