QUANTUM FOODS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2013/208598/06)
Share code: QFH
ISIN: ZAE000193686
(“Quantum Foods” or the “Company” or the “Group”)


                                TRADING STATEMENT AND OPERATIONAL UPDATE


TRADING STATEMENT

In terms of the JSE Limited Listings Requirements, a JSE listed company is required to publish a trading statement as
soon as 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 at least 20% from the financial results for the previous corresponding period.

Shareholders of Quantum Foods are hereby advised that for the six months ending 31 March 2023 (“Current Reporting
Period”) a reasonable degree of certainty exists that:

•   headline earnings per share (“HEPS”) of the Company will be at least 100%, or 15.8 cents per share, lower than the
    15.8 cents per share reported for the six months ended 31 March 2022 (“Previous Corresponding Period”); and
•   earnings per share (“EPS”) of the Company will be at least 100%, or 16.5 cents per share, lower than the 16.5 cents
    per share reported for the Previous Corresponding Period.

This implies that for the Current Reporting Period, the Company is expected to report a loss for both HEPS and EPS.

The Company is expected to report a profit at earnings before interest, taxes, depreciation, and amortisation (“EBITDA”)
level for the Current Reporting Period (EBITDA for the Previous Corresponding Period: R89.1 million) unless a further
significant deterioration in trading conditions occurs in the remainder of the period ending 31 March 2023.

A further trading statement will be published as soon as there is a reasonable degree of certainty as to the likely range
within which the Company’s HEPS and EPS is expected to decrease.

OPERATIONAL UPDATE FOR THE 4 MONTHS ENDED 31 JANUARY 2023 (“CURRENT PERIOD”)

A number of trading conditions continued to significantly impact Company performance in the Current Period.

These include, inter alia, the further significant increases in the cost of feed raw materials and the devastating effect of
disrupted electricity supply. The increase in feed raw material costs especially impacted the eggs and layer livestock
businesses, where selling prices could not be adjusted to recover the higher cost, which resulted in significant under
recovery of production cost. When comparing the Current Period to the four months ended 31 January 2022 (“Previous
Period”), egg selling prices increased by 3.9% and feed costs increased by 25.7%. Egg producers in South Africa are
under severe financial pressure which has already resulted in some producers exiting the market or placing less birds,
both of which the Company anticipates should result in a decline in egg production in South Africa for the 2023 calendar
year when compared to the 2022 calendar year. For the Current Reporting Period, the egg business is expected to
report significant losses.

The effect of increased hours under loadshedding in the Current Period, has resulted in not only a substantial increase
in the cost of generator fuel being incurred, but also had other adverse consequences. These include disruptions in the
supply of some feed raw material items, especially those produced by maize and wheat mills not equipped with
generators, and planned production capacity being unavailable at the feed mills of the Company that are not equipped
with generators. These factors resulted in significant additional costs being incurred in the Current Period.

The risk of Highly Pathogenic Avian Influenza (“HPAI”) remains high, and although the Company did not experience any
HPAI outbreak in the Current Period, some outbreaks were reported by other poultry producers.

For the Current Period, operational efficiencies in the South African operations of the Group improved when compared
to the Previous Period, despite the challenges especially associated with, inter alia, loadshedding. The improvement

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was particularly evident in the feeds, broiler breeder and layer farming businesses. These improvements partially offset
the negative effect on financial performance of the demanding trading conditions. Cost management, except for energy
costs, remained under control. Energy costs for the Current Period increased by R19.4 million (42.2%) when compared
to the Previous Period, which include an increase of R17.6 million in generator fuel expenses.

Sales volumes remained healthy and in line with budget estimates for the Current Period. When compared to the
Previous Period, sales volumes increased in the feeds and broiler farming businesses. Layer point of lay hen sales were,
as planned, much lower, while egg sales reduced following the reduction in production capacity implemented in the 2022
financial year.

The Zambian business continued to perform well, although, as expected margins declined following increased feed
costs when compared to the Previous Period. The Ugandan businesses was affected by record high feed costs and very
weak day-old chick demand, while the Mozambican business was affected by the same industry factors, high feed costs
and insufficient selling prices for eggs, affecting egg businesses in South Africa.

No HPAI outbreaks were experienced in the other African businesses during the Current Period.

CAPITAL EXPENDITURE AND FUNDING

The weaker earnings levels and higher cost of raw materials, impacting the investment in working capital, resulted in the
Company delaying previously planned capital expenditure and having to increase its funding facilities. New capital has
been committed to reduce the damaging effect of loadshedding. The balance sheet position of the Group remains
healthy with sufficient levels of liquidity in place.

The financial information contained in this announcement is the responsibility of the directors of Quantum Foods, and
such information has not been reviewed or reported on by the Company’s external auditors.

The financial results for the Current Reporting Period are expected to be published on SENS on or about
Friday, 26 May 2023.


Wellington
23 February 2023

Corporate advisor and Sponsor
One Capital




Attorneys
Webber Wentzel




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