PIONEER FOOD GROUP LIMITED - Apportionment of Tax Cost for South African Income Tax Purposes in respect of an Unbundling

Apportionment of Tax Cost for South African Income Tax Purposes in respect of an Unbundling

Pioneer Food Group Limited
Incorporated in the Republic of South Africa
Registration number: 1996/017676/06
Share code: PFG
ISIN code: ZAE000118279
(“Pioneer Foods” or “the Company” or “the Group”)

APPORTIONMENT OF TAX COST FOR SOUTH AFRICAN INCOME TAX
PURPOSES IN RESPECT OF THE UNBUNDLING OF PIONEER FOODS
INTERESTS IN QUANTUM FOODS HOLDINGS LIMITED (“Quantum Foods”)

1.   Introduction

     Shareholders are referred to the SENS announcement of 18
     September 2014 (“the SENS announcement”), relating to the
     unbundling by Pioneer Foods of 100% of the issued share
     capital of Quantum Foods (“Unbundling”), to its ordinary
     shareholders in the ratio of 1 Quantum Foods Share for
     every 1 ordinary share held in Pioneer Foods on
     10 October 2014 (“Unbundling Record Date”) and to its
     Class A ordinary shareholders in the ratio of 0.3 Quantum
     Foods Shares for every 1 Class A ordinary share held in
     Pioneer Foods on the Unbundling Record Date, rounded to
     the nearest whole number.

     Shareholders are hereby advised that the Unbundling was
     implemented in terms of section 46 of the Companies Act No
     71 of 2008 and section 46 of the Income Tax Act No 58 of
     1962 (“Income Tax Act”).

     The purpose of this announcement is to notify shareholders
     of the apportionment ratio to be applied by shareholders
     in determining the portion of their past costs (and market
     value, if relevant) to be allocated to the unbundled
     Quantum Foods shares and the retained Pioneer Foods
     ordinary shares.

2.   Apportionment tax principles

     Shareholders are referred to the SENS announcement where
     the tax implications for shareholders of the Unbundling
     were explained in more detail.

     As indicated in the SENS announcement, Pioneer Foods
     ordinary shareholders will have a combined expenditure in
     respect of the Pioneer Foods ordinary shares and the
     Quantum Foods shares received pursuant to the Unbundling.

     Pioneer Foods shares held as trading stock:
     Any Pioneer Foods shareholder holding Pioneer Foods shares
     as trading stock will be deemed to acquire the unbundled
     Quantum Foods shares as trading stock. The combined
     expenditure of such Pioneer Foods and Quantum Foods shares
     will be the amount taken into account by the shareholder
     in respect of those Pioneer Foods shares, as contemplated
     in section 11(a), section 22(1), or section 22(2) of the
     Income Tax Act.

     The portion of the above combined expenditure to be
     allocated to the unbundled Quantum Foods shares will be
     determined by applying the ratio that the market value of
     the Quantum Foods shares bears to the sum of the market
     value of Pioneer Foods and Quantum Foods shares at the end
     of the date of Unbundling, being 6 October 2014
     (“Apportionment Ratio”). The expenditure so allocated to
     the unbundled Quantum Foods shares will reduce the
     expenditure of the Pioneer Foods shares held.

     Pioneer Foods shares held as capital assets:
     Any Pioneer Foods shareholder holding Pioneer Foods shares
     as capital assets will be deemed to acquire the unbundled
     Quantum Foods shares as capital assets. The combined
     expenditure of such Pioneer Foods and Quantum Foods shares
     will be the original expenditure incurred in respect of
     the Pioneer Foods shares, in terms of paragraph 20 of the
     Eighth Schedule to the Income Tax Act, and where the
     Pioneer Foods shares were acquired before 1 October 2001,
     the market value adopted or determined as contemplated in
     paragraph 29 of the Eighth Schedule to the Income Tax Act.

     The portion of the above combined expenditure to be
     allocated to the unbundled Quantum Foods shares will be
     determined by applying the ratio that the market value of
     Quantum Foods shares bears to the sum of the market value
     of Pioneer Foods and Quantum Foods shares at the end of
     the date of Unbundling, being 6 October 2014
     (“Apportionment Ratio”).
     The expenditure and market value so allocated to the
     unbundled Quantum Foods shares will reduce the expenditure
     and market value of the Pioneer Foods shares held.

     Pioneer Foods shareholders are advised to consult their
     own professional tax advisors should they have any queries
     regarding the taxation consequences of the Unbundling and
     the calculation of their costs for taxation purposes.

3.   Apportionment ratio

     Shareholders are hereby advised that the expenditure and
     market value of their Pioneer Foods shares as referred to
     above must be apportioned in the ratio of 97.02666% to a
     Pioneer Foods share held after the Unbundling and 2.97334%
     to an unbundled Quantum Foods share (“Apportionment
     Ratio”). The Apportionment Ratio is based on the closing
     price of R114.98 per Pioneer Foods share and R3.50 per
     Quantum Foods share on 6 October 2014, the date of the
     Unbundling.

Bellville
8 October 2014

Transaction Adviser and Sponsor
PSG Capital Proprietary Limited

Date: 08/10/2014 04:02:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.