Libstar Holdings Ltd. · JSE:LBR
Libstar — H1 2021 Earnings Presentation
53 slides from Libstar's earnings presentation, 2021
Slide 1: Interim Results Presentation, Six Months ended 30 June 2021
THE LIBSTAR FAMILY LIBSTAR From our Home to Yours Interim Results Presentation Six Months ended 30 June 2021
Slide 2: Presentation overview
01 02 03 04 05 Presentation overview Introduction Financial Review Category Review Group Outlook Questions and Answers
Slide 3: 01 Introduction
Slide 4: Key features of H1 2021 performance
Key features of H1 2021 wivodton Market conditions Libstar impact/response Lower volumes vs improved price & mix Growth achieved through: — New product development - Targeting growing consumer trends — Brand solutions offering Focus on cost containment Rising input costs Relatively higher exposure p
Slide 5: Libstar priorities in COVID environment
Libstar priorities in COVID environment rivoduton Protecting our people * R8 million spent protecting workforce (H1 20: R44m) * Private COVID testing * Over 1 000 recoveries Preserving financial stability H1 2021 H1 2020 Cash flow conversion rate* 102% 78% Normalised EBITDA to net interest cover (ex
Slide 6: H1 2021 summary of revenue performance by sales channel
H1 2021 summary of revenue performance Invodueton 6 5 product categories sold in 4 sales channels; effects of COVID most apparent in sales channels Revenue by Comments sales channel Retail & Wholesale Flat off high base (H1 20 impacted by COVID stockpiling) Food service off low base (H1 20 impacted
Slide 7: • Investment in capital projects increased depreciation charges
• • • Investment in capital projects increased depreciation charges
Slide 8: Food vs other performance
Food vs other performance Ivodueton Food Categories Perishables, Groceries, Snacks & Confectionery Household & Personal Care and Baking & Baking Aids (HPC) * Excluding allocation of corporate costs
Slide 9: Key priorities & strategies
Key priorities & strategies rivodueton Protect Strategy * Protect Libstar’s people + Preservation of financial stability & cash flows Grow our Categories Operational Excellence * Maintain high service levels to customers Commercial Excellence * Manage margin — Input costs — Competitive pricing Build
Slide 10: Financial Review
LIBSTAR
Slide 11: H1 2021 Defined retail basket market share
H1 2021 Defined retail basket market share’* ——finaniaineview 11 Growing longer-term market share Defined basket Growth Categories Libstar: . Defined y Libstar Household cleaning products 12.8% value share* | basket growth YS Growth underperformed the market + R3.4bn 479 59 vy ' * 128m units A ” A3.
Slide 12: Income Statement - Revenue & Gross Profit
Income Statement - Revenue & Gross Profit Group revenue R5.1b6n Volume Price/mix -3.7% +12.4% Food categories HPC revenue revenue * AllH1 2021 revenue is organic H1 2019 H22019 H12020 H22020 H1 2021 * Wexport margin - lower avg. FX rates vs H1 20 * WHPC gross profit margin (by 10.0 pp) - significant
Slide 13: Income Statement - R8m in extraordinary expenses
Income Statement - R8m in extraordinary expenses Financial Review 13 COVID extraordinary expenses % of Total Cost R’000 Donations* 4% 310 Personnel-related benefits (transport, COVID testing) 28% 2 194 COVID operating costs 68% 5 314 R7m in operating expenses * In support of needy communities NOTE:
Slide 14: Income Statement - Operating expenses
Income Statement - Operating expenses Financial Review 14 Opex 953 949 +0.9% 945 813 Long-term incentives (12 114) (9 137) | Provision for LTIP* & GSP* Retrenchment & settlement costs (16 869) (5 215) © Denny/NMC/HPC cuner non-operating or non-recurring 3 892 (3687) | Normalisation adjustments Opex
Slide 15: Income Statement (contd.)
Income Statement (contd.) FnancialReview 15 Rm } 12021 | Change H1 2020 Forex gains in H1 2020 due to currency volatility Rim unrealised FX gain (H1 2020: R31m gain) ‘Siemens oat “ABs 778. R3mrealised FXloss — (H1 2020: R20m gain) * R18m other income (H1 2020: R27m, incl. loan write back of R20m) Op
Slide 16: Underlying margin performance vs targets
Underlying margin performance vs targets Franca Review Food Categories: 11.1% 16 Perishables Groceries Snacks & Confectionery Baking & Baking Aids HPC * Revised upward at the end of F2020 Normalised EBITDA margin H1 2021 H1 2020 Near term H1 2021 achieved achieved target Performance vs target 8.2% 7
Slide 17: Financial Review
Financial Review 17 Rm + Net facility interest expense R49.6m (H1 2020: R68.2m) Net finance cost 80.8 -18.3% 98.8 . + IFRS 16 interest expense R31.2m —_ (H1 2020: R30.7m) Profit before tax 107.7 -18.6% 132.3 Income tax -34.2 -33.3 + Effective rate 28% excluding hedging gains/(losses) & GSP (effectiv
Slide 18: Income Statement reconciliation
Income Statement reconciliation FinancialReview 18 Reconciliation between Normalised EBITDA, Normalised earnings & Normalised headline earnings H1 2021 Change H1 2020 Normalised EBITDA 456.1 Depreciation of assets and amortisation of software -173.4 -163.4 Net finance cost -80.8 -98.8 Income tax (in
Slide 19: Income Statement - Normalised EPS & HEPS
Income Statement - Normalised EPS & HEPS Financial Review 19 Change H1 2020 Normalised earnings (R million) 4+2.4% 142.0 WANOS* (million) 595.8 Normalised EPS (cps) +2.5% 23.8 Normalised HEPS (cps) -0.8% 24.2 Current dividend policy: Dividend declared once p.a. at year-end * Weighted average number
Slide 20: Cash summary
Cash summary Financial Review 20 Cash flow conversion remains str Cash generated from ops (after NWC changes, lease payments) Normalised EBITDA excl. IFRS 16 NOTE: Cash conversion ratio calculation updated to include F 7 5 lease payments; historic numbers updated accordingly H1 2019 H2 2019 H1 2021
Slide 21: Capital expenditure (capex)
Capital expenditure (capex) FinancielReviow 21 Main capex items H1 2021 Capex Rm Estimated earnings impact from: * Expansion & operating efficiencies 134 - Hard-cheese packing (Lancewood) 43 H2 2021 - Swellendam facility upgrades (Lancewood) 14 H1 2021 - Facility move (HPC) 12 H2 2021 - Beef plant u
Slide 22: Capex analysis (2019 - H1 2021)
Capex analysis (2019 - H1 2021) Frarcia\Rovew 22 9 7 ofnet Category & business | Project descripti Rm }H1 2019 | H2 2019 | H1 2020 | H2 2020 | H1 20: F2019: 4.1% Perishables 259 F2020: 3.4% _ Millennium Foods Convenience meal plant upgrade & frozen capabilities 37 | Lancewood Milk reception upgrade
Slide 23: Cash Flow - working capital days
Cash Flow - working capital days FinancialReview 23 (14.4% 14.8% 15.1% 14.5% Net working capital (12-month rolling) : Revenue 5 — ' : \ } : = $f — a 54 53 Net working capital days decreased from 55 days to 53 days; 50 : remain within target of 13-15% of revenue i Creditors days 67 : 61 * Slight impr
Slide 24: 5-year net debt trend
5-year net debt trend Financial Revew 24 Net Gearing calculation = Net debt : Normalised EBITDA (Excluding IFRS 16) Rm 2 500 NOTES: 2.000 1. Despite high expansionary capex in the prior periods, gearing remains low 4500 2. R1.3bn in unutilised funding facilities 3. Maximum net gearing aligned with f
Slide 25: Summary of key financial ratios
Summary of key financial ratios Financial Review 25 H1 2021 H1 2020 Targets Gearing ratio 1.4 1.3x Optimal 1.0-2.0 (net debt to normalised EBITDA) “x ; pumal range !.Gre.0X Cash from operations before working capital changes R452m R460m Cash generative Cash generated from operating activities R332m
Slide 26: Category Review
LIBSTAR
Slide 27: Our category focused approach
Our category focused approach cateooy Review 27 Food Categories Other Snacks & Baking & Perishables Groceries Confectionery Baking Aids ICEW DO, CapeHerbédpice” BES 4 8 pIALTQ os A v Khoisan Rl ALTQ gourmet a Pp CAPE COASTAL DENNY. MONTAGU p\roops AS Sues hatep turn malti-cép oe LIBSTAR SE * Consoli
Slide 28: Category revenue contributions
Category revenue contributions categoy Review 28 ori categories 930, ¢00 4 categories 97 % PERISHABLES H1 2020 H1 2021 BAKING & BAKING AIDS HOUSEHOLD & PERSONAL CARE (HPC) HPC 7% HPC 9%
Slide 29: Category Normalised EBITDA contributions
Category Normalised EBITDA“ contributions category Reviow 28 good categories 1039, 00d categories 930, PERISHABLES Normalised EBITDA’ Normalised EBITDA’ H1 2021 H1 2020 HOUSEHOLD & PERSONAL CARE (HPC) ’ Before allocation of HPC -3% corporate costs HPC 7%
Slide 30: H1 2021 Performance by Category & Channel: Perishables
LIBSTAR H1 2021 Performance by Category & Channel casey seven 30 PERISHABLES Channel contribution ishables revenue by channel H1 2021 Retail & Wholesale -0.7% H1 2020 Food service +45.7% revenue Exports +43.7% Industrial & Contract Manufacturing +25.7% @ Retail & Wholesale = Food service . = Export
Slide 31: H1 2021 Performance by Category & Channel: Groceries
LIBSTAR H1 2021 Performance by Category & Channel —easyraiew 31 GROCERIES Channel c' buti Groceries revenue by channel H1 2021 Retail & Wholesale +5.7% H1 2020 a Food service +45.3% revenue Exports +20.5% Industrial & Contract Manufacturing +10.5% m Retail & Wholesale m= Food service m Export = Indu
Slide 32: H1 2021 Performance by Category & Channel: Snacks & Confectionery
H1 2021 Performance by Category & Channel —eawsyraiew 32 SNACKS & CONFECTIONERY Channel contribution Snacks & Confectionery revenue by channel H1 2021 Retail & Wholesale -12.2% Exports +17.5% revenue Industrial & Contract Manufacturing -8.2% =Retail & Wholesale Export m= Industrial Snacks & Confecti
Slide 33: H1 2021 Performance by Category & Channel: Baking & Baking Aids
LIBSTAR H1 2021 Performance by Category & Channel Category Review 33 BAKING & BAKING AIDS Channel contribution revenue 4% 1% @ Retail & Wholesale m Export ™ Food service = Industrial Baking & Baking Aids revenue by channel H1 2021 Retail & Wholesale +1.2% Food service +55.2% Exports +0.1% Industrial
Slide 34: H1 2021 Performance by Category & Channel: HPC
LIBSTAR H1 2021 Performance by Category & Channel caw oven 34 HPC Retail & Wholesale -10.4% a fo) le 20% Industrial & Contract Manufacturing +23.1% mRetail & Wholesale Export mIndustrial HPC category revenue -9.6% Category performance Price/mix H1 2021 H1 2020 Revenue“ (Rm) +7.8% 375.9 -9.6% Gross p
Slide 35: Group Outlook
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Slide 36: Product diversity & innovation
Product diversity & innovation ve ucts H1 24 ore New 215 1181 Renovated 101 661 Total 316 1842 Greater flexibility to weather negative market conditions SAUSAGES COON a MISIHOOMS gS Piecwo' Cake CHEESECAKE MIX
Slide 37: Taking advantage of market trends
Taking advantage of market trends Basket Diversified product mix, e.g. new wet-condiment ranges, Focus on choice brand solutions, plant-based products etc. Meal-ingredients, meal solutions, wet-condiments, dry- condiments Sugar-free products, meat & cheese alternatives Libstar focus on Private Label
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: Short term outlook by Category & Channel
Short term outlook by Category & Channel Group outook 39 « Retail & Wholesale + All categories: - Demand largely normalised - Continued resilient retail & wholesale channel demand — Slow H2 start (delivery timing into distribution vs other channels centres & container shipment delays) - But strained
Slide 40: Post-period trading: July & Aug 2021
Post-period trading: July & Aug 2021 Retail and wholesale Industrial and contract manufacturing Impacted by timing & import container delays in Q3 Continuing strong topline recovery vs comparative period Impacted by port congestion, but demand remains robust Continuing growth from existing & new cus
Slide 41: F2021 Group Outlook: Headwinds & Tailwinds
LIBSTAR Headwinds & Covid-19 Tailwinds F2021 Group Outlook Group Outlook A COVID continued to impact individual business units Consumer under increasing pressure: behaviour reset Cost inflation Pressure on volume in selected food categories HPC challenges & competitive set Currency volatility Supply
Slide 42: Libstar's response to challenging conditions
Libstar’s response to challenging conditions Agile, adaptable, innovative & diversified quality portfolio in weak environment Strong, long-term customer Limited exposure relationships to volatile + Entrenched category - management insight & commodity capabilities products + Track record of launching
Slide 43: 05 Questions and Answers
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 - R8m in extraordinary expenses
Income Statement - R8m in extraordinary expenses Appendices 46 COVID extraordinary expenses % of Total Cost R’000 Donations* 4% 310 Charitable giving to parties external to the Group 4% 310 Personnel related benefits 28% 2 194 Special transport benefits* 20% 1 580 Sanitisation packs (not protective
Slide 47: Breakdown of open FEC exposure
kdown of open FEC exposure Appendices 47 FEC revalued at Dealt Amount Forward FEC Cover FEC spot rate on Quarter Millions Rate Rm 30 June 2024 $0 June 2021 2021-03 263 250 +EUR 10 17.8 170 17.0 162 +GBP 0 206 2 198 2 +USD 6 15.3 91 14.3 85. 2021-04 726 422 +EUR 4 177 80 172 7 +USD 3 18.0 47 145 45 2
Slide 48: Breakdown of net investing & net financing activities
Breakdown of net investing & net financing activities Appendices 48 Rm Net investing activities -124 Capital expenditure Sale of PPE Other loans repaid to the group Net financing activities -442 Principal elements of lease payments Net movement from term loans and asset-based financing Net movement
Slide 49: Net debt structure
- 700 -1 200 Net debt structure Appendices 49 1 000 1000 = Ht 2021 @H1 2020 sso 328 420 mm 2 - 702 - 957 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 (Cash) (Prime -1.4pp) * 94% (R2.0bn) in
Slide 50: Divisional contribution to EBITDA: Perishables
4 LIBSTAR PERISHABLES 92% of category EBITDA Divisional contribution to EBITDA Appendices 50 Weighted contribution to change in Normalised EBITDA Lancewood (Dairy) Finlar (Meat) Rialto (Value-added perishables) Denny (Mushrooms) Millennium Foods (Pre-packaged meals) Total Incl. IFRS 16 +16.4% -0.2%
Slide 51: Divisional contribution to EBITDA: Groceries
LIBSTAR GROCERIES Divisional contribution to EBITDA Appendices 51 79% of category EBITDA Dry condiments (Cape Herb & Spice) Meal ingredients (Rialto Foods; NMC) Wet condiments (Dickon Hall Foods) Spreads (Cape Coastal Honey) Wet condiments (Cecil Vinegar; Montagu Foods) Teas (Khoisan Gourmet) Multi-
Slide 52: Divisional contribution to EBITDA: Snacks & Confectionery
4 LIBSTAR SNACKS & CONFECTIONERY 100% of category EBITDA Divisional contribution to EBITDA Appendices 52 Weighted contribution to change in Normalised EBITDA Ambassador Foods K Snacks Incl. IFRS 16 Excl. IFRS 16
Slide 53: Divisional contribution to EBITDA: Baking & Baking Aids
LIBSTAR Divisional contribution to EBITDA Appendices BAKING & BAKING AIDS Excl. IFRS 16 Incl. IFRS 16 Weighted contribution to change in Normalised EBITDA Amaro Foods 100% of category EBITDA Retailer Brands Cani Artisan Bakers