QUANTUM FOODS HOLDINGS LIMITED - Trading Statement

Trading Statement

QUANTUM FOODS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration Number: 2013/208598/06
Share Code: QFH
ISIN Code: ZAE000193686
("Quantum Foods" or "the Company")


TRADING STATEMENT


In terms of the Listings Requirements of the JSE Limited, a listed company is required to
publish a trading statement once it is satisfied that a reasonable degree of certainty exists that
the financial results for the period to be reported on next will differ by 20% or more from the
financial results for the previous corresponding period.

Shareholders are hereby advised that for the six-month period ended 31 March 2020,
Quantum Foods expects:

 -   headline earnings per share (“HEPS”) of between 28.1 cents and 34.9 cents, being a
     decrease of between 23% and 38% compared to the HEPS of 45.4 cents for the previous
     corresponding period; and

 -   basic earnings per share (“EPS”) of between 28.2 cents and 35.0 cents, being a decrease
     of between 23% and 38% when compared to the EPS of 45.2 cents in the previous
     corresponding period.

Earnings expected for the first six months of the 2020 financial year, compared to the first six
months of the 2019 financial year, was impacted by:

 -   a significant reduction in profitability from the eggs business, where margins contracted
     due to the decline in egg selling prices, resulting from an increase in egg supply in South
     Africa, and higher feed production costs. The business benefited from higher volumes
     sold, but this could not offset the effect of lower margins. The egg business is expected
     to report a loss for the six-month period ended 31 March 2020;

 -   improved levels of profitability from the feeds business, benefiting from increased volumes
     supplied to both external customers and the Company’s layer farms that had higher
     numbers of layer hens in production;

 -   improved levels of profitability from the farming business, mostly due to higher volumes
     of live birds supplied by the Western Cape broiler farming operations. Productivity on the
     layer farms continues to improve which further contributed to earnings. However, weaker
     demand from the layer livestock market negatively impacted margins in this business; and

 -   a decline in earnings from the other African operations, mostly from Zambia where the
     very poor 2019 maize harvest resulted in materially higher feed costs, and consequently
     lower margins from eggs and lower demand from livestock customers.

Impact of IFRS16 on the reporting period, HEPS and EPS.

The Company applied the modified retrospective transition approach and did not restate
comparative figures to account for IFRS16 (Accounting for Leases). The effect of IFRS16 on
the HEPS and EPS for the reporting period ended 31 March 2020, is not expected to be
material.

Quantum Foods continues to operate - Covid-19

Quantum Foods continues to operate as a supplier of essential goods to the South African
market, during the lock-down period. The health and safety of our employees, service
providers and the South African population remain a top priority and additional measures have
been implemented to reduce the risk of the virus spreading. Covid-19 has, to date, not had
any significant effect on the business. The extent of the negative impact of Covid-19 on
consumers and the economy is, however, still very uncertain and the Company will continue
to evaluate and communicate any significant effect on the operations or financial performance
of the Company. The Company is privileged to be part of the food supply chain and believe
that the diversity and geographical spread of its operations, together with sufficient access to
funding facilities should allow successful navigation through this period of uncertainty.

The results for the six months ended 31 March 2020 is expected to be published on SENS on
or about 21 May 2020.

The financial information on which this trading statement is based, has not been reviewed or
reported on by the Company's external auditors.

Wellington
2 April 2020

Sponsor
PSG Capital

Date: 02-04-2020 07:05:00
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