Heather Keeler-Hurshman - Vice President of Investor Relations Paul Jewer - Executive Vice President and Chief Financial Officer Henry Demone - President and Chief Executive Officer

George Doumet - Scotiabank Sabahat Khan - RBC Capital Markets Doug Cooper - Beacon Securities Robert Gibson - PI Financial Corp Jonathan Lamers - BMO Capital Markets

Good afternoon, ladies and gentlemen, thank you for standing by. Welcome to the High Liner Foods Incorporated conference call for results of the second quarter of 2017. At this time, all participants are in a listen-only mode. Following the management's prepared remarks, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. [Operator Instructions]. This conference call is being recorded today, Tuesday, August 15, 2017 at 2 PM Eastern Standard Time for replay purposes. I would now like to turn the call over to Heather Keeler-Hurshman, Vice President of Investor Relations for High Liner Foods. Ms. Keeler-Hurshman, please go ahead. Heather Keeler-Hurshman: Thank you, and good afternoon, everyone. Thank you for joining High Liner Foods' conference call to discuss our financial results for the second quarter of 2017. On the call today from High Liner Foods are Henry Demone, Chairman and Chief Executive Officer; and Paul Jewer, Executive Vice President and Chief Financial Officer. Today's call will start with Paul reviewing the Company's financial performance for the second quarter 2017, followed by Henry, who will discuss yesterday’s announcement from the Company’s Board of Directors and has been reappointed the CEO for High Liner Foods. Before turning the call over to management, listeners are reminded that certain statements made in today's call may be forward-looking statements that are subject to risks and uncertainties. Management may use forward-looking statements as they discuss the Company's strategy and business in the future. Actual operating or financial results could differ materially from those anticipated in these forward-looking statements. High Liner Foods includes a thorough discussion of the risk factors that can cause its anticipated outcomes to differ from actual outcomes in its publicly available disclosure documents, particularly in its Annual Report and annual information form. Please note that High Liner Foods is under no obligation to update any forward-looking statements discussed today. Yesterday, High Liner Foods reported its financial results for the second quarter ended July 1, 2017. A news release along with the Company's MD&A and unaudited condensed interim consolidated financial statements for the first quarter of 2017 have been filed on SEDAR and can also be found in the investor information section of High Liner Foods' website. If you would like to receive our news releases in the future, please visit the Company's website to register. Lastly, please note that the Company reports its financial information in U.S. dollars and the results to be discussed today are stated in U.S. dollars unless otherwise noted. High Liner Foods common shares trade on the Toronto Stock Exchange and are quoted in Canadian dollars. I will now turn the call over to Paul. Paul, please go ahead.

Thank you, Heather and good afternoon everyone. Before beginning my financial review, I would like to remind listeners that we use certain non-IFRS measures and ratios when discussing our results as we believe these are useful in assessing the Company's financial performance. These measures are fully described and reconciled to IFRS measures in our MD&A. Please note that all comparisons provided during my financial review of the second quarter of 2017 are relative to the second quarter of 2016. There were three non-routine or unusual items impacting the second quarter’s financial results that you should be aware of the purpose of comparing these results to the same period last year. The first of these items is the acquisition of Rubicon completed on May 30, 2017 which had the impact of increasing sales volume by £3 .3 million, sales as reported by 17.7 million and adjusted EBITDA by $500,000 in the second quarter of 2017 compared to the same period last year. The second of these items is the sale of our New Bedford scallop business on September 7, 2016 which had the impact of lowering sales volume by £800,000 million, sales as reported by $10.7 million and had a nominal impact on adjusted EBITDA in the second quarter of 2017 compared to the same period last year. The third item to be aware of is the expanded voluntary product recall activities in the second quarter. On last quarter’s conference call, we disclosed that $700,000 in estimate losses were recognized in the first quarter’s results. The latest of the voluntary recall of product due to the potential presence of undeclared milk. We also disclosed that we had identified that the allergen originated from ingredient supplied by one of our ingredient suppliers. Subsequent to releasing the first quarter’s results, we were notified by this ingredient supplier that it was recalling several additional ingredients due to the potential presence of undeclared milk. This intern necessitated that we expand our initial product recall and resulted in a recognition of $8.6 million in further estimated losses being recognized related to the product recall in the second quarter. This amount is comprised of two components. The first being $6.7 million related to the return of destroyed products, along with direct incremental costs we incurred related to the rework of product, consumer refunds and customer fines. Please note that this amount $6.7 million has been added back for the purpose of calculating adjusted EBITDA for the second quarter. The second component of the $8.6 million in total estimated losses is $1.9 million related to the return of product to be reworked, which has not been added back for the purpose of calculating adjusted EBITDA as the product is expected to be resold. These estimated losses do not include any estimate of the reduction in earnings associated with the product recall as a result of lost sales opportunities due to limited product availability and customer shortages, or increased production costs related to the interruption of production at our facilities. The majority of the disruption to our business associated with the recall has subsided. We are receiving regular ingredient shipments from the ingredient supplier, rebuilding inventory of recalled products and have resumed shipment of these products to customers. We expect to recover substantially all of the estimated losses associated with the recall from the ingredient supplier, and will record these recoveries in the period in which they occur or virtually certain to occur, in accordance with IFRS. In summary, the product recall had the impact of lowering sales volume by £2.5 million, sales as reported by $8.5 million and adjusted EBITDA by $1.9 million in the second quarter of 2017 compared to the same period last year. Sales volume increased in the second quarter of 2017 by £1.1 million, a £63.4 million due to higher sales volume reflecting the following: The addition of sales volume from Rubicon offset by reduced sales volume related to the return of recalled product and lower solid sales as a result of the sale of the New Bedford facility in the third quarter of 2016. Excluding the impact of these items, sales volume for the second quarter of 2017 increased by £1.1 million reflecting higher sales volume in our Canadian retail and food services business and in our U.S. food services business. A later Easter in 2017 compared to 2016 shifted a portion of the benefit associated with Lent compared to the full benefit being realized in the first quarter last year. This benefit however was partially offset by loss sales opportunities associated with the product recall. Sales in U.S. dollars increased in the second quarter of 2016 by $8 million by $232.4 million. A weaker Canadian had the effect of increasing the value of reported sales by approximately $2.9 million relative to the conversion impact in the same period last year. In domestic currency which is before the impact of converting our Canadian operations to the U.S. dollar presentation currency. Sales increased by $12.2 million to $254.9 million. Excluding the addition of sales from Rubicon, the decrease in sale, is it a product recall returns and reduced call up sales due to the sale of new Bedford. Sales decreased by $14.3 million mainly due to the increase by $14.3 million mainly due to the increase in sales volume mentioned previously. Gross profit decreased in the second quarter by $8.9 million to $37.8 million reflecting higher volumes and a decrease in gross profit as a percentage of sales to 16.3% compared to 20.8%. This decrease reflects $8.6 million and estimated losses recognized in the second quarter related to product recall partially offset by $2.1 million in gross profit from Rubicon. Excluding these two items, gross profit decreased by 2.4% to $44.3 million or 19.8% of sales due to the impact of product mix changes and residual plant inefficiencies since closing our new Bedford facility that were worsen by production interruptions and our facilities as a result of the product recall. Adjusted EBITDA decreased in the second quarter of 2017 by $4 million to $13.4 million. The impact of converting our Canadian dollar denominated operations and corporate activities through our U.S. dollar presentation currency increased the value of reported adjusted EBITDA in the U.S. dollars by $1 million in the second quarter of 2017 compared to $1.4 million in the same period in 2016. In domestic currency, adjusted EBITDA decreased in the second quarter by $4.5 million a $14.4 million and was 5.7% of sales compared to 7.8% in the same period last year. The $4.5 million decrease in domestic currency adjusted EBITDA will reflect $1.9 million of estimated losses associated with the recall related to the return product that will be reworked and resold that I mentioned previously. The remaining $2.6 million decrease in domestic currency adjusted EBITDA which I refer to as the residual decrease reflects a number of factors already discussed such as changes in product mix, continued plant inefficiencies that were worsened by product interruptions related to the recall, lost sales opportunities also related to the recall, all partially offset by $500,000 in adjusted EBITDA from Rubicon. We estimate that the impact of the product recall on plant efficiency and lost sales opportunities was responsible for at least half of the $2.6 million residual decrease. Reported net income decreased in the second quarter of 2017 by $4.5 million to $600,000 with diluted earnings per share of $0.02. The decrease in net income reflects the decrease in adjusted EBITDA mentioned previously along with decreases in depreciation and income tax expense. Excluding the impact of certain non-routine and non-cash items, which are explained in our MD&A, adjusted net income decreased in the second quarter of 2017 by $2.4 million to $6.1 million and correspondingly adjusted diluted earnings per share decreased by $0.08 to $0.19. Turning now to the balance sheet, net interest bearing debt increased by $97.8 million to $349.8 million at the end of the first half of 2017 compared to $252.1 million at the end of 2016, primarily reflecting the acquisition of Rubicon. Including trailing 12 month adjusted EBITDA of Rubicon, net interest-bearing debt to rolling 12 month adjusted EBITDA was 4.3 times at July 1, 2017 compared to 3.1 times at the end of fiscal 2016. In the absence of any major acquisitions or strategic initiatives requiring capital expenditures in 2017, we expect this ratio to improve to approximate four times by the end of 2017. That concludes my financial review for the second quarter of 2017. I will now turn the call over to Henry.

Thank you, Paul. Good afternoon, everyone. As Heather mentioned at the beginning of today’s call, the Board of Directors of High Liner Foods announced yesterday my appointment as the Company’s CEO effective immediately. For any listeners not already aware, I was previously the Company’s CEO from 1992 to 2015 prior to the appointment of Keith Decker to this position in May of 2015 at which time I assumed the position of Board Chairman. The Board and I are very confident in the strategy the Company is pursuing to grow our business and to create long-term shareholder value. We are progressing against the strategy, but our belief that more progress can be made more quickly supported this change. Like many of you, I’m a significant shareholder of High Liner Foods and I’m focused on growing value for shareholders beyond what has been achieved to-date. The Company has strong leadership and talent and I’m looking forward to working more closely with the team at High Liner Foods to expedite progress on our strategic objectives and to pursue new growth opportunities. On behalf of the Board, I would like to thank Keith for his contribution to the High Liner and wish him all the best with his future endeavors. Turning back to performance in the second quarter, year-over-year trends in particular sales volume improved as expected and were further bolstered by the acquisition of Rubicon which was successfully completed in the quarter. Unfortunately, the impact of the product recall served to offset a portion of this improvement and contributed to inefficiencies at our manufacturing facilities. The product recall was a disruption to the business in the second quarter, but I believe that it has been handled efficiently and as Paul stated earlier, we believe the majority of the disruption is behind us and we expect to recover substantially all of the estimated losses associated with the recall from our ingredient supplier. This recovery will be recorded in future periods. Having returned to year-over-year sales volume growth in the second quarter, we expect this to continue for the rest of the year and combined with continued improvements at our manufacturing facilities we expect to deliver year-over-year earnings growth in the back half of 2017. This is before considering any benefit from the Rubicon acquisition which will further strengthen our financial performance going forward. I’m also pleased to share with you that yesterday the Company's Board of Directors approved a quarterly dividend of $0.14 per share on the Company's common shares payable on September 15, 2017 to holders of record on September 1, 2017. Operator, I would now like to open the call for questions.

Certainly. [Operator Instructions] Your first question comes from the line of George Doumet with Scotiabank. Your line is now open.

Good afternoon, guys. Just wanted to clarify a little bit I mean appreciate you Paul on the numbers you provided in terms of the impacts for the recall. But maybe give us a little bit more in terms of the loss of the sale opportunity and the increased production costs as you expect them to persist in the next couple of quarters?

Yes, we don't expect them to persist in the next couple of quarters. As I said, most of that recall impact is now behind us, now is August. So, there was a little bit of an impact in July, but that is behind us as Henry and I spoke of the key to the performance improvement in the back half of the year is the sales trend that we have already experienced and a return to the production efficiency in our plants that we believe is achievable.

Okay, great. And just to classify I think Henry in your prepared remarks you mentioned these come into year-over-year growth earnings growth that's purely organic, right?

That's right. Does not include Rubicon.

Okay, perfect. And just looking at the Rubicon acquisition itself, it seems like the contribution for the quarter was a little bit less than expected on our end. Just wondering if there is any seasonality you can may be point to or any reduction in sales there that we have seen and also if maybe you could just provide us with a little bit of an update on the legal disputes that are currently underway over there.

Yes, sure. On the impact on the quarter just as a reminder there was only one month in there, because we didn't close the deal until the end of May. The one month if you analyze over the year obviously would be below what you would expect but there is seasonality in that business particularly as you go into the December period and also through Lent. so there was not an expectation internally that there would be significant impact from Rubicon in the second quarter as a result. Sales are absolutely in-line with expectations, there has been some increase in shrimp prices and that frankly Rubicon has 17 years of experience in business figuring out how management were confident that there will be able to do that as we forward. So that’s the financial impact of Rubicon. Going to the second part of your question which is the legal update, there really isn’t much more to update on that front. At this point, we continue to believe that the suit is without merit. We are deeply committed to sustainable practices in buying and labor practices in High Liner organization and we know in the Rubicon organization in its supply chain. So we will continue to vigorously defend the law suit as we go forward.

Great, that’s helpful. And then just one last one if I may, I guess just looking at High Liner from a strategic standpoint. Would you guys consider adding non-frozen maybe shelf stable products to your suite does that kind of satisfies your goal of species diversification?

Yes, I think species diversification obviously is a goal of ours and we have said before we would always look at any opportunity that we thought was a good strategic fit. Clearly sea food is our focus and likely sea food will continue to remain our focus and other than that we won’t comment specifically on any specific target that we might have.

Okay, that’s helpful. Thanks guys.

Thank you.

Your next question comes from the line of Sabahat Khan with RBC Capital Markets. Your line is now open.

Thanks and good afternoon. Can you maybe give us some indication, you said you expect earnings growth in the back half of the year. Maybe what are you seeing across your U.S. food service customers and even in retail in Canada that’s giving maybe some confidence for the back half?

I think there is a couple of things. As we talked about in the call, we did see sales improvement in the second quarter even in U.S. food service and Canadian retail. So we expect that to continue as we go through Q3 and Q4, we obviously have a little bit of Q3 already behind us and are comfortable with that start that is in-line with our expectations for growth for the balance of Q3 and into Q4.

All right, thanks and just one follow-up on the product recall, it seemed like from the recall that it was a very broad based or what is concentrated maybe in Canada versus U.S. or with any particular customer at all or was it widespread.

No it was very broad based across both Canada and the U.S. Initially it started in Canada in Q1 but as it spread it was across Canadian and U.S. customers in both retail and food service. In our case obviously it was limited to sea food, because that’s what we do but it impacted people that produced other protein as well it wasn’t not just a sea food issue or not just a High Liner issue.

All right, thanks and then just one follow-up on your earlier commentary on potential M&A and you provide us some color on what may interest you, but can you comment maybe on the capacity on your balance sheet and this willingness to do another acquisition on the back of Rubicon. Would you be comfortable with another one in the next six to 12 months of similar size?

Yes. I think we are very comfortable with our ability to execute on deal if a deal is the right deal to do. We are comfortable with their ability to manage and we necessarily integrate and acquisition, if an opportunity presents itself in that timeframe. From a balance sheet perspective, I would say, what we said before as we believe that we can finance acquisition someone our balance sheet and if necessary. We would look at supporting that with other security issuances in order to make sure that we were comfortable that the risk profile of the transaction was appropriate for the business. And what we know of our own business is we generate significant free cash flow. And we believe, if we were accepting more leverage, it would be temporary and we would be working hard to get back down to our stated target of leverage for the business over the long-term. So we are willing to accept some increased in leverage for the right strategic acquisition that makes financial sense. But we are certainly cautious of doing that in appropriate risk managed basis as we go forward.

All right. Thank you.

Your next question comes from the line of Doug Cooper with Beacon Securities. Your line is now open.

Hi good afternoon, thanks for the time here. First of all, just on Rubicon, I just want to get back to that for a second. When it was amounted, it was 60 million of EBITDA and 234 million of revenue, which is just under 7% margin. Obviously came in this quarter just under 3%. Is that a volume thing and I guess following to that. In the back half for the year, given the seasonality would that typically represent about 60% of the sales is that ballpark figure?

I don’t have that number for the back half for the year in front of me in terms of sales. And I think that maybe a little high just because January, February, March are pretty good periods for them as well and December, which would be in this year, would be a good month as well. In terms of the profitability. Yes, we would expect the profitability to improve in the back half for the year versus what you saw in June. But I did mention June was also impacted as were a couple of months prior to the acquisition impacted by increases in shrimp prices. So we do have the team focused on managing that to get the profitability from the business that we expect over the medium to long-term.

So that means, you are trying to pass along the price increases. Is that basically what it mean?

Yes. There absolutely is some of that. There has been two things. One there were rising prices in shrimp, some of that has subsided fortunately. But also there was some of that similar to our business, it can’t pass on immediately.

Right. Can you just talk about maybe how the excluding the recall issue, how the breaded and battered category did this quarter, I mean we have been in sort of I guess decline for the past whatever couple of years. Is there any sign of that stabilize or it down another couple of percent sort of year-over-year?

I think the decline has abated, I wouldn’t say that the product category grew in the quarter. But the decline did abate compared to what we saw in previous quarters, certainly excluding the product recall as we said. We will give a bit more perspective on that in Q3 as well because it’s a little hard to comment on fully given some shift in volume between Q1 and Q2 related to the change in Lent, but I will certainly give some more perspective in Q3. But I would say our general sense is it has abated a little.

Okay. And two more quick ones. The new product [indiscernible] out there distribution in Canada anyway. Can you comment a little bit about how it’s going and how your distribution is shaping up on that front?

Yes, so we are quite pleased with how the launch went. It’s early days, it was launched in May and the intent that it will get featured and promoted a little more heavily as we go into September and the back-to-school period. The distribution that we got across retails, across the country on the launch, we are very pleased with and we see that continuing to grow. And we have been able to - that is not one of the products that was negatively impacted in terms of ability to store. So we still see good potential for that product as we move forward. And I think the other thing that we are very pleased with is the consumer response that we had for the product, the product has been very positive from the consumer groups that we expected would be interested in the product.

Okay. And what about [salmon] (Ph) price and how is that trending?

So salmon pricing is starting to normalize from what were pretty high levels last year because of issues in Chile. So that did have a negative impact in our business as we talked [indiscernible] about in Q1 and the latter part of 2016. But we do expect that to be a more positive trend as we look forward.

Okay. And as a final from me. When you are giving guidance of year-over-year increase in earnings in the second half, is there anything built in there for the new product CAN'T MESS IT UP in there or is that expected to be sort of a breakeven in the first - during its initial launch period? And is there a quantum you want to give in terms of year-over-year or is it sort of 5% or under 10% or can you add any color to the quantum?

Yes, I don’t really want to give any quantum, because it’s too early and frankly it’s one product right. In fact it’s 3Q right, it’s not even...

I’m sorry, quantum, I’m sorry, just in general the year-over-year increase?

I’m sorry I thought you were referring to CAN'T MESS IT UP specifically. No, I mean in terms of level of growth, what we are comfortable is saying is in the back of the year we will see growth over Q3 and Q4. We obviously believe there will be more of that growth in Q4 than Q3 as we continue to come out of the plant production challenges that we had but that’s all I had right at the vision.

Okay. And just on the CAN'T MESS IT UP. Do you expect that product to be profitable in the second half of the year or is that something that once you are through the initial launch then it should start to gain profitability?

Yes, there is always some level of extra promotion that you do when you launch products obviously. So we don’t expect it to be a significant contributor profitability in the back half of the year, but we do expect it to be profitable.

And sorry, last one from me. Just on that product do you expect U.S. distribution for that product?

We are actively pursuing that as we speak, because we do believe there are opportunities for that kind of product in the U.S. market

Great. Thanks very much.

And your next question comes from the line of Bob Gibson with PI Financial. Your line is now open.

Thank you. Henry, nice to have you back.

Thank you, Bob. Just like old days.

Exactly, exactly. Can you give me a little idea, you called out higher raw material costs was that just shrimp or give me some color there?

Shrimp is where it had an impact on Rubicon, we did see some higher raw material costs in few of our key species caught as an example salmon actually abated a little bit as I mentioned earlier. But I would say that's more typical inflation rather than some of the acute cost increases that we saw if you look back a few years ago. So our focus is on managing margin and mix as we speak what are more typical cyclical ups downs in species.

Rubicon, now that you had it any thoughts of where it might go?

Absolutely, I mean I think as we talked about when we announced that we were acquiring it, we see great opportunity for us to grow our shrimp volume across the rest of our retail and foodservice business both in Canada and the U.S. Rubicon was primarily, entirely focused on U.S. retail. So, we see an opportunity in the other channel.

Okay. And just touching on the U.S. retail, any particular reason why it didn't perform the same as the other sectors, any color would be appreciated.

Yes, the primary area of decline in that business continues to be Fisher Boy and some of our legacy Sea Cuisine products where we are seeing growth is in things like the Sea Cuisine impact line. So our focus is on like we have been focused on across the rest of our business finding a way to mix out that so that we can have some level of growth in excess of what will continue to be some level of product decline in traditional categories.

Great. Thanks very much.

And your next question comes from the line of Jonathan Lamers of BMO Capital Markets. Your line is now open.

Good afternoon. Paul, you made a comment in your prepared remarks that of the residual $2.6 million decrease about half was due to a specific issue. So, could you just repeat that comment? I didn't hear that.

Yes, sure. So half is related to the recall which is two things related to the recall, one is that plant inefficiency associated with recovering from the recall and the second is there is some level of loss sales when you don't have product to meet the demand that was associated with the recall, that's half of the residual decline. The other half is more operational in nature. We talked about gross margin mix in the business. We have seen some increase in commodity sales and some decline in value added product. So, that has a slightly negative impact on gross margin. And then the other piece that we have talked about as well is the plant inefficiency still relating back to the New Bedford closure late last year and it's working through that now that the recall is largely behind us, that gives us confidence in terms of performance in the back half of the year.

I’m sorry the $2.6 million is with respect to normalized EBITDA excluding the recall effect or the gross margin?

Yes, so the $2.6 million is normalized EBITDA, but included in that $2.6 million decline year-over-year in adjusted EBITDA is half of it we believe is related to the recall plant disruption and volume impact, because of opportunity not to complete sales. The other half is related to more regular operational issues, gross margin mixed and the plant inefficiencies associated with still moving product around related effort.

Okay. So in the outlook comments, when the Company says it believes that the plant efficiencies will improve in the second half is that referring to that half of the EBITDA decline specific to the recall disruption or does that also refer to both.

Absolutely both.

And this margin mix shift from the growth in uncoded products versus value added products, I mean will that not continue going forward given the breaded and battered continue to decline?

Yes we do believe that that will continue as we move forward, but what we have been able to do frankly that GAAP in Q2 was less than has been in previous quarters, because we found ways to mix it out in our business and some of the new products that we launched are value added type products that help with that margin and the plant inefficiency piece is a negative impact on margin as well. so the improvements there we believe will allow us to return to that level of growth in EBITDA in the back half of the year.

Okay. And just on the sales volumes growth in Q2 benefitted from the calendar timing shift with the late Lent and if carve that out you know it looks like organic volumes would have been down year-over-year. So you know so far in July were there is some improvement in demand that improved the underlying volume trend relative to that looking through these calendar effects?

Yes we did start the quarter, the third quarter as I mentioned earlier with a better even a more improved trend on sales volume and that does give us some confidence in the growth as we look at Q3 and Q4 and I wouldn’t say that all of the remaining organic volume growth is associated just with the Lent shift.

No but I believe in Q1 you indicated that Lent shift negatively impacted Q1 sales by £2.1 million year-over-year. So was the contribution in Q2 less than £2.1 million?

Yes the contribution in Q2 was likely a little less than £2.1 million. I’m struggling to remember the £2.1 million number because I didn’t think we had quantified at that specifically but if we did then you are right they would be slightly less of a positive impact in Q2. The reason, I’m surprised that we quantified that specifically is because it frankly it’s a little hard to do in terms of quantifying exactly what business could have happened in March that ended up happening in April. But sufficed to say that we feel quite comfortable that even without the shift in Lent, our sales volume trend was much better in Q2 than it was in Q1. And we expect to continue to improve as we move forward.

You are right, I’m just checking my numbers the 2.1 million was my interpretation. One more question on the product recall. The $1.9 million loss that is included in adjusted EBITDA for returned product to be rework. Can you just explain how you develop that estimate and what is included in that?

Sure, yes. So as we product, as we got product back from primarily retailers in this case. That was product that could not be sold. As accounting rules requiring us to reverse the sale that you initially booked for those products and reverse the margin associated with those sales. And the reason they do that is because if you can rework product and you should book the sale after the reworking occurs. And so that reworking as occurred and those sales will be reported in Q3.

Okay. And when you say you expect to recover substantially all of the estimated losses that refers the entire 9.3 million recognized over the first half?

Yes. It does.

Is there a litigation needed for this and where is the Company in the process of recovering these losses?

We certainly hope, there is no litigation needed for this. We know that our supplier continues to be an important supplier for us. We continue to receive product from them. They are a big strong company, who are also [in short] (Ph) . So we are confident that we can resolve this with our supplier. And that is what we will continue to do. And we are still as I say, buying product from that supplier and managing how we pay for those products. So the supplier has been supportive.

Okay great and have the customers changed their orders or volumes following the recall?

No. Thankfully, what we have seen at this stage is customers refilling their stock levels. And that was what we are working hard to get through.

And just on Henry resuming the CEO position. As a Board considered conducting a search for a new CEO?

Yes. What I can tell you about that is I’m here full-time with all my energy and all my talent to do the job as well as I can. I can promise you I won’t be here as long as I was first time. But more seriously we will be looking for a new CEO and obviously the Board makes that decision. But in the meantime, I’m here doing the job on a full-time basis, not on an interim basis.

Okay, thanks for your comments.

Yes, thank you.

And there are no further questions. I will turn the call back over to the presenters.

Okay. I want to thank everyone for participating in today's call. We look forward to updating you with our third quarter results on our next conference call in November. Thank you very much.

Thank you.

That concludes today's conference call. You may now disconnect.