Scales announces petfood JV with Alliance Group

Scales Corporation Limited
Head Office: 52 Cashel Street | Christchurch 8013 | New Zealand
Postal: PO Box 1590 | Christchurch 8140 | New Zealand
Phone: +64 3 379 7720
scalescorporation.co.nz



NZX & Media Release

7 March 2019

SCALES CORPORATION ENTERS INTO PETFOOD JOINT VENTURE WITH ALLIANCE GROUP

Diversified agribusiness Scales Corporation Limited (NZX:SCL) today announced an agreement to
enter into a petfood Joint Venture (JV) with Alliance Group Limited (Alliance). Under the terms of the
JV, Alliance will pay $15 million to acquire a 50% interest in Meateor’s New Zealand business and
operations.

Managing Director Andy Borland says: “We are pleased to enter into a partnership with one of New
Zealand’s leading farmer co-operatives. This venture is about developing New Zealand as the
premier supplier of petfood proteins. We think the venture provides a number of benefits to the entire
New Zealand petfood-supply industry including as an avenue for the industry to improve scale;
improved relationships with customers including the ability to commit to longer-term relationships; an
ability to move into higher value and added value ingredients; and ability to leverage extended
customer and supplier networks.”

David Surveyor, chief executive of Alliance says: “The joint venture extends Alliance’s downstream
reach, allows Alliance to become vertically integrated and ensures we have an end-to-end connection
with the market. Meateor has established itself as a strong domestic and international petfood
ingredients business, and we are pleased to be partnering with their high quality team. We admire
Meateor’s excellent customer-service, commitment to employees, and high operating standards, and
believe they align well with our goals at Alliance.”

Tim Goodacre, Chairman of Scales Corporation, says: The JV with Meateor represents the next step
in our petfood ingredients strategy. We look forward to continuing to develop this division with further
investment and growth initiatives.”

Scales was advised by Maher & Associates (lead sale advisor) and Anthony Harper (legal).
Alliance was advised by Simpson Grierson (legal).
PwC provided independent corporate advisory services to both Scales and Alliance.

Contact
Andy Borland, Managing Director, Scales Corporation Limited, Mob: 021 975 999,
email: andy.borland@scalescorporation.co.nz

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Contact
Sam Halstead, Latitude Strategy and Communication
Mob: 027 474 6065
email: sam@latitudesc.co.nz

About Scales Corporation
Scales Corporation is a diversified agribusiness group. It currently comprises three operating
divisions: Horticulture, Storage & Logistics and Food Ingredients. The company’s diverse spread of
activities gives Scales broad exposure to New Zealand’s agribusiness sector. Scales Corporation
was founded in 1897 as a shipping business by George Herbert Scales. Today it employs more than
700 staff New Zealand wide. Find out more at www.scalescorporation.co.nz.

About Meateor
Meateor is a processor and marketer of high-quality petfood ingredients to global pet food customers.

About Alliance
Alliance is a food and solutions co-operative and New Zealand’s only 100 per cent farmer-owned
major red meat co-operative.
Alliance’s activities include producing and supplying raw red meat materials to petfood processors.
Find out more at www.alliance.co.nz.

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MeateorJoint
Venture

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MeateorJoint Venture
•Meateor’sNew Zealand petfoodbusiness and operations are being sold to a JV that will be run jointly
between Scales and Alliance (a leading farmer co-operative)
•Meateoris a processor and marketer of high-quality ingredients to global petfoodcustomers and Alliance
is a supplier of raw materials to this sector
•This transaction provides a number of benefits to the New Zealand petfoodindustry:
An avenue for the industry to improve scale and participate in associated efficiencies
Improved relationships with customers. The joint venture expects to engage with customers on long-term programmes –
committing volumes beyond the current season and driving product innovation
Added value. The joint venture expects to consider opportunities for added value growth in petfood(including petfoodsthat are
more nutritious and functional), positioning New Zealand as the premier supplier of petfoodproteins. The joint venture can
leverage the combined resources of its partners to evaluate, test, and progress growth opportunities
Extended customer and supplier networks
Scales today has entered into a 50/50 petfoodjoint venture with Alliance

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MeateorJoint Venture (continued)
•The implied valuation for Meateor’sNew Zealand business is $30m
•Scales retains the sole ownership of its trade in Australian petfood. An overview of Scales’ interest across
the MeateorGroup, including ownership proportion, is shown in the graphic below
•Settlement is scheduled for March 2019
•Scales is committed to providing updated guidance for 2019, following the outcome of the OIO process for
Polarcold, including the updated Balance Sheet effect and debt position post all of the announced
transactions
Key metrics
MeateorGroup
Australia
Sourcing & sales
(100%)
New Zealand
Sourcing, processing & sales
(50%)
United States
Sourcing, processing & sales
(60%)