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Shareholders are advised that RCL FOODS and Siqalo Foods (Pty) Ltd. (“Siqalo”) have entered into a management services agreement, in terms of which RCL FOODS shall be appointed to manage and assist Siqalo in its day-to-day business operations by providing agreed management services (the “MSA”).

Siqalo manufactures and markets certain spreads products throughout South Africa, Botswana, Lesotho, Namibia and Swaziland.

Remgro Ltd. (“Remgro”) is a material shareholder of RCL FOODS and Siqalo is a subsidiary of Remgro. As a result, the conclusion of the MSA constitutes a small related party transaction in terms of paragraphs 10.1 and 10.7 of the Listings Requirements of the JSE Ltd. (“Listings Requirements”).

Vector Logistics (Pty) Ltd. (“Vector”), a subsidiary of RCL FOODS, will also enter into a Services agreement with Siqalo in order to provide an integrated logistics service to Siqalo. The agreement is in the ordinary course of Vector”s business and therefore does not fall within the ambits of paragraph 10.1(a) of the Listings Requirements.

Terms of the MSA
The MSA is subject to the fulfilment of the condition precedent (“condition”) that the provisions of the Listings Requirements are complied with.

In terms of the MSA, with effect from the date on which the condition is fulfilled RCL FOODS shall be appointed to provide the agreed services, which shall be reviewed against the agreed performance measures. RCL FOODS will have full discretion in the performance of the services, subject to (i) the principles and policies laid down by Siqalo”s board of directors: (ii) Siqalo”s annual budget and business plan; and (iii) the provisions of the MSA and Siqalo”s constitutional documents. The agreed services include Finance, Sales, Marketing, Procurement, Human Resources, Legal, Internal Audit and Information Technology, leveraging off RCL FOODS” existing shared services platform.

The MSA shall continue for a total period of three years. In consideration for the services to be rendered by RCL FOODS in terms of the MSA, Siqalo shall pay RCL FOODS a management fee of R134 million per annum, which shall exclude VAT. The fee represents a market-related charge for the services provided.

Fairness opinion
In terms of paragraph 10.7(b) of the Listings Requirements, RCL FOODS is required to provide the JSE with written confirmation from an independent expert acceptable to the JSE, that the terms of the MSA are fair as far as the shareholders of RCL FOODS are concerned (“Fairness Opinion”).

RCL FOODS has engaged Ernst & Young Advisory Services (Pty) Ltd., who has expressed the opinion that the terms of the MSA are fair to RCL FOODS” shareholders. The Fairness Opinion will lie for inspection at RCL FOODS” registered office for a period of 28 days from the date of this announcement.