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Release Date: 28/05/2019 07:05
Code(s): ARL     PDF:  
Wrap Text
General update

Astral Foods Limited
("Astral Foods")
Registration number: 1978/003194/06
JSE Code: ARL ISIN: ZAE000029757

General Update

In   the  interim   results  reported   for  the   six  months ended
31 March 2019, it was stated that the deterioration of the municipal
infrastructure of the Lekwa (Standerton) municipality has led to
water supply interruptions to Astral’s poultry processing plant in
Standerton, despite the proximity of this municipality to a
substantial water source in the Vaal River. This water supply issue
is resulting in significant cost implications for the group.

A substantial ongoing under supply of water has escalated, and this
notwithstanding a permanent order of court requiring the municipality
to secure a minimum necessary supply. The total calculated impact on
profits is currently at least R85 million.

This comprises mainly the following:

                                                           R million

•   Costs to manage the impact of the short supply         19
•   Costs related to not slaughtering birds
    according to a pre-determined schedule;
    additional feed costs due to a higher bird age         10
•   Cost of slaughtering at alternative processing
    plants                                                 25
•   Forced production cuts planned for June 2019;
    to reduce the number of birds to be slaughtered
    with an estimated non-recovery of costs                31

In spite of active engagement with a number of stakeholders on this
issue, cooperation from the Lekwa local municipality has not been
forthcoming. Due to the unpredictability of the outcome of the
ongoing discussions with the authorities, the group is not in a
position to provide an estimate of the impact on profits of the short
supply of water beyond what is stated above.

Astral is actively seeking alternative water supply solutions in an
attempt to mitigate any further cost impacts under the ongoing water
supply interruptions. All possible avenues are being explored which
includes continued legal action to secure water supply through the
municipal infrastructure.

The above information has not been reviewed or reported on by Astral
Foods’ auditors.

Further  updates  will  be  communicated  as  and  when circumstances


28 May 2019
Nedbank Corporate and Investment Banking, a division of Nedbank

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