Veritas Investments Limited

VERITAS INVESTMENTS LIMITED

NOTICE OF MEETING OF SHAREHOLDERS AND
EXPLANATORY MEMORANDUM

10 November 2014

Important Dates:

• Meeting time/date: 10am, Tuesday, 25 November 2014

• Venue: Regatta Room D,Pullman Auckland, Corner Princes Street and Waterloo Quadrant, Auckland 1010

• Last date for receipt of Voting/Proxy Forms:10am, Sunday, 23 November 2014 (being 48 hours before the commencement of the Annual Meeting)

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NOTICE OF ANNUAL MEETING

Notice is given that the Annual Meeting of the Shareholders of Veritas Investments Limited (“Veritas”) for the year ended 30 June 2014 will be held at Regatta Room D, Pullman Auckland, Corner Princes Street and Waterloo Quadrant, Auckland, on Tuesday 25 November 2014 commencing at 10am ( “Annual Meeting”).

The Annual Meeting is called for the Shareholders to consider certain special and ordinary business relating to Veritas.

SPECIAL BUSINESS

On 6 November 2014, Veritas announced its entry into a conditional sale and purchase agreement to acquireall of the business and assets ofThe Better Bar Company Limited, O’Hagans Limited and Danny Doolans Limitedand their respective subsidiaries (together, the “BBC Group”). It is proposed thatVeritas Holdings Limited, a wholly-owned subsidiary of the Company, will acquire all of the business and assets of the BBC Group, for $31.2 million (the “Proposed BBC Transaction”). The purchase price comprises 75% cash and 25% shares, with the $23.4 million cash portion of the acquisition to be funded by a facility of up to $25 million with ANZ Bank. The Proposed BBC Transaction is subject to satisfaction of certain conditions in the Sale and Purchase Agreement for the transaction, including approval by a special resolution of the Veritas Shareholders.

This Notice of Meeting and Explanatory Memorandum includes important information requiring your immediate attention relating to the Proposed BBC Transaction.

The Veritas Board strongly advises that you read this document carefully. For the Proposed BBC Transaction to proceed, Shareholder support is required.

The Notice of Meeting set out in section 7 of this document specifies the Resolutions relating to such special business to be considered at the Annual Meeting of Shareholders to be held atRegatta Room D, Pullman Auckland, CornerPrinces Street and Waterloo Quadrant, Auckland, on Tuesday, 25 November 2014 at 10am. The remainder of this document sets out the details of,and rationale for,the Proposed BBC Transaction, as well as other ordinary business to be considered at the Annual Meeting.

The Veritas Board fully supports the Proposed BBC Transaction and unanimously recommends that Shareholders vote in favour of each of the Resolutions to be put to themfor the Proposed BBC Transaction at the Annual Meeting.

Should you have questions, please contact your investment adviser.

ORDINARY BUSINESS

Following the consideration of the special business described above, the Annual Meeting will consider a number of ordinary business items, including director re-elections and replacement of the auditor for Veritas. The Notice of Meeting set out in section 7 of this document specifies the Resolutions relating to such ordinary business to be considered at the Annual Meeting.

TABLE OF CONTENTS

Chairman’s Letter / 4
Highlights of the Proposed BBC Transaction / 6
Overview of Veritas / 7
The rationale for the Proposed BBC Transaction, and overview of the Combined Group / 8
Pro forma financial information / 12
Details of the Proposed BBC Transaction / 16
Notice of Meeting / 20
Explanation of the Resolutions and Additional Information / 24
Glossary / 28
Appendix – Reconciliation of EBITDA to NPAT / 30
Directory / 32

important dates

Proposed BBC Transaction announcement / 6 November 2014
Annual Meeting of Shareholders / 25 November 2014
Proposed BBC Transaction settlement / 28 November 2014
New Veritas Shares commence trading on the NZX Main Board / 28 November 2014

These dates, and future dates in this document generally, are subject to change, are indicative only and, subject to the requirements of the Listing Rulesand the Financial Markets Conduct Act 2013, may be amended by Veritas at its absolute discretion.

Forward Looking Statements

This Notice of Meeting and Explanatory Memorandum contains certain statements that relate to the future. Such statements are not a guarantee of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the Company and which may cause actual results, performance or achievements of the Company to differ materially from those expressed or implied by such statements.

Defined Terms

Capitalised terms used in this Notice of Meeting and Explanatory Memorandum are defined in the Glossary, in section9 of this document.

References to dollars and $
Unless otherwise indicated, all references in this Notice of Meeting and Explanatory Memorandum to dollars or “$” shall be to New Zealand dollars.

1.CHAIRMAN’SLETTER

Dear Shareholder,

On behalf of the Board of Veritas, we are pleased to offer you the opportunity to support Veritas’ intended acquisition of the BBC Group, at an enterprise value of approximately $37.2 million. This enterprise value comprises $31.2 million payable for the business and net assets of the BBC Group, and approximately $6 million of the BBC Group’s net debt that Veritas will acquire as part of that transaction.

VeritasShareholders will be familiar with the merger and acquisition activities of the Company over the last 18 months, successfully making 3 acquisitions, the most recent of which was the Nosh Food Market business in September 2014. In our announcement for the Nosh Food Market acquisition, we signalled that Veritas continues to look for additional acquisitions in the food, beverage and franchise sectors. The Veritas Board views the acquisition of the BBC Group as a significant and transformational next step in its investment strategy in the food and beverage sector.

The BBC Group is a significant operator of gastro bars in New Zealand, including the newly refurbished and reopened gastro bar “The Cav” in Auckland, the well-established iconic Irish pubs based in Auckland’s Viaduct, O’Hagans and Danny Doolans, as well as The Doolan Brothers chain of neighbourhood Irish bars and eating establishments in various suburbs around Auckland and Hamilton. The BBC Group also operates two new establishments in Hamilton, The Good Home and Honky Tonk. The BBC Group has enjoyed strong periods of growth and profitability driven by a management team that has a proven track record of developing and sustaining great, long lasting concepts within the hospitality sector.

The proposed acquisition complements Veritas’ existing investments in the food and beverage sector by leveraging off existing areas of strength and expertise in procurement and operations, as well as diversifying risk within the Group’s investment portfolio to hospitality and food service on top of the current retail focus. This acquisition will enable Veritas to become a leading player in the food and beverage hospitality sector. Following completion of the proposed acquisition, with only seven months of trading included for the BBC Group, the combined revenues of the Veritas Group are expected to be in the range of $71 million to $78 million for the year ending 30 June 2015.

The BBC Group is currently privately owned by the interests associated with Richard Sigley, Geoff Tuttle and Phil Clark. TheProposedTransaction continues that relationship, with Richard Sigley proposed to be appointed as a director of Veritas and Geoff Tuttle to continue on as CEO for the BBC business following completion of the Proposed Transaction. Both Richard and Geoff will become shareholders of Veritas Investments Limited should the proposed acquisition go ahead.

Veritas is seeking to acquire all of the business and net assets of the BBC Group for consideration of $31.2 million. 75% of theconsideration payable to the vendors in connection with theproposed acquisition will be funded through an extension of Veritas’ debt facilities. The remaining25% of the consideration payable to the vendorswill be satisfied through the issue of newVeritas Shares to the interests associated with the vendors. Approximately $6 million of the BBC Group’s net debt will also be assumedby Veritas under the transaction.The additional debt and the assumption of the BBC Group’ debt facilities,which will either be extended in their current form or rolled intoVeritas’ facilities,have been agreed in principle with Veritas and the BBC Group’s existing bankers and formal documentation is in the process of being finalised.

The BBC opportunity is large by any measure and will be a game changer for Veritas. The Board believes that the proposed acquisition will add significant scale and diversification to Veritas’ current business and will allow for operational efficiency gains in procurement and operations across the Veritas Group. Potential benefits have been identified through the detailed due diligence process,however, they are not factored into any proforma financial forecast information.

The Veritas Board expects this acquisitionto increase investor interest in Veritas, which should be of benefit to all Shareholders. The Board will also benefit from the addition of an experienced Director, Richard Sigley, who will bring his extensive experience with the BBC Group and the hospitality industry onto the Board.

The proposed acquisition is conditional on a number of conditions precedent, includingVeritas shareholder approval. Resolutions to approve theproposed acquisition, the issue of the sharesas part consideration for that acquisition, and to approvethe appointment of Richard Sigley to the Veritas Board, will be put to Shareholders at the annual meeting to be held in Auckland on 25 November 2014. If the Resolutions are not approved, the proposed acquisition will not proceed.

The proposed acquisition presentsa rare opportunity to transform Veritas. Further, we have supportive vendors prepared to take significant shareholdings in Veritas, providing even greater confidence for the future.

The Board of Veritas unanimously recommends thatShareholders support the proposed acquisition.

Yours faithfully,

Veritas Investments Limited

Mark Darrow
Chairman

2.HIGHLIGHTS of the proposed BBC transaction

Opportunity

/

Transformational acquisition for Veritas

Businesses to be acquired

/

A group of 11 gastro and Irish barsin Auckland and Hamilton

Enterprise value

/

$37.2 million (which includes approximately $6 million of the BBC Group’s net debt to be assumed by Veritas)

Purchase price

/

$23.4 million in cash (subject to adjustment)

$7.8 million in new Veritas Shares

Acquisition funding

/

$23.4 million (being the cash component of the purchase price) fully funded by bank debt

Retention of key people

/

Richard Sigley to be appointed to the Veritas Board and Geoff Tuttle to continue as CEO for the business for a minimum of 2 years

Both key people to become shareholders of Veritas (through their nominated companies)

Estimated increase in revenue

/

From less than $30 million for FY2014 to between $71million and $78million forecast for FY2015 (unaudited)

Estimated increase in EBITDA

/

From less than $6.3 million for FY2014 to between $10.6million and $11.7 million forecast for FY2015 (unaudited)

Estimated increase in EPS

/

From 12.09 cents per Share for FY2014 to between 15.00and 16.66 cents per Share forecast for FY2015(unaudited)

Estimated increase in NPAT

/

From $4.3 million for FY2014 to between $6.3 million and $7.0 million forecast for FY2015(unaudited)

Please note that the information above relating to FY2014 has been extracted from Veritas’ audited financial statements for the year ended 30 June 2014.

Information forecast for FY2015 has not been audited. Please refer to further information relating to the Proposed BBC Transaction in sections 5 and 6 of this document.

3.OVERVIEW OF VERITAS

Veritas is an investment company listed on the NZX Main Board focusing in the food, beverage and franchise sectors.

Veritas was repositioned in December 2011 to identify high quality acquisition opportunities, principally within the retail and consumer sectors in New Zealand. One of Veritas’ key criteria for investment is to identify established businesses with strong, sustainable cash flows and considerable future growth opportunities, whether by way of organic growth or acquisition.

Overview of Veritas’ business activities

Veritas currently has three key investments in the food, beverage and franchise sectors.

Mad Butcher Limited

The Mad Butcher brand was established in 1971 when (now Sir) Peter Leitch purchased Rosella Meats, a local Mangere butchery. At that time, prior to the proliferation of supermarkets, it became apparent that a niche butchery market existed.

Mad Butcherestablished a volume business based on carcass supply cut to proprietary specification, enabling the Mad Butcherto pass volume discount and a high carcass yield to customers while maintaining a high gross margin.

Expansion of the brand began in Auckland throughout the early 1980s and reached into the regions in the mid-1990s with two owner-operated stores opening in Rotorua.

During 1998, having opened eight stores, the first franchise was established in Whangarei (Quayside). All owner-operated stores soon migrated to this model. Considerable growth occurred during the 2000s when a further 26 franchisees were added to the network.

Today, the Mad Butcheris represented at 39 locations throughout New Zealand with its 40th store about to be opened in Nelson. The Mad Butcher stores achieve in excess of $150 million of store sales per annum which Mad Butcher Limited earns rebate and carcass margin revenue from.

Kiwi Pacific Foods

Veritas announced in December 2013 that it has acquired a 50% shareholding and joint venture interest in Kiwi Pacific Foods Limited, a manufacturer and supplier of meat patties for local and international markets. The remaining 50% of Kiwi Pacific Foods is owned by Antares Restaurant Group Limited, which holds the Burger King franchise in New Zealand. As part of the transaction, Veritas also acquired the management rights to manage Kiwi Pacific Foods’ operations on behalf of its shareholders.

Kiwi Pacific Foods owns and operates a Ministry for Primary Industry approved meat patty production facility in Auckland, where it employs 14 staff. It has a preferred supplier arrangement with Antares through which it has been supplying meat patties to Burger King in New Zealand for nearly 20 years. In addition, it also supplies meat patties to other high profile customers in the restaurants and fast food sector in New Zealand.

Nosh Food Market

In September 2014,Veritas purchased the Nosh Food Market business.

Nosh Food Market is a market-style concept in food shopping bringing together the authenticity and expertise of butchery, bakery, delicatessen, the greengrocer and more, under one roof. It currently has seven stores, six in Auckland, including five corporate owned stores and one joint venture owned store as well as a franchisee store in Mt Maunganui

Nosh is a very well regarded brand in the New Zealand market that focuses on quality fresh food and produce appealing to modern household shoppers.

4.RATIONALE FOR THE PROPOSED BBC TRANSACTION AND OVERVIEW OF THE COMBINED GROUP

Rationale for the Proposed BBC Transaction

The Veritas Board considers that the ProposedBBC Transaction represents an exciting and transformational opportunity for Veritas and its Shareholders. Veritas considers that in order to achieve growth in the New Zealand food, beverage and franchise sectors it needs to be a player of significant scale, and that the Proposed BBC Transaction presents a rare transformational opportunity for Veritas to expand into the food and beverage hospitality sector – a sector with growth opportunities and one that complements Veritas’ existing investments well.

The Proposed BBCTransaction is expected to result in the Combined Group becoming a leading player in the food and beverage hospitality sector. The Combined Group will have a greater range of capabilities to take advantage of new and existing opportunities.

The Proposed BBC Transaction will transform Veritas and is expected to deliver significant value for Veritas Shareholders:

1. The Combined Group will have a greater range of capabilities and resources to take advantage of new and existing opportunities in the growing food, beverage, franchise and hospitality markets.

The proposed acquisition of BBC will secure the expertise and experience of key personnel with longstanding successful careers within the hospitality industry. Along with the operational and retail expertise within the current Veritas companies of the Mad Butcher, Nosh Group Limited and Kiwi Pacific Foods, these skills are highly complementary to what will represent a significant investment portfolio within the food and beverage sector.

1. Veritas and the BBC Group both have a proven track record of profit growth under the guidance of the existing experienced management teams.

The BBC Group has grown its business in the past 4 years by both acquisition and internal growth. In 2011 it achieved EBITDA of just under $4million, and in FY2015 it is expected to achieve over $7 million on a full year normalised EBITDA basis. The $7 million is an estimate of the pro forma profitability of the BBC Group under Veritas’ ownership, based on all locations operating in their rebranded formats on a 12 month basis.

Following the Proposed BBC Transaction, the BBC Group will have better access to capital and funding under Veritas’ ownership as well as Veritas’ corporate governance structure, to enable the business to maintain or better their growth at a nationwide scale.

Greater diversification of the Combined Group’s revenue streams will leave it better placed to adapt and respond to changes in regulatory framework and competitive dynamics within the food and beverage sector.

1. Highly earnings accretive transaction offering an attractive forecast dividend yield.

The Board expects the Proposed BBCTransaction to be highly earnings accretive. Based on the Board’s expectations of the financial performance of the existing Veritas businesses and the earnings ofthe BBC Group, the Proposed BBC Transaction is, on a pro forma basis, expected to result in EPS being in the range of 15.00and 16.66 cents per Share for FY2015.This compares favourably against an EPS of 12.09 cents per Share for FY2014. Please refer to further information relating to EPS provided in section 5 of this document.

1. Increased market capitalisation and index weighting expected to increase investor interest in Veritas.

The Proposed BBCTransaction willresult in a higher index weighting, which should result in increased research coverage of Veritas.