Slide 1: Final Results Presentation
Final Results Presentation YEAR ENDED 31 DECEMBER 2018
Slide 2: Introduction, Financial Review, Corporate Matters
INTRODUCTION FINANCIAL REVIEW CORPORATE MATTERS Robin Smith, Financial and Commercial Director SEGMENTAL REVIEW & OUTLOOK GROUP OUTLOOK Andries van Rensburg, Chief Executive Officer Audited results for the year ended 31 December 2018 2
Slide 3: Introduction, Financial Review, Corporate Matters
INTRODUCTION FINANCIAL REVIEW CORPORATE MATTERS Robin Smith, Financial and Commercial Director SEGMENTAL REVIEW & OUTLOOK GROUP OUTLOOK Andries van Rensburg, Chief Executive Officer Audited results for the year ended 31 December 2018 3
Slide 4: F2018 Salient features
Introduction F2018 Salient features Normalised EBIT Normalised EPS Revenue 1.4% 11.8% 12.5% Normalised EBITDA Normalised HEPS 4.6% 16.1% Cash flow generated Net debt Maiden cash from operating activities to R1.2bn dividend R505m (from R1.9bn) 22 cps Audited results for the year ended 31 December 201
Slide 5: F2018 market review
Introduction F2018 market review Weak SA economy Consumer markets Supermarket retail ▪ Retail slowdown ▪ Stretched consumers volumes (%) - Low economic growth - Want value for money 1.4 - Unemployment - Low consumer confidence 1.0 - Lower discretionary spend - Middle market squeezed 0.8 - Fuel pric
Slide 6: Introduction, Financial Review, Corporate Matters
INTRODUCTION FINANCIAL REVIEW CORPORATE MATTERS Robin Smith, Financial and Commercial Director SEGMENTAL REVIEW & OUTLOOK GROUP OUTLOOK Andries van Rensburg, Chief Executive Officer Audited results for the year ended 31 December 2018 6
Slide 7: Stronger H2 as guided
Financial Review Stronger H2 as guided YoY growth H1 F2018 H2 F2018 F2018 ▪ Product innovation (yoghurts, dips, sauces & bars) 12.5% Revenue 14.2% ▪ Innovation & product launches 11.1% ▪ Stronger dry condiment shipments +3.7% organic +6.2% organic ▪ Full production at Dickon Hall +5.1% organic (H1 s
Slide 8: Income Statement – Revenue
Financial Review Income Statement – Revenue Rm F2018 Ch (%) H2 2018 H1 2018 F2017 Revenue 9 892.3 +12.5% 5 363.6 4 528.7 8 796.4 Rm Rm 12 000 1200 9 892 Organic revenue 10 000 Revenue: 20.1% 5-year CAGR 8 796 1000 984 Normalised EBITDA: 18.1% 5-year CAGR 940 8 021 8 000 800 +5.1% 816 (H1: +3.7%) 6 1
Slide 9: Income Statement – Gross Profit
Financial Review Income Statement – Gross Profit Rm F2018 Ch (%) H2 2018 H1 2018 F2017 Revenue 9 892.3 (22.2%) +12.5% 5 363.6 (22.2%) 4 528.7 (22.2%) 8 796.4 (22.2%) Gross profit (margin) 2 198.7 (22.2%) +9.5% 1254.1 (23.4%) 944.6 (20.9%) 2 007.8 (22.8%) F2018 GP margin down 0.6 p.p, but a significa
Slide 10: Group full-year GP margin evolution
Financial Review Group full-year GP margin evolution F2017-F2018 22.8% 0.9% Finlar & Sonnendal 22.2% 0.3% 0.1% 0.1% 0.0% 0.0% 0.0% H1: -0.9% H1: -0.6% H1: -0.1% H1: 0.0% H1: +0.2% H1: +0.0% H1: -0.1% H1 comparables GP margin margin Perishables Ambient Snacks and Baking and Niche Home and Specialised
Slide 11: Income Statement – Other income
Financial Review Income Statement – Other income Rm F2018 Ch (%) H2 2018 H1 2018 F2017 Revenue 9 892.3 (22.2%) +12.5% 5 363.6 (22.2%) 4 528.7 (22.2%) 8 796.4 (22.2%) Gross profit (margin) 2 198.7 (22.2%) +9.5% 1254.1 (23.4%) 944.6 (20.9%) 2 007.8 (22.8%) Other income 18.5 -87.4% 11.5 7.0 146.6 Histo
Slide 12: Treasury and FEC exposure management
Financial Review Treasury and FEC exposure management Ongoing initiatives R1.5m investment in Treasury function outsourced; Hedge accounting logistics IT platform centralised visibility ▪ Piloted at Rialto in March 2019 ▪ FEC* policies formalised ▪ To be implemented H1 F19 ▪ Improves product costing
Slide 13: Income Statement – Operating expenses & EBIT
Financial Review Income Statement – Operating expenses & EBIT Rm F2018 Ch (%) H2 2018 H1 2018 F2017 Revenue 9 892.3 (0.0%) +12.5% 5 363.6 (0.0%) 4 528.7 (0.0%) 8 796.4 (0.0%) Gross profit (margin) 2 198.7 (22.2%) +9.5% 1254.1 (23.4%) 944.6 (20.9%) 2 007.8 (22.8%) Other income 18.5 (0.0%) -87.4% 11.5
Slide 14: Income Statement – Normalised EBIT & EBITDA
Income Statement – Normalised EBIT & EBITDA Financial Review * Normalised for non-recurring, non-trading & non-cash items Rm F2018 Ch (%) H2 2018 H1 2018 F2017 EBIT (margin) 575.0 (5.8%) -3.9% 351.5 (6.6%) 223.5 (4.9%) 595.8 (6.8%) Normalised* EBIT (margin) 818.9 (8.3%) 1.4% 501.4 (9.4%) 317.5 (7.0%
Slide 15: Income Statement – Net interest
Financial Review Income Statement – Net interest Rm F2018 Ch (%) H2 2018 H1 2018 F2017 Revenue 9 892.3 (0.0%) +12.5% 5 363.6 (0.0%) 4 528.7 (0.0%) 8 796.4 (0.0%) Gross profit (margin) 2 198.7 (22.2%) +9.5% 1254.1 (23.4%) 944.6 (20.9%) 2 007.8 (22.8%) Other income 18.5 (0.0%) -87.4% 11.5 (0.0%) 7.0 (
Slide 16: Income Statement – Taxation
Financial Review Income Statement – Taxation Rm F2018 Ch (%) H2 2018 H1 2018 F2017 Revenue 9 892.3 (0.0%) +12.5% 5 363.6 (0.0%) 4 528.7 (0.0%) 8 796.4 (0.0%) Gross profit (margin) 2 198.7 (22.2%) +9.5% 1254.1 (23.4%) 944.6 (20.9%) 2 007.8 (22.8%) Other income 18.5 (0.0%) -87.4% 11.5 (0.0%) 7.0 (0.0%
Slide 17: F2018 Headline after-tax adjustments
Financial Review F2018 Headline after-tax adjustments (Rm) ▪ R42m pre-tax (R30m post-tax) impairment 500 ▪ Dairy blends & fruit concentrates under continued & significant competitive pressure - likely to persist for some time to come 30 450 ▪ Strategic options being evaluated 3 400 33 18 415 350 101
Slide 18: Income Statement – Normalised EPS & HEPS
Financial Review Income Statement – Normalised EPS & HEPS Rm F2018 Ch (%) F2017 Normalised* earnings 382.0 7.6% 355.0 Impairment losses on goodwill & other intangible assets 30.2 50.0 Loss on disposal of PPE 2.4 0.7 Normalised* headline earnings 414.7 2.2% 405.8 Continuing profit adjustments WANOS^
Slide 19: Cash Flow – Summary
Financial Review Cash Flow – Summary F2018 (Rm) F2017 (Rm) 351 Opening cash balance 118 961 Cash generated from ops 875 -92 Working capital changes 71 -225 Net finance charges -229 -139 Tax paid -145 505 Cash generated from operating activities 573 -346 Investment activities -606 319 Finance activit
Slide 20: Cash Flow – Working capital trend
Financial Review Cash Flow – Working capital trend Rm Target 12 000 18% 15.5% 16% 14.5% 10 000 13.6% 12.9% 14% 12.4% 8 000 12% 10% 6 000 8% 9 892 8 796 4 000 8 021 6% 6 176 4% 2 000 4 752 2% 0% F14 F15 F16 F17 F18 Revenue (LHS) Working capital as % of revenue - RHS Target band (RHS): 13%-15% Working
Slide 21: Cash Flow – Working capital days
Financial Review Cash Flow – Working capital days F17 F18 R141m ▪ Investment of R83m & R8m cash impact of R42m R16m 79 other receivables & payables (eg. VAT) 63 63 ▪ Net w.c. target: 45 days 61 55 53 45 45 Debtors Inventory Creditors Net working capital Target: 60 days Target: 60 days ▪ Target: 75 d
Slide 22: Cash Flow – Net investing & financing activities
Financial Review Cash Flow – Net investing & financing activities Net investing activities F2018 F2017 Net financing activities F2018 F2017 Rm -346 -606 Rm 319 267 Acquisitions/disposals 3 -291 Proceeds from issue of equity shares 1 440 132 Capex -349 -315 Including: Net debt inflow 2 624 355 • Lanc
Slide 23: 5-Year net debt trend
Financial Review 5-Year net debt trend R1 500m IPO: ▪ R1 100m used to repay term loans Rm ▪ R400m retained as cash 6 000 80% 5 270 5 419 67% 70% 5 000 4 567 56% 4 086 60% 4 000 3 809 51% 50% 41% 3 000 2 827 40% 2 125 2 094 30% 2 000 1 891 1 865 24% 22% 1 283 1 167 20% 1 000 10% 0% F14 F15 F16 F17 H1
Slide 24: Net debt structure
Financial Review Net debt structure Rm 1 500 1000 2017 2018 1 000 950 670 493 500 309 192 269 285 0 0 3 41 Settlement: (Old Jibar (Old Jibar Settlement: 4 years from + 3.5%) + 3.5%) - 500 5 years from (351) Nov ‘18 Nov ‘18 -1 000 (829) Facility A Facility B Facility C Facility D Other Vehicle & Asse
Slide 25: Introduction, Financial Review, Corporate Matters
INTRODUCTION FINANCIAL REVIEW CORPORATE MATTERS Robin Smith, Financial and Commercial Director SEGMENTAL REVIEW & OUTLOOK GROUP OUTLOOK Andries van Rensburg, Chief Executive Officer Audited results for the year ended 31 December 2018 25
Slide 26: Corporate Matters
Corporate Matters Corporate Matters APEF MAURITIUS LTD SHARE REPURCHASE PROGRAMME ▪ Commenced 19 Dec 2018 ▪ Holds 252,5m shares (37%) in Libstar − 9.8m shares bought from 19 December 2018 to ▪ Is held by 5 entities: 8 March 2019 (R74.3m) − Board to review programme post closed period Hermes Mauritiu
Slide 27: B-BBEE
Corporate Matters B-BBEE ▪ Implementation of employee scheme delayed due to: ‒ Prolonged registration process (B-BBEE Commission) ‒ Unfavourable issue price vs current market price ▪ Contemplating options; in process of consultation with stakeholders ▪ No IFRS 2 charge or dilutive impact on WANOS un
Slide 28: Introduction, Financial Review, Corporate Matters
INTRODUCTION FINANCIAL REVIEW CORPORATE MATTERS Robin Smith, Financial and Commercial Director SEGMENTAL REVIEW & OUTLOOK GROUP OUTLOOK Andries van Rensburg, Chief Executive Officer Audited results for the year ended 31 December 2018 28
Slide 29: Organic growth by category
Segmental Review Organic growth by category Organic revenue Volume Price / mix +5.1% = +3.8% + +1.3% (H1: +3.7%) (H1: +2.7%) (H1: +1.0%) Perishables +11.9% +7.9% +4.0% Food-related Ambient Groceries -6.6% +3.7% -10.3% categories = 82% of revenue Snacks & Confectionery +11.4% +30.6% -19.2% Baking & B
Slide 30: EBITDA performance by category
Segmental Review EBITDA performance by category* * In order of EBITDA contribution Perishables ▪ Dairy margin up Lancewood F2018 contribution Double digit ▪ New products launched, e.g. yoghurts, sauces & spreads 88% of (Dairy) to Group: ▪ Hard cheese volume growth in retail, food service & export ch
Slide 31: Segmental outlook
Segmental Outlook Segmental outlook Perishables ▪ Dairy ‒ Ongoing innovation & new product launches ‒ Protect & grow market share ‒ Investment in capacity & efficiency improvements ‒ R100m in multiple facility upgrades at Lancewood ▪ Meat ‒ New products (fully-cooked chicken) & new channels – better
Slide 32: EBITDA performance by product category
Segmental Review EBITDA performance by product category* * In order of EBITDA contribution Ambient Groceries F2018 contribution Cape Herb and Spice ▪ Significant H2 margin enhancement (Dry condiments) Flat to Group: ▪ H2 improvement on slower H1 sales 86% of Category ▪ Slow performance of branded pr
Slide 33: Segmental outlook
Segmental Outlook Segmental outlook Ambient Groceries ▪ Dry condiments ‒ Recovery & growth in key export markets ‒ Focus on value-added products in local & export markets ▪ Wet condiments ‒ Recovery of branded product sales ‒ Strong private label growth ▪ Honey ‒ Continued market growth ‒ Improved,
Slide 34: EBITDA performance by product category
Segmental EBITDA performance by product category Review & Outlook Snacks and Confectionery F2018 contribution Review to Group: ▪ Significant bulk raisin & peanut sales Ambassador Revenue: Single digit ▪ Strong performance driven by new products 5% Foods ▪ Value-added product growth Organic revenue +
Slide 35: EBITDA performance by product category
Segmental EBITDA performance by product category* Review & Outlook Baking and Baking Aids Review * In order of EBITDA contribution F2018 contribution Amaro ▪ Significant growth in rolls & speciality breads to Group: Foods Double digit ▪ Wraps & specialised products recovered in H2 93% of (Baked good
Slide 36: EBITDA performance by product category
Segmental EBITDA performance by product category* Review & Outlook Niche Beverages Review * In order of EBITDA contribution F2018 contribution ▪ Acquired November 2017 to Group: Khoisan New ▪ Good annual crop & high tea prices = strong performance 94% of Gourmet - in line with expectations Category
Slide 37: EBITDA performance by product category
Segmental EBITDA performance by product category* Review & Outlook HPC Review * In order of EBITDA contribution F2018 contribution ▪ Slow cleaning product sales to Group: Contactim Double digit ▪ Cotton products showed some resilience 82% of ▪ Margin pressure from unfavourable exchange rates Categor
Slide 38: EBITDA performance by product category
Segmental EBITDA performance by product category Review & Outlook Specialised Food Packaging F2018 contribution Review * In order of EBITDA contribution to Group: ▪ Stronger H2 industrial channel performance somewhat offset H1 low Revenue: Multicup Double digit volume growth & margin pressures 2% ▪
Slide 39: Introduction, Financial Review, Corporate Matters
INTRODUCTION FINANCIAL REVIEW CORPORATE MATTERS Robin Smith, Financial and Commercial Director SEGMENTAL REVIEW & OUTLOOK GROUP OUTLOOK Andries van Rensburg, Chief Executive Officer Audited results for the year ended 31 December 2018 39
Slide 40: Response to tough consumer landscape
Group Outlook : Response to tough consumer landscape Under the Libstar umbrella of innovation Category & channel development Investment Systems ▪ Category gaps, e.g. health, wellness, Significant capital allocation to: Standardised IT platforms on-the-go eating & convenience ▪ New technologies ▪ Imp
Slide 41: Growth strategy and growth areas
Group Outlook growth strategy 3 growth areas Organic growth Capacity growth Acquisitive growth 2018 2018 2017 ▪ Market share growth in key businesses ▪ Hard cheese manufacturing ▪ Sonnendal ▪ Innovation ▪ New granola plant ‒ Lancewood yoghurts ‒ 387 new products ▪ Health bar capacity expansion (now
Slide 42: Examples of F2018 new product development
Group Outlook Examples of F2018 new product development 387 New products Innovation 336 Renovated products Audited results for the year ended 31 December 2018 42
Slide 43: Strategic outlook of businesses
Group Outlook Strategic outlook of businesses Core growth businesses (95% of earnings) Non-core businesses Snacks & Baking & Niche Specialised Perishables Ambient Groceries HPC Confectionery Baking Aids Beverages Packaging (Incorporating Sonnendal) Audited results for the year ended 31 December 2018
Slide 44: Disclaimer
Disclaimer Certain matters discussed in this document regarding Libstar’s future performance, that are neither reported financial results nor other historical information but involve known and unknown risks based on assumptions regarding the group’s present and future business strategies and the env
Slide 45: Appendices
APPENDICES Audited results for the year ended 31 December 2018 45
Slide 46: Normalised EPS, HEPS & ROIC trends
Appendix 1 Normalised EPS, HEPS & ROIC trends cps 100 26% 90 87 75 78 76 25% 80 73 71 70 73 24% 60 51 67 50 23% 40 50 25.2% 22% 30 23.4% 23.3% 20 21% 10 20.9% 0 20% FY14 FY15 FY16 FY17 FY18 ROIC* (RHS) Normalised EPS Normalised HEPS 5 year CAGR >20% 5 year CAGR 7.6% 5 year CAGR 9.4% * Return on Inve
Slide 47: Breakdown of open FEC exposure
Appendix 2 Breakdown of open FEC exposure FEC Revalued Import "Purchase" / FEC cover FEC spot rate at 31 Dec 18 Quarter (Export "Sell") Millions FEC rate Rm on 31 Dec 18 Rm 2019-Q1 19 18 AUD (2) 10.3 (17) 10.2 (17) EUR 5 16.2 80 16.6 82 GBP (1) 19.1 (16) 18.6 (16) JPY 1 0.1 0 0.1 0 NZD (0) 9.4 (0) 9