Libstar Holdings Ltd. · JSE:LBR
Libstar — FY2020 Earnings Presentation
54 slides from Libstar's earnings presentation, 2021
Slide 1: Results Presentation: Year ended 31 December 2020
THE LIBSTAR FAMILY LIBSTAR From our Home to Yours Results Presentation Year ended 31 December 2020
Slide 2: Presentation overview
01 02 03 04 05 Presentation overview Introduction Financial Review Category Review Group Outlook Questions and Answers
Slide 3: Introduction
LIBSTAR
Slide 4: Key aspects of F2020 - market conditions
Key aspects of F2020 - market conditions rirodton Consumer pressure * Lower disposable income & high unemployment; consumer exercising caution ¢ Poorest consumers hit hardest; middle class somewhat more resilient * Private Label/ Dealer-Own Brand
Slide 5: Libstar priorities in 2020 COVID environment
Priorities Libstar priorities in 2020 COVID environment Introduction Protecting our people * R65 million spent protecting workforce * Private COVID testing (more than 2000) * Over 700 recoveries Preserving financial stability * Improved cash flow conversion from 91% to 94% * Gearing remained at 1.3x
Slide 6: F2020 Libstar salient features
F2020 Libstar salient features Introduction 6 ¢ 5 product categories sold in 4 sales channels ¢ Effects of COVID-19 most apparent in sales channels : Group y-o-y % revenue growth Libstar Gross revenue by sales channel* H1 2020 H2 2020 F2020 | Change in sales mix * Q3 robust retail demand Retail & Wh
Slide 7: Libstar 2020 Group results
Libstar 2020 Group results rvodveton Revenue 4.0% GP Margin 0.4%V Strong Retail & Wholesale performance, offset by COVID-19 restrictions on QSR*/hospitality Norm. EBITDA*(incl. COVID-19 costs) 5.0% W | | Norm. EBIT*(incl. COVID-19 costs’) 13.1 %YW Mainly due to depreciation incurred on completed 201
Slide 8: Food vs other performance
Food vs other performance fredtution 8 Food Categories Perishables, Groceries, Snacks & Confectionery and Baking & Baking Aids Household & Personal Care Revenue Normalised EBITDA* ei a v1 92% 94% of Group of Group Organic’ Incl. COVID-19 Organic/ Incl. COVID- 3.1 % growth v 8.1 % costs of R60m 7.9%
Slide 9: Financial Review
LIBSTAR 02 Financial Review Charl de Villiers, CFO
Slide 10: 2020 market share
2020 market share* Financial Review 10 Libstar continues to outperform the market Defined basket (Retail) Libstar: 12.6% value share * R3.5bn vy ' * 141m units R28bn (1.3bn units) = Total FMCG basket = Libstar defined basket *12 months to November 2020 Growth Categories Defined basket growth At19% L
Slide 11: Income Statement - Revenue & Gross Profit
LIBSTAR Income Statement - Revenue & Gross Profit Group revenue R10.3bn Group organic* revenue R10.2bn Volume — Price/mix -4.6% +8.1% Food categories’ Organic revenue HPC Organic revenue * Excludes revenue from Elvin, K Snacks and Healthwise 2015 2016 2017 2018 2019 2020 * Change in Retail/Food serv
Slide 12: Income Statement - R65m in extraordinary expenses
Income Statement - R65m in extraordinary expenses FinancialReview 12 COVID-19 extraordinary expenses % of Total Cost R’000 Donations* 8% 5 304 Personnel-related benefits (transport, COVID-19 testing) 44% 28 473 COVID-19 operating costs 48% 30 918 cn Ri5m mn in Cost of Sales operating expenses * In s
Slide 13: Income Statement - Operating expenses
Income Statement - Operating expenses FinancalReview 13 Operating expenses (R’000) % ch. 201 Opex 2111 168 22.0% 1729 857 Long-term incentives (13 990) (6 948) | Provision for SARs*, LTIP* and GSP* Retrenchment & settlement costs (16 758) (16 646) | Corporate/Perishables/Groceries/HPC. Other non-ope
Slide 14: R204m in impairments
R204m in impairments R198m Denny impairment (downward revision of 5-year growth forecasts) 2020 headwinds * Competitive SA market (capacity t ) * Substantial } in Food service channel offtake * Some product shifted to Retail & Wholesale channel (but not all) + Profitability severely affected 3% + in
Slide 15: Income Statement (contd.)
Income Statement (contd.) Francia Review 15 Rm | 2020 | Ch (%) 2019 . * * Unrealised FX loss of R22m (2019: R11m) other oe 47.2 -10.5% 52.7. + Realised FX gains of R25m (2019: R38m) (forex gains/losses) * Sundry income R29.7m (loan write-back) Operating expenses -2 111.2 9 -1729.9 , : (margin) (205%
Slide 16: Underlying margin performance vs targets
Underlying margin performance vs targets FrarcalRevew 16 Normalised EBITDA margin 2020 2019 Near term Pe Hone ce vs achieved achieved target target Perishables 8.7% 11.7% 10 - 13% Below target Above target, Food Groceries 15.8% 15.4% 11- 14% increasing target to ood 13-16% from FY21 Categories: 12.0
Slide 17: Income Statement (contd)
Income Statement (contd) Fania Review 17 Rm | 2020 | Ch (%) 2019 . . + Net facility interest expense R121.5m (2019: R153.7m); Nts tere [setts AEG HE “BUS IFRS 16 interest expense R63.9m (2019: R55.1m) Profit before tax 180.0 -63.5% 493.0 Income tax -106.5 . 6 -136.3 | f F 9 f . . (effective rate) 69
Slide 18: Income Statement reconciliation
Income Statement reconciliation FinancalReview 18 Reconciliation between Normalised EBITDA, Normalised earnings & Normalised headline earnings Normalised EBITDA Depreciation of assets and amortisation of software -341.2 20.4% -283.3 Net interest expense -185.4 -11.2% -208.7 Impairments -203.8 - - In
Slide 19: Income Statement - Normalised EPS, HEPS & DPS
Income Statement - Normalised EPS, HEPS & DPS Financial Review 19 Normalised earnings (R million) WANOS* (million) Normalised EPS (cps) Normalised HEPS (cps) DPS (cps) * Dividend policy unchanged - Declared once p.a. at final results - Covered 3-4x by HEPS + F20 = 2.9x covered due to improved cash c
Slide 20: Cash summary
Cash summary Financial Revew 20 Cash flow conversion remains strong I 94%| Cash generated from ops (after NWC changes) Normalised EBITDA excl. IFRS 16 eg—__ aa 2018 2019 2020 2020 (Rm) 2019 (Rm) 855 Opening cash balance EE 829 | 027 Cash generated from ops 115 -118 Working capital changes -190 -121
Slide 21: Capex analysis (2019-2020)
Capex analysis (201 9-2020) Financial Review 21 Category & business | Project descriptio 2019: 4.1% Perishables 201 2020: 3.4% Millennium Foods Convenience meal plant upgrade & frozen 37 capabilities Lancewood Milk reception upgrade 30 Distribution centre upgrade 23 Hard-cheese manuf. (Swellendam) 3
Slide 22: Cash Flow - working capital days
Cash Flow - working capital days Financial Review 22 ~ 15.1% Net working capital days increased 8 13.2% from 50 days to 54 days a 46 —— Net working capital : Revenue above target of 13-15% of revenue Creditor days * Change in dairy & groceries logistics arrangements (late 2019) Debtor days * Slight
Slide 23: 5-year net debt trend
5-year net debt trend Financial Review 23 Net Gearing calculation = Net debt : Normalised EBITDA (Excluding IFRS 16) Rm 2500 2000 1500 1000 500 = Normalised EBITDA (LHS) = Net interest-bearing debt (RHS) = Net gearing Sufficient headroom for bolt-on or stand-alone acquisition opportunities providing
Slide 24: Summary of key financial ratios
Summary of key financial ratios FranciaReview 24 | 2020 | 2019 Targets trot debt to normalised EBITDA) tasks 13x Below 2.0x Cash from operations before working capital changes R1 027m R1 115m Cash generative Cash generated from operations R909m R945m Cash generative Cash conversion ratio 94% 91% Abo
Slide 25: Category Review
LIBSTAR 03 Category Review
Slide 26: Our category focused approach
Our category focused approach cateooy Review 26 Food Categories Other Snacks & Baking & Perishables Groceries Confectionery Baking Aids Coptoboyie « \ —sivautg 6 “EHP @®> Disoniooss pIALTA MONTAGU DENNY eG Sues malti-cép Moa" LIBSTAR PSPRING WATERY bp CAPE COASTAL wera onanos ee ee rs Consolidation
Slide 27: Category revenue contributions
Category revenue contributions categoy Reviw 27 4 categories 920 4 categories 920, "00! ¥00 PERISHABLES GROCERIES BAKING & BAKING AIDS HOUSEHOLD & PERSONAL CARE (HPC) HPC 8% HPC 8%
Slide 28: Category Normalised EBITDA contributions
Category Normalised EBITDA“ contributions catego Reviow 28 4 categories 949, 4 categories 96%, ¥¢00 ¥00 PERISHABLES GROCERIES Normalised Normalised EBITDA’ EBITDA* 2020 2019 AIDS HOUSEHOLD & PERSONAL CARE (HPC) ’ Before allocation of HPC 6% corporate costs HPC 4%
Slide 29: 2020 Performance by Category & Channel: Perishables
ri LIBSTAR 2020 Performance by Category & Channel Category Review 29 PERISHABLES Channel contribution 2020 revenue’ § Food service = Industrial @ Retail & Wholesale m= Export Perishables revenue by channel4 2020 Retail & Wholesale +9.4% Food service -21.4% Exports +2.6% Industrial & Contract Manufac
Slide 30: 2020 Performance by Category & Channel: Groceries
LIBSTAR 2020 Performance by Category & Channel category Review 30 GROCERIES Channel contribution Groceries revenue by channel” 2020 Retail & Wholesale +16.4% ji . ivy 16% Me 28%) Food service 34.7% revenue’ Exports +7.0% Industrial & Contract Manufacturing -2.9% = Retail & Wholesale = Food service =
Slide 31: 2020 Performance by Category & Channel: Snacks & Confectionery
LIBSTAR 2020 Performance by Category & Channel categoryReview 31 SNACKS & CONFECTIONERY Channel contribution Snacks & Confectionery revenue by channel* 2020 Retail & Wholesale +8.9% EO 2020 88% nen) Food service -22.8% revenue” 1% revenue’ 2% Exports -19.6% 3% Industrial & Contract Manufacturing -69
Slide 32: 2020 Performance by Category & Channel: Baking & Baking Aids
LIBSTAR 2020 Performance by Category & Channel category Review 32 BAKING & BAKING AIDS Channel contribution Baking & Baking Aids revenue by channel* 2020 Retail & Wholesale +16.4% 2020 Food service -11.9% revenue’ 8% revenue’ ° Exports +22.3% 5% . . 1% Industrial & Contract Manufacturing -6.7% ™ Ret
Slide 33: 2020 Performance by Category & Channel: HPC
LIBSTAR 2020 Performance by Category & Channel category Review 33 HPC Channel contribution HPC revenue by channel/ 2020 Retail & Wholesale +11.8% Food service -4.3% revenue 2% revenue’ 2% 4% 6% Exports -24.4% 8% 9% Industrial & Contract Manufacturing +0.3% ™ Retail & Wholesale = Food service m Expor
Slide 34: Group Outlook
LIBSTAR 04 Group Outlook Andries van Rensburg, CEO
Slide 35: Update on corporate matters
Update on corporate matters Succession planning * Dynamic succession plan with an emphasis on talent development in place * Oversight from the Board Nomination committee in conjunction with Libstar Exec team * Divisional succession & development plans prioritised in 2020
Slide 36: Our priorities
usr | Our priorities Group Outlook Culture of innovation 36 * Our people * Our customers and other stakeholders * Our cash kets & Channels * Food service showing signs of increased demand * Strong demand in Export markets esp. spices and tea * Retail & Wholesale strong performance Product availabili
Slide 37: Taking advantage of market trends
Taking advantage of market trends Group Outlook «37 Consumer behaviour shift towards more convenient in-home dining + Eg. Pasta, Pasta Sauces, Tomatoes, Condiments, Robertson Baking & Baking Aids, Frozen convenience meals (Millennium) Libstar focus on Private label (PL) / Dealer own Brands + Consume
Slide 38: Libstar's competitive advantages
Libstar’s competitive advantages Group Outlook 38 * Resilient, adaptable & diversified portfolio crucial in weak environment — Culture of entrepreneurship & innovation * Portfolio well-positioned — For evolving consumer lifestyle & dietary changes — More geared to value-added products * Consumer pro
Slide 39: Consistently meeting consumers' needs with product innovation
LIBSTAR Consistently meeting consumers’ needs with product innovation Libstar brands 2020 485 New products LOW FAT ccd ean YOGHURT 139 Renovated products 624 Total iz
Slide 40: Short term outlook by Channel & Category
Short term outlook by Channel & Category Group Outlook 40 Continued benefit from stronger Retail & Wholesale channel demand vs other channels, but effect of weak economy on consumer unknown Continued Retail & Wholesale — Q4 demand largely normalised * Food Service — Slow recovery — Past months showi
Slide 41: Key strategies
LIBSTAR Key strategies Protection Strategy * Protect Libstar’s people * Preserve financial stability & cash flows Grow our Categories * Operational Excellence — Maintain high service levels to customers — Production efficiencies + Commercial Excellence * Manage margin (input costs & pricing) Strateg
Slide 42: F2021 Group Outlook
F2021 Group Outlook Group Outlook 42 * COVID-19 — Slow recovery to pre-pandemic levels, especially within Food service HEADWINDS — Possible supply chain disruptions & weakening consumer confidence & COVID-19 — Direct COvid-19 expenses . Increasing consumer price sensitivity & growing input cost infl
Slide 43: LIBSTAR
LIBSTAR LANCEWOOD' <-, DOUBLE CREAM STRAWBERRIES & CREAM f <ttm, ~ YOGHURT De » 1
Slide 44: Disclaimer
LIBSTAR 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
Slide 45: Appendices
Slide 46: Income Statement - R65m in extraordinary expenses
Income Statement - Ré5m in extraordinary expenses Appendices 46 COVID-19 extraordinary expenses % of Total Cost R’000 Donations* 8% 5 304 Charitable giving to parties external to the Group 8% 5 304 Personnel related benefits 44% 18 473 Special transport benefits* 31% 20 364 Bonuses or other incentiv
Slide 47: Breakdown of open FEC exposure
Breakdown of open FEC exposure Appendices 47 FEC revalued at FEC Cover FEC spot rate on 31 December 2020 Quarter Dealt Amount - Millions Forward Rate Rm 31 December 2020 Rm Buy (Imports) 2021-Q1 151 141 +EUR 4 19.0 80 18.1 77 +USD 4 16.3 71 14.7 64 2021-Q2 127 120 +EUR 3 18.9 63 18.3 61 +USD. 4 16.1
Slide 48: Breakdown of net investing & net financing activities
Breakdown of net investing & net financing activities Appendices 48 Rm Net investing activities -322 Capital expenditure Sale of PPE Other loans repaid Net financing activities -234 Principal elements of lease payments Net movement from term loans and asset-based financing Net movement of other loan
Slide 49: Debt structure
- 700 -1 200 debt structure Appendices 49 1.000 1000 670 670 ™2020 m2019 392 425 | — -~936 - 855 Facility A Facility B Facility C Other term loans Vehicle & Asset Net overdraft/ (8M JIBAR +1.68pp) (3M JIBAR +1.75pp) (8M JIBAR +1.85pp) finance facility (Prime (Cash) -1.4pp) * Renegotiated debt packag
Slide 50: Cash conversion
Cash conversion operon 50 New cash conversion calculation B949%| Cash generated from ops 591% am (after NWC changes) ‘0 Normalised EBITDA excl. IFRS 16 2018 2019 2020 Old cash conversion calculation Normalised EBITDA excl. IFRS 16 less -Sra— CAPEX Normalised EBITDA excl. IFRS 16 2018 2019 2020
Slide 51: Perishables: Divisional contribution to EBITDA
4 LIBSTAR PERISHABLES Divisional contribution to EBITDA Appendices 51 90% of category EBITDA Lancewood (Dairy) Finlar (Meat) Rialto (Value-added perishables) Denny (Mushrooms) Millennium Foods (Pre-packaged meals) Total -11.8% -8.7% -1.3% -2.8% -0.8% -25.4% -13.9% -9.5% -1.2% -3.0% -0.9% -28.5%
Slide 52: Groceries: Divisional contribution to EBITDA
LIBSTAR GROCERIES Divisional contribution to EBITDA Appendices 52 81% of category EBITDA Weighted contribution to change Incl. in Normalised EBITDA IFRS 16 Dry condiments (Cape Herb & Spice) +10.4% Meal ingredients (Rialto Foods; NMC) -1.4% Wet condiments (Dickon Hall Foods) +0.5% Spreads (Cape Coas
Slide 53: Snacks & Confectionery: Divisional contribution to EBITDA
4 LIBSTAR SNACKS & CONFECTIONERY 100% of category EBITDA Divisional contribution to EBITDA Appendices 53 Weighted contribution to change in Normalised EBITDA Ambassador Foods K Snacks Incl. IFRS 16 Excl. IFRS16
Slide 54: Baking & Baking Aids: Divisional contribution to EBITDA
LIBSTAR BAKING & BAKING AIDS 100% of category EBITDA Divisional contribution to EBITDA Appendices 54 Weighted contribution to change in Normalised EBITDA Amaro Foods Retailer Brands Cani Artisan Bakers Incl. IFRS 16 Excl. IFRS16