Disposal

Nichols PLC
05 November 2004







Date:                   Immediate release: Friday 5 November 2004

Contacts:               John Nichols, Executive Chairman
                        Brendan Hynes, Group Finance Director
                        Nichols plc
                        Telephone:  [phone]

                        Andrew Thomas, Director
                        N M Rothschild & Sons Limited
                        Telephone:  [phone]

                        Richard Evans, Director
                        Brewin Dolphin Securities
                        Telephone:  [phone]

                        Alistair Mackinnon-Musson
                        Philip Dennis
                        Hudson Sandler
                        Telephone:  [phone]
                        Email:    [e-mail]



                            NICHOLS PLC ('Nichols')



                           Disposal of Nichols Foods





Further to the interim statement on 11 August 2004, the Board is pleased to
announce today it has completed the sale of Nichols Foods and has exchanged
conditional contracts for the sale of an associated freehold property.  The
total consideration for the sale of both Nichols Foods and the property is
£11.63 million in cash.



Transaction Summary



•           Total cash consideration payable on completion of the disposal of
Nichols Foods to Newco of £8.13 million.  Newco is a company formed by Gary
Unsworth, the former Group Managing Director of Nichols, for the purpose of
acquiring Nichols Foods.



•           Total cash consideration payable on completion of the disposal of
the property to PLI of £3.5 million.  PLI is a special purpose vehicle formed by
Gary Unsworth for the purpose of acquiring the property.



•           Furthermore, a pre completion dividend of £1.1 million was paid to
Nichols PLC by Nichols Foods Ltd.



•           Net proceeds of the Disposal will be applied to reduce Group
borrowings, leaving the Group broadly debt free.



•           In the year to 31 December 2003, Nichols Foods contributed a
profit before tax of £1.45 million on turnover of £48.8 million.



•           The sale of Nichols Foods represents the final stage of the
Group's strategic review and will enable it to focus on the future development
and marketing of its soft drinks business, the Vimto brand and the expansion of
its dispense business.



Commenting John Nichols, Chairman of Nichols PLC, said:



'The disposal of Nichols Foods and in due course the freehold site at Penny Lane
in Haydock will complete the Board's strategic review, significantly
repositioning the group, strengthening the balance sheet and materially reducing
our gearing. This move allows us to focus our attention on growing our core soft
drinks and dispense businesses and developing the Vimto brand further, both in
the United Kingdom and overseas.'



Information on Nichols Foods



Nichols Foods is a supplier of hot and cold beverage products to the UK food
service, vending and retail sectors.  A wide range of branded and private label
products are manufactured, packed and supplied from premises in Haydock.
Products include powdered beverages and soups, whiteners, dilutable drinks,
single serve sauce sachets, jams and fruit pie fillings.  In addition, Nichols
Foods also provides a range of contract packing services to other food
manufacturing businesses via its Stockpack operation.



The trading record of Nichols Foods and Stockpack Limited for the three years
ended 30 June 2004, as aggregated and extracted from the financial statements is
summarised below:


                                                                                           Six months ended

                                                    Year ended 31 December                          30 June
                                             2001            2002            2003                      2004
                                        (audited)       (audited)       (audited)               (unaudited)
                                             £000            £000            £000                      £000

Turnover                                   43,320          48,860          48,853                    23,037


Profit/(loss) before taxation               3,610           2,103           1,454                     (114)





As at 31 October 2004, the unaudited net assets (excluding cash) of Nichols
Foods had a book value of approximately £15.8 million including the freehold
property



Terms of the Disposal



Nichols has received total cash consideration of £8.13 million for the disposal
of Nichols Foods to Newco, together with a dividend of £1.1 million, paid to
Nichols immediately prior to completion on 5 November 2004.  With regard to the
disposal of the Property, £3.5 million in cash is conditionally payable on
completion of the sale of the property.  Completion of the contract for the sale
of the Property is subject to PLI obtaining funding and is expected to be
completed before the end of December 2004



The total consideration payable represents a discount to the asset value of
Nichols Foods of £4.2 million.  In addition there will be a non cash goodwill
write off of £6.1 million. The immediate cash inflow to the Group of  £8.13
million, together with the further £3.5 million from the disposal of the
Property, will significantly reduce group borrowings and leave the group broadly
debt free.



Reasons for the Disposal



The Group has undergone a strategic review over the past two years.   Whilst
Nichols Foods has traded profitably in recent years, the Board considers that in
the longer term shareholder's interests can be best served by focusing the
Group's strategy on the development, marketing and licensing of its soft drinks
and dispense brands.



Prior to the disposals, the Board undertook an extensive marketing process of
the assets and having taken advice believe the terms offered by Newco are the
best available.



Current trading and prospects



The Group's interim results for the six months ended 30 June 2004 were announced
on 11 August 2004.  The unaudited results showed a profit before taxation of
£2.01 million (2003: £2.17 million loss) on turnover of £46.8 million (2003:
£47.8 million).  Earnings per Ordinary Share were 3.67p (2003: 4.33p loss per
share).



Since the interim announcement the Group has traded broadly in line with
expectations.



Related party transaction



The Disposal is a related party transaction within the meaning of paragraph 12
of the AIM Rules as Gary Unsworth, a major shareholder of Newco and investor in
PLI has been a Director of the Company within the previous twelve months.  The
Directors consider, having consulted with the Company's nominated adviser Brewin
Dolphin Securities Ltd, that the terms of the Disposal are fair and reasonable
insofar as the Shareholders are concerned.





                                    - ENDS -



Definitions



In this statement unless the context otherwise requires, the following
expressions bear the following meanings:


'Company' or 'Nichols'      Nichols plc

'Disposal'                  the disposal by the Company of Nichols Foods, including its premises at Penny
                            Lane, Haydock

'Disposal Agreement'        the agreement dated 5 November 2004 between the Company and Newco relating to the
                            Disposal

'Directors' or 'Board'      the directors of the Company

'Group'                     the Company and its subsidiaries or any of them as the context requires

'Newco'                     Ever 2448 Ltd

'Nichols Foods'             Nichols Foods Limited and Stockpack Limited

'Ordinary Shares'           Ordinary shares of 10p each in the capital of the Company

'PLI'                       Penny Lane Investments LLP

'the Property'              the freehold site at Penny lane, Haydock

'Shareholders'              holders of Ordinary Shares




                      This information is provided by RNS
            The company news service from the London Stock Exchange