PIONEER FOOD GROUP LIMITED - Voluntary Announcement Butterfield Bakeries Investment

Voluntary Announcement – Butterfield Bakeries Investment

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”)

VOLUNTARY ANNOUNCEMENT – BUTTERFIELD BAKERIES INVESTMENT

Shareholders are hereby advised that Pioneer Foods has agreed to invest in
a new company, Food Concepts Pioneer Limited (“FCPL”), together with a
partner, Food Concepts Plc, in terms of which Pioneer Foods will obtain
the majority shareholding in FCPL. FCPL, will own the business of
Butterfield Bakeries, a Nigerian baked goods business specialising in
bread and sausage roll production, for a purchase consideration of US $7
million. Pioneer Foods will leverage FCPL’s existing infrastructure and
brand recognition as a lower risk, route-to-market opportunity to expand
its basket.

Pioneer Foods already has a significant export footprint in a number of
African countries, and with the conclusion of this partnership with Food
Concepts Plc, creates an in-market presence for Pioneer Foods in Nigeria
via a low risk entry strategy. This approach, which is focussed on branded
packaged goods, is predicated on finding smaller operations that are
scalable within the categories that meet Pioneer’s competencies.

Food Concepts Plc was founded by local businessman Deji Akinyanju. Mr.
Akinyanju’s entrepreneurial reputation and local market knowledge forges a
mutually beneficial partnership with Pioneer’s technical expertise and
know-how in the bakery category.

FCPL, with its well established Butterfield bread brand, has bakery
operations in Abuja, Ibadan, Lagos and Benin City. Following the
investment by Pioneer Foods, it is expected that the current modest
operations will be scaled up over time to meet the growth expectations
commensurate with the prevailing macro-economic opportunities. Bread
consumption per capita in Nigeria (7.50kg) is relatively low compared to
South Africa (40.2kg) while sausage rolls, such as FPLC’s Yum Yum brand,
has shown strong growth during the early stages of its market launch.

“FCPL provides an ideal opportunity to leverage our expertise to grow the
bread category and to establish a national bread brand over time in a
gradual low risk manner,” said Phil Roux, CEO of Pioneer Foods.

“Pioneer Foods aims to be a leading FMCG company in Africa with globally
trusted brands and Nigeria is a key market for any food company in search
of growth,” added Roux.

“This is a fairly priced asset with good upside potential,” he said.

Mr. Akinyanju believes the partnership will benefit from the combination
of the respective strengths which will be used to tap into the vast
opportunities in the Nigerian FMCG sector. Other shareholders in Food
Concepts Plc include the International Finance Corporation (IFC), a World
Bank member, and the Development Partners International (DPI), a UK based
private equity firm focused on African investments.
Pioneer Foods will implement key operational changes to the Butterfield
bakery to increase its efficiency.

Under the terms of the agreement, Pioneer Foods will hold 50.1% of the
shares in FCPL and the current Food Concepts Plc shareholders interest
will be diluted to 49.9%.

Bellville
3 March 2015

Sponsor and corporate adviser
PSG Capital

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