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Blueheath Holdings (BOK)

  Print      Mail a friend       Annual reports

Wednesday 09 May, 2007

Blueheath Holdings

Acquisition

Blueheath Holdings PLC
09 May 2007


9 May 2007


             Blueheath Holdings PLC ('Blueheath' or the 'Company')


                  Proposed Acquisition of Giant Topco Limited


           Admission of the Enlarged Share Capital to trading on AIM


                       Change of name to Booker Group plc


               Approval of waiver of Rule 9 of the Takeover Code


                     Change of Nominated Adviser and Broker


The board of Blueheath today announces that it has conditionally agreed to
acquire the entire issued share capital of Giant Topco Limited, the ultimate
holding company of the Booker Group, through the issue of 1,344,910,958 new
Ordinary Shares in Blueheath.


The new company will be called Booker Group plc and will be one of the UK's
leading food wholesalers with annual sales of more than £3 billion. Booker is
the largest operator of cash and carry outlets in the UK, while Blueheath
focuses on the delivered grocery wholesale market. The combination of the two
will create an operation with the ability to serve retailers, caterers and small
businesses, independents and multiple accounts - as well as providing both local
'top-up' and national delivery services.


The Acquisition will be treated as a reverse takeover under the AIM Rules. Upon
completion of the Acquisition, the current shareholders of Giant Topco Limited
will be interested in 90.01 per cent. of the Fully Diluted Enlarged Share
Capital of Blueheath, with the existing Blueheath shareholders holding the
remaining 9.99 per cent..


Richard Rose, Executive Chairman of Blueheath, will be the Non-Executive
Chairman of the Enlarged Group while Charles Wilson, Chief Executive Officer of
Booker, will be Chief Executive Officer and Jonathan Prentis, finance director
of Booker, will be Chief Financial Officer.


The Board also announces the appointment of Investec as Nominated Adviser and
Broker to the Company with immediate effect.


Richard Rose said: 'We are very excited by this chance to create a dynamic new
force in the UK wholesale market. This transaction will form the UK's largest
food wholesaler, by combining Booker's scale, customer base, catering expertise,
coverage and brands with Blueheath's technology and delivery expertise.'


Charles Wilson said: 'Booker has made great progress in the last 18 months and
this transaction gives us the opportunity to take the group to the next level. A
combined Booker/Blueheath will be able to offer retailers and caterers an
unrivalled service of national delivery, 'top-up' delivery and Cash and Carry.'


For further information contact:

Tulchan Communications (PR Adviser to Booker)      020-7353-4200
Susanna Voyle
Celia Gordon Shute

Investec (Nominated Adviser & Broker to Blueheath) 020-7597-5970
James Grace
Keith Anderson
Martin Smith
Tom Levin


There will be a call for analysts at 9.30am. For details please call Laura
Pearson at Tulchan on 020-7353-4200.


This summary should be read in conjunction with the full text of the Admission
Document which is expected to be sent to shareholders today. The Acquisition
will be subject to certain conditions including but not limited to approval of
Shareholders at an EGM which is expected to be convened for this purpose on 1
June 2007. Notice of this meeting is set out in the Admission Document. Certain
definitions and terms used in this Announcement are set out at the end of this
announcement.

Investec, which is authorised and regulated by the Financial Services Authority
in the United Kingdom, is acting exclusively as Nominated Adviser and Broker to
Blueheath in connection with Admission and the Acquisition and is not acting for
any other person and will not be responsible to any other person for providing
the protections afforded to customers of Investec or for advising on the
transaction and arrangements proposed in the Admission Document.

This announcement does not constitute, or form part of, an offer or invitation
to purchase or subscribe for any securities in any jurisdiction. The Admission
Document is expected to be published by the Company on the date of this
announcement and any acquisition of New Ordinary Shares in the Company should be
made only by reference to such Admission Document.


This announcement contains statements about members of the Booker and Blueheath
that are or may be forward-looking statements. All statements other than
statements of historical facts included in this announcement may be
forward-looking statements. Any statements preceded or followed by or that
include the words 'targets', 'plans', 'believes', 'expects', 'aims', 'intends',
'will', 'may', 'anticipates' or similar expressions or the negative thereof are
forward-looking statements. Forward-looking statements include statements
relating to the following: (i) future capital expenditures, expenses, revenues,
economic performance, financial condition, dividend policy, losses and future
prospects; (ii) business and management strategies and the expansion and growth
of the Booker or Blueheath; and (iii) the effects of government regulation on
Booker's or Blueheath's business. These forward-looking statements involve known
and unknown risk, uncertainties and other factors which may cause the actual
results, performance or achievements of any such entity, or industry results, to
be materially different from any results, performance or achievements expressed
or implied by such forward-looking statements. These forward-looking statements
are based on numerous assumptions regarding the present and future business
strategies of such entity and the environment in which each will operate in the
future. Except as required by law, neither Blueheath nor any other party intends
to update these forward-looking statements, even though the affairs of Blueheath
and Booker will change from time to time.


Notes to editors:


Booker is the UK's largest cash and carry operator, offering branded and
private-label goods to more than 400,000 customers, including independent
convenience stores, grocers, pubs and restaurants. In the year to 31 March 2006,
Booker made an operating profit before goodwill amortisation and exceptional
items of approximately £22 million on turnover of approximately £3 billion. The
Proposed Directors estimate that Giant Topco Limited will report turnover of not
less than £3 billion and operating profit before goodwill and exceptional items
of not less than £39 million for the year ended 30 March 2007. Since 2005,
Booker Group has been owned by a consortium led by the Baugur Group hf.


Booker Holdings' improving trend in sales EBITDA, EBIT and net debt compared to
the same period in the prior financial period for the two periods ended 30 March
2007 is set out below:



                                  Period Ended
                     16 September 31 March 2006  15 September 30 March 2007***
                             2005                        2006             

Turnover £m                 1,467         1,570         1,430          1,579

Turnover % Change          (5.9%)        (5.9%)        (2.5%)           0.6%

EBITDA £m *                    22            18            30             27

EBITDA % Change             (41%)         (33%)           37%            50%

EBIT £m **                     13             9            22             17

EBIT % Change               (54%)         (44%)           69%            89%

Net debt £m                   361           125            70             77


Notes:

* Before exceptional items.

** Before goodwill amortisation, goodwill impairment and exceptional items.

*** Results are estimates and are not expected to be less than the numbers
presented above. The actual results reported may be affected by revisions which
could cause the actual results to differ to those estimated above.


Blueheath, established in 2000, is a wholesaler offering added value software
solutions to its customers. The Company offers both branded and private-label
goods to more than 1,200 customers. The Company, which was admitted to trading
on AIM in July 2004, operates from two UK national distribution centres in
Thurrock and Wrexham. In the year to 4 March 2006, Blueheath made a pre-tax loss
of approximately £4.9m on turnover of approximately £132.3m.


The Acquisition is subject to approval of Blueheath's shareholders at an
extraordinary general meeting, which is expected to be held on 1 June 2007.
Application will be made for the Enlarged Share Capital to be admitted to
trading on AIM, which is expected to become effective on 4 June 2007.
Immediately prior to Admission, the Enlarged Group will be
re-named Booker Group plc. Immediately following Admission shareholdings in the
Enlarged Group will include:

Shareholder                                                 Interest in
                                                         Enlarged Share
                                                                Capital
                                                            immediately
                                                              following
                                                            Admission %

Milton ehf *                                                       35.2
Bank of Scotland                                                   12.0
Charles Wilson **                                                   8.1
Kaupthing Bank hf                                                   8.2
TBH Trading Limited                                                 7.4
Kevin Stanford                                                      5.0
Other Booker employee shareholders (including Booker               14.4
EBT)


Notes:

* Milton ehf is a Company owned by BG Holding ehf (a wholly owned subsidiary of
Baugur Group hf) and Fons Eignarhaldsfelag hf

** CEO of the Enlarged Group









                             Blueheath Holdings PLC


                  Proposed Acquisition of Giant Topco Limited


           Admission of the Enlarged Share Capital to trading on AIM


                       Change of name to Booker Group plc


               Approval of waiver of Rule 9 of the Takeover Code


                     Change of Nominated Adviser and Broker


The board of Blueheath announces today that Blueheath has conditionally agreed
to acquire the entire issued share capital of Giant Topco Limited ('Booker
Holdings') in consideration for the issue of 1,344,910,958 new Ordinary Shares
in Blueheath. Upon completion of the Acquisition the shareholders of Booker
Holdings will be interested in 90.01 per cent. of the Fully Diluted Enlarged
Share Capital of Blueheath, with the existing Blueheath shareholders and
optionholders holding the remaining 9.99 per cent..


Booker Holdings is the ultimate holding company within the Booker Group. The
principal trading subsidiary of the Booker Group is Booker. Booker is the UK's
largest cash and carry operator, offering branded and private-label goods which
are sold to over 400,000 customers including independent convenience stores,
grocers, pubs and restaurants.


The Enlarged Group will be one of the UK's leading food wholesalers. The
Directors and the Proposed Directors believe that it will be unique in providing
both national delivery and local 'top-up' services in the UK, serving both
single site and multi-site customers. The Directors and the Proposed Directors
believe that the Enlarged Group will be able to enhance customer service through
an increased choice of both product and delivery format.


Following Admission, the Enlarged Group intends to change its year end to
conform with that of Booker Holdings.


The Acquisition will be treated as a reverse takeover under the AIM Rules and,
as such, requires the prior approval of Blueheath shareholders at the
extraordinary general meeting which is expected to be convened for 11.00 a.m. on
1 June 2007 at the offices of Taylor Wessing LLP, Carmelite, 50 Victoria
Embankment, Blackfriars, London, EC4Y 0DX. Irrevocable undertakings to vote in
favour of the Resolutions have been received from holders of approximately 60.8
per cent. of the existing issued ordinary share capital of the Company. Should
Shareholder approval be obtained, trading in the Existing Ordinary Shares will
be cancelled and the Enlarged Share Capital will be admitted to trading on AIM.


Application will be made for the Enlarged Share Capital to be admitted to
trading on AIM, which is expected to become effective on 4 June 2007.
Immediately prior to Admission, Blueheath will be renamed Booker Group plc.


BG Holding ehf (a wholly owned subsidiary of Baugur Group hf), Fons
Eignarhaldsfelag hf, Milton ehf, Kevin Stanford and TBH Trading Limited are
deemed to be acting in concert in relation to Blueheath for the purposes of the
Takeover Code. On completion of the Acquisition, the Concert Party Members will
between them be interested in 707,844,210 Ordinary Shares, representing
approximately 47.6 per cent. of the Company's enlarged voting share capital. The
Takeover Panel has agreed, however, to waive the obligation to make a general
offer that would arise on the part of the Concert Party Members, either
individually or collectively, as a result of the Acquisition, subject to a
Resolution being passed on a poll by Shareholders.


The Board also announces the appointment of Investec as Nominated Adviser and
Broker to the Company with immediate effect.


Information on Blueheath

Blueheath is a wholesaler of groceries to independent and multiple retail and
leisure outlets within the UK. Established in 2000, Blueheath was the UK's first
internet based delivered grocery wholesaler. The Blueheath offering includes
both branded and private-label goods which are sold to over 1,200 customers.
Blueheath's innovative IT capability enables it to offer an enhanced value
service proposition to its customers and gives it an efficient, low cost
delivery platform with increased stock availability whilst keeping its inventory
levels low. This superior technological base enables Blueheath to differentiate
itself in the marketplace.


Blueheath was admitted to trading on AIM in July 2004 and trades under the RIC
code 'BLH'. In the year ended 4 March 2006, Blueheath acquired two wholesalers,
CTM Wholesale Limited and AC Ward & Son Limited for £5.7 million and £3.3
million respectively.


Blueheath operates from two UK national distribution centres in Thurrock and
Wrexham which, between them, have a combined area of approximately 100,000 sq
ft.


The Blueheath Group employed approximately 250 employees as at 4 March 2006, 68
employees as at 26 February 2005 and 63 employees as at 28 February 2004.


Richard Rose and Mark Aylwin were appointed as Executive Chairman and Chief
Executive Officer of Blueheath in September 2006. A strategic review of
Blueheath's business followed these appointments. The results of this review,
which were announced in November 2006, were that Blueheath had an inappropriate
cost structure, a number of large unprofitable customers and areas of operating
inefficiencies.


On 26 January 2007 Blueheath announced an equity fundraising to raise £3.575
million via a placing which was supported by its largest shareholders, Schroder
Investment Management Limited and Peder Smedvig Capital AS in order to
strengthen its balance sheet and provide the necessary financial resources to
allow the new management team to address the issues raised by the strategic
review.


Financial summary of Blueheath for the financial years ended 28 February 2004,
26 February 2005 and 4 March 2006 and for the 26 weeks ended 2 September 2006


The table below summarises the financial results of Blueheath and its
subsidiaries for each of the financial years ended 28 February 2004, 26 February
2005 and 4 March 2006 and for the 26 weeks ended 2 September 2006 and the net
assets of Blueheath as at each of those dates.

                                         Period
                                          ended
                                 28 26 February   4 March   26 weeks
                           February        2005      2006    ended 2
                               2004                        September
                                                                2006
                                 £m          £m        £m         £m
Group Turnover                 62.7        70.2     132.3       77.2
Loss on ordinary              (7.5)      (5.8)*     (4.9)      (2.8)
activities before
taxation and exceptional
items
Net (liabilities)/assets      (7.0)        11.6      12.5       13.7

Note

* as restated


The information above has been extracted without material adjustment from the
published audited consolidated accounts of the Blueheath Group for the financial
years ended 28 February 2004, 26 February 2005 and 4 March 2006 and from the
published unaudited interim results for the 26 weeks ended 2 September 2006. In
order to make a proper assessment of the financial position of Blueheath, you
should not rely solely on the summary information set out above but should refer
to the published annual results of Blueheath for each of the financial years
ended 28 February 2004, 26 February 2005 and 4 March 2006 and the published
interim results of Blueheath for the 26 weeks ended 2 September 2006.


Information on the Booker Group


Background and history

Booker Holdings is the ultimate holding company within the Booker Group. The
principal trading subsidiary of the Booker Group is Booker.


Booker plc entered the UK food wholesaling market in 1957 when it acquired
Alfred Button Limited. Booker expanded via organic growth and acquisition until
1997 when it reported sales of approximately £3.9 billion for the year ended 27
December 1997. In 2000 Booker plc was acquired by Iceland Group plc which was
then renamed The Big Food Group plc. The Big Food Group plc was subsequently
acquired by Booker Holdings in February 2005. Following the acquisition of The
Big Food Group plc by Booker Holdings all the activities of The Big Food Group
plc other than the cash and carry business of Booker (including the food retail
business Iceland Foods Limited, Woodwards Foodservice Limited and Expert) were
sold to other companies owned or controlled by certain of the Key Vendors.


The results for Booker Holdings in the six months to 16 September 2005 showed a
fall in sales of approximately 5.9 per cent., a fall in EBITDA of approximately
41.0 per cent. and a fall in operating profit before goodwill amortisation,
goodwill impairment and exceptional items of 54.0 per cent. as compared to the
same period for the prior year. On 1 November 2005 Charles Wilson joined Booker
as Chief Executive Officer. In November 2005 a new senior management team was
introduced and the 'Booker Recovery Plan' was announced.


The first phase of the plan between November 2005 and March 2006 comprised
focussing the business on improving cash management and on the customer. Through
tight cash control and a re-financing net debt was reduced. Head office costs
were substantially reduced and supply chain costs were cut by approximately 20
per cent.. The business was simplified and the buying and selling activities
were brought closer together. Stock availability was improved significantly and
a new range of customer promotions introduced. By March 2006 the 'focus' phase
was complete with net debt reduced to approximately £125 million and the rate of
profit decline was arrested.


The second phase of the recovery plan between April 2006 and March 2007 involved
'driving' the business through increased responsiveness to customers. Customers
wanted 'Choice Up, Prices Down, Better Service'. Customer choice has been
improved through a combination of extended ranges; more emphasis on fruit and
vegetables; targeting the on-trade; improved events; and a range of 'Must
Stocks'. Prices down has involved reducing the prices of 600 lines, improving
promotions and launching 'Booker Basics', a range of basic lines with an entry
price ticket. Initiatives designed to improve service have focused on
availability, the speed of service and the role of the branch manager. The
Proposed Directors believe that these actions are working. Like for like sales
to caterers declined by 5.8 per cent. in the six months to 16 September 2005 and
has since then shown a consistent improvement on a half year by half year basis.
Like for like sales to caterers showed an estimated increase of 3.9 per cent.
for the second half of the year ended 30 March 2007. Like for like sales to
retailers declined by 5.6 per cent. for the six months to 16 September 2005.
Sales to retailers have also shown a consistent improvement on a half year by
half year basis. Like for like sales to retailers reduced by an estimated 0.1
per cent. for the second half of the year ended 30 March 2007. As a result, the
operating profit before goodwill amortisation, goodwill impairment and
exceptional items for the year ended 30 March 2007 is expected to be not less
than £39 million (compared to £22 million for the year ended 31 March 2006).


The final phase of the recovery plan (which is ongoing) is to 'Broaden' the
business and is aimed at making Booker the UK's biggest and best supplier to
small business. 'Choice Up, Prices Down, Better Service' remains the long-term
plan and there are significant opportunities for Booker to expand its existing
activities. The Proposed Directors believe that growth in the Booker business
will come predominantly from the following areas:


* increasing sales to caterers;

* the conversion of branches to the new format, 'Booker Extra';

* expanding local delivery (currently approximately £489 million of sales);

* continuing to expand the Premier brand and Retail Club; and

* harnessing the internet as a sales and distribution channel.


Current position

Booker Holdings is the ultimate holding company of Booker, its principal trading
subsidiary.


Booker is the UK's largest cash and carry operator, offering branded and
private-label goods which are sold to over 400,000 customers including
independent convenience stores, grocers, pubs and restaurants. For the year to
30 March 2007, Booker Holdings had estimated sales of approximately £3.0
billion, of which approximately £2.1 billion were to retailers; £0.8 billion to
caterers; and £0.1 billion to other customers (comprising schools, churches, and
professional business users amongst others).


Booker currently lists over 20,000 lines of product, comprising a fully
comprehensive range of branded and own label grocery, fresh & frozen food,
beers, wines, spirits, tobacco and non-food items. For the year ended 30 March
2007, the split of estimated sales by product category to retailers, caterers
and other customers is shown below:

                     Retailers       Caterers         Others          Total
                           £bn            £bn            £bn            £bn

Tobacco                    1.2            0.1              -            1.3
Food and Drink             0.9            0.7            0.1            1.7
Non Food                     -            0.1              -            0.1
                           2.1            0.8            0.1            3.0

Note: Totals do not add up exactly due to rounding of numbers


While tobacco accounted for approximately 42 per cent. of Booker's estimated
turnover for the year ended 30 March 2007, it should be noted that the margin on
tobacco sales is much lower than for other product categories.


The Proposed Directors have been encouraged by the performance in the catering
category which is the most profitable part of the business.


In the year ended 30 March 2007, Booker delivered approximately £489 million of
goods from the cash and carry branches with approximately £2.5 billion of sales
made on a customer collect basis. An estimated 69 per cent. of Booker's sales in
the year ended 30 March 2007 were paid for in cash at the time of purchase.


Cash and Carry branches

Booker currently trades from 172 branches in the UK. The average size of these
branches is approximately 47,000 sq ft, although Booker has four branches over
100,000 sq ft and 12 branches under 20,000 sq ft. The Proposed Directors believe
that Booker's branch portfolio is appropriate for its present requirements and
is capable of handling a considerably increased level of activity. Booker has
commenced a programme of refurbishment and has to date converted 8 branches into
the 'Extra' format. These are brighter stores with improved lighting and layout
and a range that increases choice whilst avoiding unnecessary duplication. Each
Extra branch has an increased proportion of non-food lines which tend to command
a higher margin. Overall, the Extra stores have recorded an increase in sales
and profits as compared to the non-converted portfolio. The Proposed Directors
expect that a further 24 branches will be converted to the Extra format in the
year ending 28 March 2008.


Distribution Centres

Booker operates three regional distribution centres, Hatfield and Haydock in
England and Livingston in Scotland, and has a national distribution centre in
Wellingborough. These distribution centres supply the cash and carry branches
and have the capacity to handle retail delivery.


Retailers

As at 30 March 2007 Booker had approximately 74,000 retail customers.

Booker offers its independent retail customers the opportunity to trade under
its Premier brand which provides the benefits of a national symbol group whilst
retaining the personality and entrepreneurial spirit of the independent
retailer. Premier was voted symbol group of the year at the Retail Industry
Awards 2006. Booker will typically subsidise the fit out of the store's fascia,
signage and other imagery in return for certain minimum spend contracts and
exclusive own-label supply arrangements. At 30 March 2007 there were over 2,000
Premier branded stores in the UK. Estimated sales to Premier branded stores for
the year ended 30 March 2007 were approximately £470 million, an increase of
approximately 10 per cent. on the prior year. Booker also offers customers the
alternative of becoming a member of its Retail Club. Approximately 1,850
customers are currently Retail Club members which enables them to participate in
special promotions. Estimated sales to Retail Club members for the year ended 30
March 2007 were approximately £261 million, an increase of approximately 6 per
cent. on the prior year.


Caterers

At 30 March 2007, Booker had approximately 259,000 catering customers. This is a
key area of growth as the Proposed Directors believe that the outlook for the
catering market is favourable and the profitability is attractive.


Brands

Booker owns a number of 'own label' brands including:

* Chef's Larder - a leading catering brand with wholesale sales of over £120
million for the year ended 30 March 2007;

* Malt House Vintners - leading wine and spirit brands with wholesale sales of
over £125 million for the year ended 30 March 2007; and

* Happy Shopper - a retail own label range with wholesale sales of over £50
million for the year ended 30 March 2007.


Internet

In the year to 30 March 2007 Booker reported estimated internet sales of
approximately £48 million. Booker has recently upgraded its internet
capabilities making its web site easier to use with a more efficient search
capability.


Employees

The Booker Group employed approximately 8,431 employees as at 31 March 2006 and
8,748 employees as at 1 April 2005.

Pensions

The Booker Group operates a number of pension schemes. There are two defined
benefit schemes, the rest are defined contribution schemes. Of the defined
benefit schemes one has no present or deferred members and is in surplus, the
other is the Booker Pension Scheme. This is a defined benefit scheme which is
closed to new entrants and ceased to accrue benefits in respect of service after
31 July 2002. The Booker Pension Scheme had a deficit on an FRS 17 basis of
£84.6 million (before taking into account any deferred tax credit) as at 31
March 2006.


Since 31 March 2006, the directors of Booker have taken a number of actions to
reduce the FRS 17 deficit including two offers to members of the Booker Pension
Scheme to vary or buy out the rights of those members. As a result of these
actions, investment returns made by the assets of the Booker Pension Scheme and
contributions made by Booker, the Proposed Directors believe that the audited
accounts for Booker Holdings for the year ended 30 March 2007 will show a
substantially reduced FRS 17 deficit.


On 24 February 2005, an agreement was made with the trustee of the Booker
Pension Scheme whereby a capital payment of £35 million was made in March 2005,
followed by agreed annual payments of £11.5 million in the year ended March
2006, £12.5 million in the year ended March 2007 and £14.5 million in the year
ending March 2008. The next triennial valuation is due as at 31 March 2007, the
results of which are expected in early 2008, following which a new funding rate
will need to be agreed with the trustees.

Property

Booker has a total of 202 properties under lease. Of these, 172 are branch
premises, 4 distribution centres and 2 office buildings. Of the remaining 24
properties, 5 are vacant and 19 are sub-let by Booker to third parties. Of the
172 'Cash and Carry' branches, 52 are properties which were part of a sale and
lease back transaction concluded in February 2005 (the '2005 Properties') and 12
are properties which were part of a sale and lease back transaction concluded
with AXA (the 'AXA Properties'). Total current annual rent in respect of trading
branches is £33,765,880 of which £10,309,766 (30.53 per cent.) was paid in
respect of the 2005 Properties and £5,283,138 (15.65 per cent.) was paid in
respect of the AXA Properties.

The leases of the 2005 Properties are on substantially similar terms. In
particular, the leases expire on the same date, 27 February 2030, and are
subject to rent reviews every five years, the next rent review for each property
being on 28 February 2010. Rent is reviewed on an upwards only basis at a rate
equal to the higher of 2.5 per cent. of current rent compounded annually and
open market rent. The leases of the AXA Properties are also on similar terms
save that the rent reviews occur annually, the minimum rented increase is 3 per
cent. and the leases expire on various dates between 2012 and 2037. The
remaining trading branches are leased on differing terms from a number of
landlords.

In relation to the vacant and sub-let properties Booker has made provisions
where appropriate to cover the present value of the expected costs that may
arise in relation to those properties over the remaining life of the leases.

Tax

The Booker Group used to have operations in the United States. Those operations
were disposed of during the 1990's. The United States tax position associated
with the companies which carried out those operations is in the process of being
resolved. The directors of Booker Holdings will make a provision of £9 million
in the accounts for the year ended 30 March 2007 to cover the possible liability
to taxation in the United States and/or United Kingdom.

Financial summary of Booker Holdings for the two periods ended 31 March 2006 and
estimate for the period ended 30 March 2007


The table below summarises the financial results of Booker Holdings for each of
the two periods ended 31 March 2006 and the net assets of Booker Holdings as at
each of those dates, with an estimate for group turnover, EBITDA and operating
profit before goodwill amortisation and exceptional items for the period ended
30 March 2007 and an estimate of net debt as at 30 March 2007.

Booker Holdings                   
                                           
                                   44 week period         Year         Year 
                                           Ended*        Ended     Ended***
                                          1 April     31 March     30 March
                                             2005         2006         2007
                                          Audited      Audited    Unaudited
                                                                   estimate
                                               £m           £m           £m

Group Turnover                              467.8      3,037.4      3,000.0
EBITDA (before exceptional                   10.5         40.3         57.0
items)
Operating profit before                       7.8         21.7         39.0
goodwill amortisation,
goodwill impairment and
exceptional items
Net debt**                                (401.0)      (124.8)       (77.0)
Net assets                                   22.7        182.5


Notes

* Booker Holdings traded for only 7 weeks in the period ended 1 April 2005.

** Net debt includes senior term loans and amounts drawn under a rolling credit
facility offset by cash in transit together with loan notes and amounts payable
under finance lease creditors less unamortised debt finance costs.

***Results are estimates. The actual results reported may be affected by
revisions which could cause the actual results to differ to those estimated
above.

In order to make a proper assessment of the financial position of Booker
Holdings, you should not rely solely on the summary information set out above
but should read the whole of the Admission Document.


The improving trend for turnover, EBITDA, EBIT and net debt compared to the same
period in the prior financial period for the two periods ended 30 March 2007 is
set out below:

                     Period Ended
Half Year            16 September  31 March     15 September 30 March
                     2005          2006         2006         2007***
                     £m            £m           £m           £m

Turnover £m          1,467         1,570        1,430        1,579
Turnover % Change    (5.9%)        (5.9%)       (2.5%)       0.6%
EBITDA* £m           22            18           30           27
EBITDA % Change      (41%)         (33%)        37%          50%
EBIT** £m            13            9            22           17
EBIT % Change        (54%)         (44%)        69%          89%
Net Debt £m          361           125          70           77



Notes

* Before exceptional items

** Before goodwill amortisation, goodwill impairment and exceptional items

*** Results or estimates. The actual results reported may be affected by
revisions which could cause those the actual results to differ to those
estimated above.


Background to the Market


Both Blueheath and Booker compete in the UK food supply market which includes
food retailing, wholesaleing and catering. The wholesale sector can be split
into Cash and Carry, Delivered Grocery and Foodservice/Catering segments. Whilst
the availability of data relating to these segments is limited, the table below
sets out the estimated total market size for the years ended 31 December 2004,
2005 and 2006.

                                     Year ended 31 December
                               2004              2005              2006
                                £bn               £bn               £bn

Cash and Carry                  9.5               9.3               9.4
Delivered Grocery               7.2               7.6               8.1
Food Service/Catering            na               6.5               6.6
                              _____             _____             _____
                                 na              23.4              24.1

Source: IGD, ACNeilsen



Key Competitors

The food wholesale sector is highly fragmented and the Directors and the
Proposed Directors are of the opinion that the Enlarged Group will experience
competition in the following areas:

Cash and Carry

As at the date of this document, Booker is the largest cash and carry business
in the UK by sales and faces competition from three other major national brands.
These are Bestway Cash & Carry, Makro and Costco. There are also a large number
of regional competitors.

Delivered Grocery

The Delivered Grocery segment has a small number of national competitors
including Palmer & Harvey, Spar and Musgrave Budgens Londis. Currently, Booker
offers 'top-up' delivery supplied from local cash and carry branches.

Food Service / Catering

Booker also competes with Brake Brothers Limited and 3663 Foodservice, Matthew
Clark, Waverley TBS and a multitude of catering suppliers. Currently, Booker
offers 'top-up' delivery to caterers and other food service customers from local
cash and carry branches.



Background to and reasons for the Acquisition


The Directors and Proposed Directors believe that the acquisition by Blueheath
of Booker Holdings will form one of the UK's leading food wholesalers by
combining Booker's scale, customer base, catering expertise, coverage and brands
with Blueheath's technology and delivery expertise.

The Directors and Proposed Directors expect that the Enlarged Group will benefit
from improved cash management and from cost synergies. Cost synergies are
expected from, inter alia, improved buying power and logistics efficiency and
from central and financing costs. The Enlarged Group will serve retailers,
caterers and small business and will supply single and multi-site customers. It
will be the only food wholesale provider of national delivery to retail
customers and local 'top-up' of fresh, frozen and ambient foods, alcohol and
non-foods.

The Directors and Proposed Directors believe that this combination will allow
the Enlarged Group to enhance customer service through a larger choice of
products and delivery methods, whilst improving efficiency with the aim of
becoming the UK's leading wholesaler.


Principal terms of the Acquisition


Blueheath will acquire the entire issued share capital of Booker Holdings in
consideration for the allotment and issue of 1,344,910,958 new Ordinary Shares.

The Acquisition will be effected by means of the acquisition of shares in Booker
Holdings from the Key Vendors, Charles Wilson, Jonathan Prentis and the Booker
EBT pursuant to a sale and purchase agreement entered into with Blueheath. The
drag-along provisions in Booker Holdings' articles of association will be
invoked to acquire the remaining shares in Booker Holdings on the terms set out
in the Share Purchase Agreement.

The Acquisition is conditional upon, inter alia, the issue of an Admission
Document and notice of EGM, Shareholder approval at the EGM and Admission.

Prior to Completion neither the Company nor Booker Holdings may, without
consent, do anything outside the ordinary course of business, declare any
dividends or other distributions or issue any shares or rights to subscribe for
shares. The Key Vendors, Charles Wilson, Jonathan Prentis and the Booker EBT
have also agreed not to acquire any shares in the Company. Breach of these
obligations may result in termination of the Share Purchase Agreement.

All the parties to the Share Purchase Agreement have given limited warranties in
relation to capacity and authority. The Key Vendors, Charles Wilson, Jonathan
Prentis and the Booker EBT have given warranties in relation to title to the
shares being sold by them.


The Board and key employees

With effect from Admission: Charles Wilson and Jonathan Prentis will become
Chief Executive Officer and Chief Financial Officer of the Enlarged Group; Mark
Aylwin (Chief Executive Officer of Blueheath), Simon Mindham (Chief Financial
Officer of Blueheath) John Hewett (Non-Executive Director of Blueheath) and Mark
Naughton-Rumbo (Non-Executive Director of Blueheath) will step down from the
Board; Kevin Lyon, Hans Kristian Hustad and Jim McMahon will be appointed
Non-Executive Directors of the Enlarged Group; and Richard Rose will remain on
the Board and will become Non-Executive Chairman. With effect from Admission,
Simon Mindham will step down as Company Secretary of Blueheath and Mark Chilton
will become Company Secretary of the Enlarged Group.


Mark Aylwin and Simon Mindham will respectively become the Managing Director and
the Finance Director of the delivered wholesale business.


The details of the Proposed Directors and key employees of the Enlarged Group
are set out below.


Proposed Directors

Richard Rose, Non-Executive Chairman (Age: 51)

Richard joined Blueheath as deputy chairman in May 2006 and was appointed
Executive Chairman in September 2006. It is proposed that on Completion Richard
becomes Non-Executive Chairman. Richard was formerly Chief Executive Officer of
Whittard of Chelsea plc, a multi site retailer of tea and coffee which was sold
to an investee company of Baugur Group hf in 2006. Previously he was a Director
of Hagemeyer (UK) Ltd, a distributor of professional products and services, with
a UK turnover approaching £1 billion through 360 outlets. Prior to that he had
been Chief Executive Officer of WF Electrical plc, a fully listed electrical
distributor, where he created a substantial improvement in shareholder value.
Hagemeyer purchased WF Electrical plc in 2000. He was also Non-Executive
Chairman of AC Electrical Wholesale Limited where he led a very successful
growth strategy resulting in a very substantial increase in shareholder value.
The business was sold to Wolseley in 2006. He is Chairman of Kiotech
International plc, Non-Executive Chairman of Nanoscience Inc. and Non-Executive
Chairman of Felix Group plc.


Charles Wilson, Chief Executive Officer (Age: 41)

Charles started his career in 1986 with Procter and Gamble following which he
was a consultant with OC&C Strategy Consultants and a Director of Abberton
Associates. In 1998 he became an Executive Director of Booker Plc which merged
with Iceland plc in 2000. In 2001 he became an Executive Director of Arcadia
Group plc and in 2004 he became an Executive Director at Marks and Spencer Plc.
In 2005 he was appointed as Chief Executive Officer of Booker.


Jonathan Prentis, Chief Financial Officer (Age: 45)

Jonathan qualified as a chartered accountant in 1987 with Deloitte & Touche.
Jonathan was appointed as finance director of Booker in 2005 after the
acquisition of The Big Food Group by Booker Holdings. Prior to this appointment,
Jonathan was finance director of Woodward Foodservice Limited and then finance
director of Group Logistics within The Big Food Group plc. Prior to 2003,
Jonathan was with TDG plc.


Kevin Lyon, Non-Executive Director (Age: 45)

Kevin qualified as a chartered accountant in 1985. After two years in merchant
banking Kevin joined the private equity and venture capital business, 3i plc.
While with 3i, he built and developed several successful investment teams across
the UK and led many transactions in a wide range of sectors. Kevin also held a
number of leadership and management positions including Managing Director, UK
Private Equity. Kevin left 3i plc in 2004 to build a portfolio of non-executive
interests. Kevin is currently Chairman of a number of UK companies.


Hans Kristian Hustad, Non-Executive Director (Age: 57)

Hans Kristian started his career in the Norwegian food and beverage industry in
the 1970's. In 1996, he started to work for one of the largest food retailers in
Norway, Reitan Group Ltd., and was responsible for the launch of Rema 1000
International Ltd. on the Oslo Stock Exchange through a merger with the listed
Narvesen Plc. He became a Non-Executive Director of Baugur Group when the
company was launched on the Icelandic Stock Exchange in 1999. When Baugur Group
hf headed the consortium which bought The Big Food Group plc in February 2005,
he became Chairman and Chief Executive Officer of Booker Holdings. When Charles
Wilson became Chief Executive Officer of Booker Holdings from November 2005, he
continued as Non-Executive Chairman. He is a Non-Executive Director of Hamleys
and Wyevale.


Jim McMahon, Non-Executive Director (Age: 58)

Jim is a founding partner, with Sir Tom Hunter, of West Coast Capital and has
been involved in approximately £5 billion of West Coast Capital led deals since
March 2001. Jim sits on a number of retail boards, including House of Fraser and
Wyevale, providing strategic and financial advice. Jim was a Senior Inspector of
Taxes and then spent sixteen years with PricewaterhouseCoopers where he was a
Tax Partner, a member of the PwC Supervisory Board and, prior to joining West
Coast Capital, headed a national team advising some of the UK's leading
entrepreneurs and their businesses.

Operational Management

In addition to the Proposed Directors, the key personnel within the Enlarged
Group that will be responsible for the operation and development of the business
are:

Mark Chilton

Mark will be appointed as Company Secretary to the Enlarged Group following
Admission. Mark qualified as a solicitor in 1987. Mark was appointed as Company
Secretary of Booker Holdings in May 2006. Previously, he was head of legal at
The Big Food Group plc. Prior to that, he was at The Greenalls Group Plc.

Mark Aylwin

Mark will be Managing Director for the delivered wholesale business of the
Enlarged Group. Mark was previously supply chain and IT director at
Musgrave-Budgens-Londis, a leading wholesaler to independent retailers in the
UK. He has over twenty years trading, supply chain and logistics experience in
the food industry, principally at Safeway where he was Commercial Director for
non--foods and then Supply Chain Director.

Bryan Drew

Bryan will be Group Commercial Director, responsible for all buying and brands
of the Enlarged Group. Bryan was at Booker plc from 1989 to 2003 when he left to
co-found Hub Wholesale Ltd. He returned to Booker plc in November 2005 as
Commercial Director.

Simon Mindham

Simon is currently Finance Director of Blueheath and will be Finance Director
for the delivered wholesale business of the Enlarged Group. He qualified as a
Chartered Accountant in 1990 with RSM Robson Rhodes and subsequently worked for
TDG plc and the Cert Group where he held a number of finance roles including
acting as Finance Director for Cert Distributors, a wholesaler of products to
the independent sector.

Bryn Satherley

Bryn Satherley will be Group Operations Director responsible for property, IT,
logistics and supply chain of the Enlarged Group. He was at Booker plc between
1999 and 2001 and rejoined in 2005. Prior to that he was at Exel plc and was on
the board of Alldays Limited.

Tony Overton

Tony Overton will be Director for the Extra format. Tony rejoined Booker plc in
2005 having co--founded Hub Wholesale Ltd. Previously he was Managing Director
of BWG Wholesale UK, a division of BWG Holdings Limited and was at Booker plc
from 1992 to 2001.

Warren Thomson

Warren is responsible for branch operations, sales and marketing. He has worked
for Booker plc for over thirty two years holding a variety of positions from
branch through to Board level.


Current Trading and Prospects of the Enlarged Group


Blueheath

On 26 January 2007 the Company announced that excellent progress had been made
in remedying the areas identified in the strategic review and that the
annualised level of cost savings achieved by that date amounted to approximately
£3.1 million. Since that date the Company has continued to trade in line with
management expectations.


Booker Holdings

The Directors and the Proposed Directors estimate that Booker Holdings will
report sales of not less than £3 billion and operating profit, before goodwill
amortisation and exceptional items of not less than £39 million for the
financial year ended 30 March 2007. Sales levels in the first period of the
current financial year were ahead of the same period in the prior year, whilst
inventory levels and costs were in line with management expectations. Overall,
Booker is currently trading in accordance with management expectations.


Enlarged Group

The Directors and the Proposed Directors view the Enlarged Group's trading and
financial prospects with confidence.


Both Blueheath and Booker Holdings intend to announce their annual results for
the years ended 3 March 2007 and 30 March 2007 respectively in the two weeks
following Admission.


Irrevocable Undertakings

Schroder Investment Management Limited, Smedvig Capital and RIT Capital Partners
plc who are interested in 38,905,078 Ordinary Shares, 39,569,600 Ordinary Shares
and 8,707,600 Ordinary Shares have irrevocably undertaken to the Company to vote
in favour of all the Resolutions. Accordingly, irrevocable undertakings have
been received from Shareholders holding approximately 60.8 per cent. in total of
the Existing Ordinary Shares to vote in favour of the Resolutions.


Dealing Restrictions

The Key Vendors have entered into an orderly market agreement whereby they
undertake to the Company and Investec not to sell or otherwise dispose of any
interest in New Ordinary Shares during the Orderly Market Period, subject to
certain exceptions.


The Proposed Directors have agreed to the dealing restrictions described above.
The Company has undertaken to Investec not to waive or vary any of those dealing
restrictions prior to 1 June 2009.


The Company and Investec have agreed that, if, in the four weeks following
Admission, there is sufficient demand from institutional and other investors
identified by Investec at a price acceptable to the Key Vendors, then the Key
Vendors may dispose of approximately 225 million of the New Ordinary Shares to
investors identified by Investec, however they are under no obligation to do so.


Charles Wilson, Jonathan Prentis and those Booker other employees of the Booker
Group who will acquire New Ordinary Shares as part of the terms of the
Acquisition will be prohibited, subject to certain limited exceptions, from
disposing of the New Ordinary Shares that they receive at Admission prior to 1
June 2009. In addition, and subject to certain limited exceptions, if any such
person ceases to be employed by the Enlarged Group (or gives or receives notice)
on or prior to 31 May 2008 his shares will be transferred to the Booker EBT at
cost. 

Richard Rose, Mark Aylwin and Simon Mindham have also given similar undertakings
that they will not prior to 1 June 2009, subject to certain limited exceptions,
dispose of Ordinary Shares which they will receive following an exercise of
Options under the Blueheath Senior Management Incentive Scheme.


IFRS adjustments


In accordance with the AIM Rules for Companies, Blueheath is required to report
its results under IFRS for the accounting period commencing 4 March 2007.
Following Admission, Blueheath intends to change its year end to conform with
that of Booker Holdings.


The Directors and the Proposed Directors believe the change from reporting
results under GAAP to reporting results under IFRS may result in material
changes to reported profit in the following areas:


Goodwill amortisation

Under IFRS goodwill is not amortised. An impairment review is performed annually
to review the carrying value of the asset. The value of goodwill on the balance
sheet of Booker Holdings at 31 March 2006 was £410.1 million and the value of
goodwill on the Blueheath balance sheet at 2 September 2006 was £5.1 million.
The amortisation charge reported in Booker Holding's consolidated financial
statements for the year to 31 March 2006 was £26.8 million (excluding an
impairment charge of £102.6 million). The amortisation charge reported in
Blueheath's financial statements for the year to 4 March 2006 was £0.1 million.


Lease incentives

Under IFRS lease incentives are required to be recognised in the income and
expenditure account spread throughout the period of the lease. Booker Holdings
entered into a 25 year sale and leaseback transaction in February 2005. Under UK
GAAP, approximately £20 million of lease incentives were being recognised over
the five year period to the first rent review in February 2010. A benefit of
approximately £4.0 million was therefore reported per annum under UK GAAP to the
year ending March 2010. Under IFRS the benefit will be approximately £0.8
million per annum throughout the 25 year of the lease.


Takeover Code

Following Admission, the Concert Party will own Ordinary Shares in aggregate
representing approximately 47.6 per cent. of the Enlarged Share Capital.


The terms of the Acquisition give rise to certain considerations under the
Takeover Code. The Takeover Code is issued and administered by the Takeover
Panel. The Takeover Code is designed principally to ensure fair and equal
treatment of all shareholders in relation to UK takeovers.


Under Rule 9 of the Takeover Code, any person who acquires an interest (as
defined in the Takeover Code) in shares which, taken together with shares in
which he is already interested and in which persons acting in concert with him
are interested, carry 30 per cent. or more of the voting rights of a company
which is subject to the Takeover Code is normally required to make a general
offer to all the remaining shareholders to acquire their shares. Similarly, when
any person, together with persons acting in concert with him, is interested in
shares which in the aggregate carry not less than 30 per cent. of the voting
rights of such a company but not more than 50 per cent. of such voting rights, a
general offer will normally be required if any further interests in shares are
acquired by any such person.


An offer under Rule 9 must be made in cash and at the highest price paid by the
person required to make the offer, or any person acting in concert with him, for
any interest in shares of the company during the 12 months prior to the
announcement of the offer.


BG Holding ehf, Fons Eignarhaldsfelag hf, Milton ehf, Kevin Stanford and TBH
Trading Limited are deemed to be acting in concert in relation to Blueheath for
the purposes of the Takeover Code. On completion of the Acquisition, the Concert
Party Members will between them be interested in 707,844,210 Ordinary Shares,
representing approximately 47.6 per cent. of the Company's enlarged voting share
capital. As a result of the Acquisition, the Concert Party Members will between
them hold interests in New Ordinary Shares carrying not less than 30 per cent.
of the voting rights in the Company.


The Takeover Panel has agreed, however, to waive the obligation to make a
general offer that would otherwise arise on the part of the Concert Party
Members as a result of the issue of Ordinary Shares to Concert Party Members,
subject to the approval of Shareholders. Accordingly, Resolution 2 is being
proposed at the EGM and will be taken on a poll. To be passed, Resolution 2 will
require a simple majority of the votes cast.


Following completion of the Acquisition the Concert Party Members will between
them be interested in Ordinary Shares carrying more than 30 per cent. of the
Company's voting share capital but will not hold shares carrying more than 50
per cent. of such voting rights and, for as long as they continue to be treated
for the purposes of the Takeover Code as acting in concert, any further increase
in that aggregate interest in shares will be subject to the provisions of Rule 9
of the Takeover Code.


Dividend Policy

The Proposed Directors intend to adopt a dividend policy which will reflect the
long-term earnings and cashflow potential of the Enlarged Group, whilst
maintaining an appropriate level of dividend cover. It is envisaged that the
Enlarged Group will pay an interim and a final dividend in respect of each year.


The payment of a dividend in respect of the current financial year is dependent
on a number of factors including the availability of distributable
reserves within the Company and finalisation of the level of contributions to
the Enlarged Group's pension schemes.


Corporate Governance

The Proposed Directors recognise the importance of sound corporate governance.
Although the Company, as a company admitted to AIM, will not be required to
comply with the Combined Code, the Proposed Directors recognise that it is in
the best interests of the Company and its Shareholders for the Company to comply
with those principles of corporate governance in the Combined Code which are
appropriate for a company of its size and nature.


The Proposed Directors consider that Richard Rose, the proposed Non-Executive
Chairman, is independent for the purposes of the Combined Code. Although upon
Admission the Company will not comply with the Combined Code requirements
regarding the number of independent directors and committee composition, it is
the intention of the Proposed Directors to appoint two independent non executive
directors to join the Board in due course following Admission.


The Board has established with effect from Admission audit, remuneration and
nomination committees comprising of Richard Rose and Kevin Lyon. Following the
appointment of the two additional independent non-executive directors, the Board
will review the composition of the committees.


The committees have duties and responsibilities formally delegated to them by
the Board.


The audit committee will meet at least three times each year. The audit
committee is primarily responsible for: (i) ensuring that the financial
performance of the Enlarged Group is properly monitored and reported on; (ii)
meeting with the auditors and reviewing reports from the auditors relating to
the Enlarged Group's accounting and internal controls; (iii) reviewing the
effectiveness of the Enlarged Group's systems of internal control; and (iv)
agreeing the terms of appointment and remuneration of the auditors.


The remuneration committee will meet at least twice a year. The remuneration
committee is responsible for setting the remuneration and other terms of
employment of the Company's executive officers and management and determining
and reviewing any share incentive plans.


The nomination committee will meet at least twice a year. The nomination
committee is responsible for making recommendations on the appointment of
additional directors and for reviewing the size, structure and composition of
the Board and the membership of Board committees.


The Proposed Directors will, following Admission, adopt a share dealing code for
the Directors and the Enlarged Group's employees who have access to price
sensitive information, which is appropriate for a company whose shares are
admitted to trading on AIM (in order to, amongst other things, ensure compliance
with Rule 21 of the AIM Rules). The Proposed Directors intend to take all
reasonable steps to ensure compliance with the share dealing code by the
Directors and relevant employees.


Relationship Agreement

The Concert Party Members have entered into a relationship agreement with the
Company to regulate certain aspects of the continuing relationship between the
Company and them, whereby they undertake to the Company to exercise their powers
of control and voting rights in relation to the Company in accordance with the
provisions of the relationship agreement, for as long as they constitute a
Concert Party and together hold ordinary shares in Blueheath carrying not less
than 30 per cent. of the voting rights.


Admission to AIM and Dealings


The Acquisition will constitute a reverse take-over under the AIM Rules and is
therefore conditional upon the approval of Shareholders being given at the
Extraordinary General Meeting, details of which are set out below.

Application will be made for the Enlarged Share Capital to be admitted to
trading on AIM and it is anticipated that Admission will become effective and
that trading in the Ordinary Shares on AIM will commence on 4 June 2007.

The Proposed Directors intend that, if and when appropriate, they will apply for
the Company's ordinary shares to be admitted to the Official List of the UK
Listing Authority and to trading on the London Stock Exchange's main market for
listed securities.

Extraordinary General Meeting


It is anticipated that the Extraordinary General Meeting, to be held at the
offices of Taylor Wessing LLP, Carmelite, 50 Victoria Embankment, Blackfriars,
London EC4Y 0DX will be convened at 11.00 am on 1 June 2007, at which, the
following Resolutions will be proposed:

* Resolution 1 is an ordinary resolution:

(a) to approve the Acquisition for the purposes of the AIM Rules;

(b) to increase the authorised share capital of the Company from £2,000,000 to
£20,000,000 in order to permit the issue of the New Ordinary Shares and to give
the Company headroom for the future;

(c) authorising the Directors under section 80 of the Act to allot:

(i) the New Ordinary Shares pursuant to the terms of the Acquisition; and

(ii) further new Ordinary Shares up to a nominal amount of £5,019,134, being the
equivalent of approximately one-third of the Enlarged Share Capital and an
amount necessary to meet the exercise of options under the Company's share
incentive schemes, in accordance with industry guidelines. This authority
replaces the authority given at the last Annual General Meeting of the Company
and will expire on the date of the next Annual General Meeting of the Company or
15 months after the date of the passing of Resolution 1, whichever is earlier;

* Resolution 2 is an ordinary resolution (which will be held on a poll) to
approve the waiver by the Takeover Panel of the requirement under Rule 9 of the
Takeover Code of the Concert Party to make a general offer for Blueheath;

* Resolution 3 is an ordinary resolution to amend the Blueheath's Senior
Management Incentive Scheme so that a reverse takeover of the Company will
result in the options vesting in full in the same way as on a takeover.

* Resolution 4 is a special resolution to disapply statutory pre-emption rights
for:

(a) any issue of new Ordinary Shares to existing Shareholders and other persons
made pro rata to existing holdings and the deemed holdings of other persons
entitled to participate in any such issue. Typically, this would involve a
rights issue. This means that, although an issue of Ordinary Shares will be made
to Blueheath shareholders and such other persons in accordance with their
existing holdings (and will therefore have no dilutive effect), the directors do
not have to comply with the procedural requirements of the Act; and

(b) allotments for cash of Ordinary Shares up to a nominal amount of £744,200,
which is equivalent to approximately 5 per cent. of the Enlarged Share Capital.
Again, it is typical for an AIM quoted company to empower its directors to
disapply statutory pre-emption rights in respect of a proportion of its issued
share capital on an annual basis. Industry guidelines suggest that a company
limit such disapplication to 5 per cent. of its issued share capital.

This authority replaces the authority given at the last Annual General Meeting
of the Company and will expire on the date of the next Annual General Meeting of
the Company or 15 months after the date of the passing of Resolution 4,
whichever is earlier;

* Resolution 5 is a special resolution to adopt new Articles of Association of
Blueheath, to bring them into line with current practice for a public company
where shares are admitted to trading on AIM.; and

* Resolution 6 is a special resolution to change the name of the Company to
Booker Group plc.

The Acquisition is conditional on Resolutions 1 and 2 being passed. If any of
the other Resolutions are not passed, the Acquisition will proceed nevertheless.


The Admission Document incorporating the notice of EGM is expected to be posted
to Shareholders today.


The definitions set out below have the following meanings, unless the context
requires otherwise.

'Act'                                The Companies Act 1985 (as amended)

'Acquisition'                        The proposed acquisition by
                                     Blueheath of the entire issued share
                                     capital of Booker Holdings

'Admission'                          The re-admission of the Existing
                                     Ordinary Shares and the admission of
                                     the New Ordinary Shares to trading
                                     on AIM becoming effective in
                                     accordance with the AIM Rules

Admission Document'                  The Admission Document dated 9 May
                                     2007, prepared in connection with
                                     the Flotation

'AIM'                                The AIM market operated by the
                                     London Stock Exchange

'AIM Rules'                          The rules published by the London
                                     Stock Exchange governing admission
                                     to, trading on and regulation and
                                     operation of AIM

'Blueheath' or the 'Company'         Blueheath Holdings PLC, a company
                                     incorporated and registered in
                                     England and Wales with registered
                                     number 05145685

'Blueheath Group'                    Blueheath and its subsidiary
                                     undertakings as at the date of this
                                     document

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

'Booker'                             Booker Limited, a company
                                     incorporated and registered in
                                     England and Wales with registered
                                     number 00197380 and indirectly, a
                                     wholly owned subsidiary of Booker
                                     Holdings

'Booker EBT'                         The employee benefit trust
                                     established on 25 April 2006 for the
                                     benefit of employees of the Booker
                                     Group

'Booker Group'                       Booker Holdings and its subsidiary
                                     undertakings as at date of this
                                     announcement or any one or more of
                                     them as the context may require

'Booker Holdings'                    Giant Topco, indirectly, the owner
                                     of 100 per cent. of the issued share
                                     capital of Booker, and the ultimate
                                     holding company of the Booker Group

'Booker Pension Scheme'              the Booker defined benefit pension
                                     scheme which came into operation on
                                     1 January 1949

'Combined Code'                      The Combined Code on Corporate
                                     Governance appended to but not
                                     forming part of the FSA's Listing
                                     Rules published in June 2006 by the
                                     Financial Reporting Council

'Completion'                         Completion of the Share Purchase
                                     Agreement in accordance with its
                                     terms

'Concert Party'                      BG Holding ehf, Fons
                                     Eignarhaldsfelag hf, Milton ehf,
                                     Kevin Stanford and TBH Trading
                                     Limited (each a ''Concert Party
                                     Member'')

'Enlarged Group'                     Blueheath and its subsidiary
                                     undertakings, including the Booker
                                     Group, following Completion or any
                                     one or more of them as the context
                                     may require

'Enlarged Ordinary Share capital' or The Existing Ordinary Shares and the
'Enlarged Share Capital'             New Ordinary Shares immediately
                                     following Admission

'Existing Ordinary Shares'           The 143,488,122 Ordinary Shares in
                                     the capital of the Company in issue
                                     as at today's date

'Extraordinary General Meeting' or   The extraordinary general meeting of
'EGM'                                Blueheath which is expected to be
                                     convened for 11.00 a.m. on 1 June
                                     2007 at which the Resolutions will
                                     be proposed and any adjournment
                                     thereof

'Flotation'                          The admission to trading of the
                                     Company's Ordinary Shares on AIM
                                     which is expected to be 4 June 2007

'FRS'                                The Financial Reporting Standards as
                                     issued by the Accounting Standards
                                     Boards from time to time

'Fully Diluted Enlarged Share        The Enlarged Share Capital plus all
Capital'                             outstanding Options

'IFRS'                               The International Financial
                                     Reporting standards as issued by the
                                     Board of International Standards
                                     Committee from time to time

'Investec'                           Investec Investment Banking, a
                                     division of Investec Bank (UK)
                                     Limited

'Key Vendors'                        Milton ehf, Kevin Stanford, TBH
                                     Trading Limited, Kaupthing Bank hf,
                                     The Governor and Company of the Bank
                                     of Scotland and Uberior Investments
                                     plc

'London Stock Exchange'              London Stock Exchange plc

'New Ordinary Shares'                The 1,344,910,958 new Ordinary
                                     Shares to be issued to shareholders
                                     of Booker Holdings pursuant to the
                                     terms of the Acquisition

'Official List'                      The Official List of the United
                                     Kingdom Listing Authority

'Options'                            Options over Ordinary Shares

'Orderly Market Period'              The period commencing on the date of
                                     Admission and ending twelve months
                                     from the date of Admission

'Ordinary Shares'                    Ordinary shares of 1p each in the
                                     share capital of Blueheath

'Pensions Regulator'                 The Pensions Regulator established
                                     by the Pensions Act 2004

'Proposed Directors'                 The proposed directors of Blueheath
                                     with effect from Admission

'Resolutions'                        The resolutions to be proposed at
                                     the EGM (and set out in the notice
                                     of EGM)

'Share Purchase Agreement''          The share purchase agreement dated 9
                                     May 2007 between Blueheath, the Key
                                     Vendors, Charles Wilson, Jonathan
                                     Prentis and the Booker EBT pursuant
                                     to which, conditionally, inter alia,
                                     upon Admission and the passing of
                                     Resolutions 1 and 2, Blueheath has
                                     agreed to acquire the entire issued
                                     share capital of Booker Holdings

'Shareholder' or 'Ordinary           Holder of Ordinary Shares
Shareholder'

''Takeover Code'                     The City Code on Takeovers and
                                     Mergers

'Takeover Panel'                     The Panel on Takeovers and Mergers

'UK' or 'United Kingdom'             The United Kingdom of Great Britain
                                     and Northern Ireland

'UK GAAP'                            United Kingdom Generally Accepted
                                     Accounting Principles





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