2018 SMALL BEGINNINGS BIG VISION AGENDA Brian Joffe - CEO - - PowerPoint PPT Presentation

SMALL BEGINNINGS BIG VISION

LONG4LIFE LIMITED

RESULTS PRESENTATION

PERIOD ENDED 28 FEBRUARY

2018

AGENDA

Brian Joffe - CEO

• Welcome and introduction

Peter Riskowitz - CFO

• Results overview

Brian Joffe - CEO

• Progress
• The future

Q&A Supplementary company information

SMALL BEGINNINGS BIG VISION

WELCOME AND INTRODUCTION Brian Joffe - CEO

LONG4LIFE LIMITED

PERIOD ENDED 28 FEBRUARY

SMALL BEGINNINGS BIG VISION

RESULTS OVERVIEW Peter Riskowitz - CFO

LONG4LIFE LIMITED

PERIOD ENDED 28 FEBRUARY

RESULTS OVERVIEW

Financials P&L

• Acquired companies contributed for four months
• Corporate expenses for eleven months
• EBITDA (pre-acquisition costs and SBP) R170 million
• Interest income on capital raised R124 million
• Headline earnings of R170,4 million equivalent to HEPS of 30,2 cents

Balance sheet

• Net asset value R4,5 billion (506 cents per share)
• Net cash of R1,5 billion (R1,2 billion post part payment for Chill)

Dividend

• Maiden dividend of 5,4 cents declared
• Based on operating earnings, net of corporate expenses
• Cover of approximately 2,5x going forward

SMALL BEGINNINGS BIG VISION

PROGRESS Brian Joffe - CEO

LONG4LIFE LIMITED

PERIOD ENDED 28 FEBRUARY

PROGRESS

Listing and acquisition of businesses JSE listing

• 7 April 2017 through the placement of 405 million shares

Capital raised

• R2 billion in equity

Shares issued post listing in respect of acquisitions

• 484 million shares for the acquisition of businesses + R436 million cash

Date of acquisitions

• Sport & Recreation assets, Sorbet, and Inhle Beverages wef November 2017
• Chill Beverages wef March 2018

Post year end

• Chill Beverages acquired for an enterprise value of R720 million

Combined acquisition valuations approximately R3,6 billion

PROGRESS

L4L is a work in progress from small beginnings Invested in lifestyle assets A decentralised philosophy Access to equity & debt capital for businesses Sharing of best practices Maximisation of potential A home for entrepreneurs Current segmentation fits criteria Venture Capital

• R100 million allocated
• Support and nurture fresh disruptive activities
• Investment in Veldskoen Shoes

Alert to opportunity

L4L Corporate Sport & Recreation Personal Care & Wellness Beverages

PROGRESS

Ownership of high quality trading assets As at 28 February 2018

• Sport & Recreation, Personal Care & Wellness, and Beverage assets acquired for a collective R2,9 billion
• Approximately R420 million in annualised EBITDA
• Average EBITDA multiple of 6,9x

Effective 1 March 2018, Chill incorporated in the Beverage segment with Inhle

• Approximately R100 million in annualised EBITDA
• EV/EBITDA multiple of 7,1x

R3,6 billion invested for approximately R520 million in combined EBITDA Effectively ungeared Outstanding and proven human capital in the businesses bolsters the L4L team

OUR CURRENT STABLE OF BRANDS… WITH MORE TO FOLLOW

SPORT & RECREATION

Foundation retail brands of Sportsmans Warehouse and Outdoor Warehouse date back three decades Wholesale brands of African Nature, Cape Storm, First Ascent, and Second Skins are equally well established OTG a recent addition Leading market positions in specialist retail and performance apparel Ecommerce an important component piece with physical store complementarity Strong base for an expanded L4L Sports and Recreation presence Cautious approach to footprint, focus on returns and sales per m² Evolving the Sportsmans and Outdoor customer experience, product and service offering

PERSONAL CARE & WELLNESS

Founded in 2004 First nationwide branded chain in SA Fully franchised, owner-operator, beauty treatment business A proven and sustainable business model Currently 200 stores Same-store growth currently being achieved with new openings boosting overall revenue Expansion of Sorbet Man and Candi & Co Scope for organic and bolt-on complementary Personal Care & Wellness offerings Category offers expanded treatment and merchandising

• pportunity

Supply chain management initiatives

BEVERAGES

Inhle founded in 2003 Contract packaging manufacture Growth accelerating, boosted by L4L investment capacity Chill founded in 2001 Strong own-brands developed, complemented by liquor brands, and contract packaging Gauteng and Western Cape manufacturing bases of Inhle and Chill provides scope for synergistic growth opportunities Inhle and Chill expected to continue performing strongly over the medium term and will benefit from mutual cooperation

BEVERAGES DIVISION

SMALL BEGINNINGS BIG VISION

THE FUTURE Brian Joffe - CEO

LONG4LIFE LIMITED

PERIOD ENDED 28 FEBRUARY

THE FUTURE

L4L Group Well-positioned lifestyle assets with exposure across retail, wholesale, manufacturing, service, merchandising, and distribution, and ecommerce Substantial opportunities to expand in existing and adjacent areas Group financial strength provides optionality for growth ambitions Remain patient to strike the right deals at the right price Venture Capital investments Introduction of additional B-BBEE shareholders complemented by empowerment initiatives at the operating level Discretionary spending is tight but the consumer mood has improved

SMALL BEGINNINGS BIG VISION

SUPPLEMENTARY INFORMATION

LONG4LIFE LIMITED

PERIOD ENDED 28 FEBRUARY

FINANCIALS

P&L

• Corporate expenses for eleven months, acquired companies contributed for four months
• Corporate operating expenses R19,2 million
• Corporate share based payment expense R11,6 million
• Acquisition costs of R16,8 million
• R124,3 million of interest earned on capital raised
• Pre-tax income R239,3 million – split approximately 50/50 between interest and trading income
• Headline earnings of R170,4 million equivalent to HEPS of 30,2 cents

FINANCIALS

Balance sheet

• Weighted average shares in issue 564,1 million
• Shares in issue as at balance sheet date 889,8 million
• Shareholders equity R4,5 billion (506 cents per share)
• Total assets R5,1 billion
• Goodwill and intangibles arising on acquisitions R2,6 billion
• Cash of R1,7 billion
• Short term borrowings R160 million

Company to all intents and purposes dormant as at 31 March 2017 February year end aligned to that of the largest acquired investee businesses Refer to PLS and subsequent public announcements relating to acquisitions

SEGMENT CONTRIBUTIONS EXCLUDING CORPORATE (FOUR MONTHS)

R’m Sport & Recreation Personal Care & Wellness Beverages Total Revenue 637,5 32,8 60,4 730,7 Trading profit 133,7 8,3 22,6 164,6

87% 5% 8% Sport & Recreation Personal Care & Wellness Beverages Contribution to revenue 4 months 81% 5% 14% Contribution to trading profit (excluding corporate) 4 months

SPORTS & RECREATION

Segment overview Performance tracking in line with pre-acquisition expectation, annualised sales grew in real terms Price inflation dropped to 1,4% from 8,1% in the previous year Sales mix marginally favoured Outdoor Warehouse and Wholesale, which continued to grow strongly Total number of stores increased to 66 from 63, with trading density remaining constant Weighted space increased by 3,5% Continued focus on working capital and supply chain efficiencies

SPORTS & RECREATION

Sportsmans Warehouse

• Breadth and depth of sports offering plus specialist advice a clear “head to toe” differentiator
• One new store with two openings and an expansion in F2019
• New smaller store concept with modified fixtures and design being rolled out, retaining complete

experience

• First OTG Active store
• In touch with global trends in sports apparel, including “athleisure”
• Rewards programme, developed through in-house Online expertise, launched November 2017 rapidly

gathering new participants

• New online sneaker footwear range

SPORTS & RECREATION

Wholesale

• Benefiting from buoyant internal and corporate demand for apparel, double digit turnover growth
• A mix of internal sales (arm’s length), corporates, schools, and game lodges both in South Africa and

regionally

• Production a combination of local and China
• Long lead times, efficient supply chains and product development expertise are key

SPORTS & RECREATION

Outdoor Warehouse

• Two new stores opened, no further openings planned in F2019
• Focus on comprehensive range of outdoor apparel and equipment, with in-store services and specialist

advice

• Merchandising efficiencies targeting in-stock for top 200 SKUs
• Repositioning the look and feel of the customer experience, assisted by staff upskilling and authenticity
• f service
• Occupancy costs lower than typical mall retail due to destination nature and high speciality of the

business

• Rewards programme, developed through in-house Online expertise, launched

Online

• Evolving a seamless web and store capability, a webrooming window, defensive virtual mall at low cost,

data capturing leads to improved customer understanding and business inventory management

• Scope to capture advantages throughout L4L, assessing reward/loyalty mechanisms, cost/benefit, and

suitability

PERSONAL CARE & WELLNESS

Segment overview Current Sorbet platform a strong basis for expanding within the Personal Care & Wellness category Well established in female personal care, male grooming growing from a low level, Candi & Co ethnic hair- care brand exploring alternative business models to facilitate expansion Sorbet

• Performance tracking in line with pre-acquisition expectation
• Annualised sales growing in double digits, comparable stores sales growing in real terms
• Treatment mix shifts according to economic environment, catering to the full spectrum and customer

pocket

• Destination service with a mid to upper income profile in the major metropoles
• High calibre, knowledgeable franchisees who are committed owner-managers

PERSONAL CARE & WELLNESS

Sorbet (continued)

• Franchise fee competitive with strong central support
• Stores >200, timing of store openings dependent on site location, set-up, and suitability of franchisees
• Total cash requirement for an owner-manager between R1,2 million (Nailbar) and R1,8 million (Salon)
• Regional expansion of existing format and experimenting with more affordable service offerings
• Common standards determined by the franchisor, staff skills and hygiene factors paramount
• Branded merchandising agreement with Clicks has good potential

BEVERAGES

Segment overview Inhle is based in Heidelberg, Gauteng Chill Beverages is based in Stellenbosch, Western Cape Both Inhle and Chill have identified opportunities for collaboration to grow, supported by L4L Creating a North/South geographic platform Inhle

• Performing to pre-acquisition expectation, annualised sales and profits have grown strongly in the past

three years

• Low cost model allows private label customers to compete with majors
• Beverage canning filling expertise with up-to-date European machinery and maintenance standards
• Mix of energy, water, and RTD drinks with current and forecast demand buoyant

BEVERAGES

Chill Beverages

• Manufactures an innovative range of own-brand soft drinks, bespoke house-brand drinks for retailers,

and contract packing drinks for companies of varying size and requirements

• Chill has successfully diversified and is performing very well, driven by an energetic and enthusiastic

team

• Water sources at the Stellenbosch location are sufficient for growth ambitions
• Well positioned to “mine” a variety of drinks sub-categories that are not viable for large players with

high volumes

• Well established routes to market nationally with product channelled for on-premises and off-premises

consumption

• Exports to Africa, with quality and ability to deliver displacing European suppliers

SMALL BEGINNINGS BIG VISION

LONG4LIFE LIMITED

PERIOD ENDED 28 FEBRUARY