SOVEREIGN FOOD INVESTMENTS LIMITED - Sovereigns joint venture with a customer

Sovereign’s joint venture with a customer

Sovereign Food Investments Limited
(Incorporated in the Republic of South Africa)
(Registration number 1995/003990/06)
Share code: SOV
ISIN: ZAE000009221
(“Sovereign” or the “Company”)

SOVEREIGN’S JOINT VENTURE WITH A CUSTOMER

At the Company’s Annual General Meeting (“AGM”) of shareholders held on Thursday,
4 August 2016, a shareholder raised questions regarding Sovereign’s interest in the entity, Sov
Factory Shop (Pty) Ltd (“JV”), and the ownership structure of the JV.

The supply of goods and services by the Sovereign group to the JV was listed as a “related party”
transaction in Sovereign’s audited financial statements for the year ended 29 February 2016.
Sovereign owns 35% of the JV and the balance is owned by a customer (“JV Partner”). As a result of
Sovereign’s ownership share in the JV, all transactions with the JV are classified as “related party”
transactions in terms of IAS 24 Related Party Disclosures. The JV itself is the “related party” and not
the JV Partner - this was repeatedly confirmed by Sovereign at the AGM.

Sovereign entered into the JV arrangement with the JV Partner on confidential terms, which is
customary for transactions of this nature.

In light of the impression created by a particular shareholder through repeated questioning regarding
the “related party” aspects of the JV, as well as the subsequent media reporting, Sovereign has
obtained the consent of the JV Partner to disclose its identity and further details regarding the JV.

Sovereign confirms that the JV Partner is Cold Storage Group (Pty) Limited (“CSG”), a privately held
entity that has been a long-standing customer of Sovereign.

In order to avoid further inaccurate and misleading reporting on the matter, Sovereign confirms that:

    -   it has no interests in CSG, directly or indirectly;
    -   no Sovereign employee has any interest in CSG, directly or indirectly;
    -   CSG erected the JV facility (which CSG also manages) and also provided the capital
        investment to erect the JV facility, in return for 65% ownership of the JV; and
    -   Sovereign does not have a retail chain, is not an expert in retail operations and therefore
        entered into the JV in order to increase the Company’s higher margin business.

Port Elizabeth
5 August 2016

Sponsor
One Capital

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