RCL FOODS LIMITED - Financial impact of product recall and suspension of operations at Wolwehoek processing plant

Financial impact of product recall and suspension of operations at Wolwehoek processing plant

RCL FOODS LIMITED
Incorporated in the Republic of South Africa)
(Registration number: 1966/004972/06)
ISIN: ZAE000179438
Share Code: RCL
(“RCL FOODS” or “the Company”)

FINANCIAL IMPACT OF PRODUCT RECALL AND SUSPENSION OF OPERATIONS
AT WOLWEHOEK PROCESSING PLANT

On 5 March 2018 the Company announced on the Stock Exchange News Service that
Rainbow polony products from the Wolwehoek processing plant were being
recalled and that the plant had been temporarily closed, as precautionary
measures due to the current listeriosis outbreak.

The purpose of this announcement is to update shareholders with regard to the
financial impact of the product recall and the suspension of operations at the
Wolwehoek processing plant.

Estimates provided are on a pre-tax basis. They are management estimates only,
and have not been reviewed or reported on by the Company’s auditors. Potential
insurance recoveries in respect of these costs are not expected to be
significant.

Identifiable costs incurred to date, associated directly with the recall and
suspension of production, are estimated to be approximately R75m.

This estimate includes:
 - Recalls and returns from customers
 - Value of stock on hand of finished goods, raw materials and work-in-
   progress
 - Logistics (distribution and handling) costs
 - Destruction and dumping costs
 - Testing costs
 - Media and in-store communications costs

In addition, there is a financial impact associated with lost contribution on
polony products being out of trade, as well as the unexpected impact on the
balance of Rainbow’s chilled processed meats and other chicken categories.
This indirect impact is difficult to determine or quantify at this stage, but
management estimates the profit impact to be approximately R20m per month.
Management is actively engaging Government in order to resume operations at
the Wolwehoek processing plant as soon as possible.

Food safety has always been of paramount importance to RCL FOODS, and we
continue to apply our strict food safety protocol by having rigorous food
safety procedures in place, including regular product and environmental
testing, at all of our food production facilities. We will continue to take
every precaution to safeguard our products, customers and consumers and to
drive and support national efforts with Government to resolve the current
listeriosis challenge.

Shareholders are also referred to:
   1. The RCL FOODS fact sheet available on the Company’s website at
      www.rclfoods.com, which is aimed at assisting all stakeholders in
      understanding the facts at our disposal around listeriosis;
   2. An independent website hosted by Dr Lucia Anelich at
      www.listeriosisfacts.co.za

Durban
26 March 2018

Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)

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