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Impact of product recall

COMPANY       GROUP
2021 2020     (R'million) 2021 2020
      3.1 IMPACT OF PRODUCT RECALL    
        During the second half of the 2021 financial year, a product recall was initiated on selected canned vegetable products within the Groceries business over safety concerns linked to defective cans. The defect was due to a deficient side-seam weld that could cause cans to leak. This defect was discovered in May 2021 and impacted products manufactured between 1 May 2019 and 5 May 2021. Approximately 64,6 million cans were identified as defective inventory that has been marked for destruction, of which 22,7 million cans were recalled from the trade.    
        For clarity, total impact of the product recall has been accounted for on the income statement as follows:    
        Revenue impact 254,9  
        Cost of sales impact 308,3  
        Associated costs included in sales and distribution expenses 68,7  
        Associated costs included in marketing expenses 10,0  
        Associated costs included in other operating expenses 4,9  
        Total cost of product recall 646,8  
      3.2 IMPACT OF CIVIL UNREST    
        The civil unrest in KwaZulu-Natal (KZN) particularly impacted the Rice and Snacks & Treats businesses. This resulted in inventory write-offs of R85,2 million across the two businesses, which has been included in cost of sales. In addition to the inventory loss, there was physical damage and loss to property, plant and equipment. The unrest also resulted in lost sales across the business, up to 31 August 2021.    
        The group has adequate South African Special Risks Insurance Association (SASRIA) and general insurance cover for material damage to assets, inventory and business interruption. The total impact of the civil unrest has been accounted for on the income statement as follows:    
        Cost of sales impact 85,2  
        Associated costs included in non-operational items (refer note 7) 15,8  
        Total cost of civil unrest 101,0