Neo Group: Acquiring home-grown brand to expand snack market

Media release highlights:

• Proposed acquisition of premium snack manufacturer Royale International Food Industries in line with plans to diversify into snack food market.

• Earnings-accretive acquisition part of strategic move to reap economies of scale from consolidation of shared resources under Thong Siek Global.

• Immediate foodhold in fast-growing snack good market to cater to younger generation in Singapore and globally.

• To drive export sales to new and existing markets, leveraging on both parties' global distribution network.

SINGAPORE – 3 February 2021 – Neo Group Limited ("Neo Group", or together with its subsidiaries, the "Group”), a homegrown integrated food solutions provider, today announced that the Company’s wholly-owned subsidiary, Thong Siek Global Pte. Ltd. (“TSG”) had entered into a legally binding term sheet for the proposed acquisition of a stake in homegrown premium snack manufacturer Royale International Food Industries Pte. Ltd. (“RIFI”).

RIFI is principally engaged in the manufacture of snacks under its flagship brand – Crusty’s, which includes an extensive selection of ready-to-eat products such as potato chips, fish skin and soy-based snacks. The products (i.e. the Crusty's snacks range) are available locally across supermarket chains, convenience stores, major petrol kiosks and cinemas; and are also exported and sold in overseas markets such as Australia, Canada, China, the United States of America, Thailand and Malaysia.

Neo Group’s Founder, Chairman and CEO, Mr Neo Kah Kiat (梁佳吉), said, “We see this latest move as a strategic fit for our food manufacturing business given RIFI’s established position as Singapore’s premium snack manufacturer through its flagship brand – Crusty’s. With this acquisition, we will be gaining an immediate foothold and diversifying into the fast-growing snack food business that caters to younger generation consumers. Additionally, with the consolidation of our manufacturing capabilities under Thong Siek Global, this will enable us to lower our snack manufacturing costs and reap economies of scale through synergistic functions across manufacturing, marketing, procurement, and operational departments.

“In line with our growth strategies, we intend to actively expand our product offerings to cater to different market segments, to meet changing consumer demand and capture growth opportunities in snacks and ready-to-eat products. This earnings-accretive acquisition will also allow us to create new income streams, drive our export sales to new and existing markets worldwide, tapping on both parties’ well-established network across over 30 countries globally.”

Mr Neo added, “The acquisition is a follow through of our plans for the Manufacturing business, to ride on increasing consumer demands in existing and complementary product ranges. The diversification into snack food products further broadens the Group’s revenue stream, with the added benefit of expanding into new overseas markets. Moving forward, where possible, we will also seek to integrate automation into production lines and adopt technological solutions to increase productivity and profitability.”

TSG shall acquire a stake in RIFI by way of an issue and allotment of 105 new ordinary shares in the share capital of RIFI to TSG representing approximately 51% of the total issued and paid-up share capital of RIFI immediately after the completion of the proposed acquisition (“Proposed Acquisition”). The aggregate consideration for the Proposed Acquisition is S$1.02 million and shall be fully paid in cash.

The Proposed Acquisition is not expected to have any material impact on the Group’s consolidated net tangible assets or earnings per share for the current financial year ending 31 March 2021.

Note: This press release is to be read in conjunction with the related announcement released by Neo Group Limited via SGXNET on 3 February 2021.

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