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LIBSTAR HOLDINGS LIMITED - Reviewed Interim Results For The 6 Months Ended 30 June 2018

Release Date: 04/09/2018 07:05
Code(s): LBR
 
Wrap Text
Reviewed Interim Results For The 6 Months Ended 30 June 2018

Libstar Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2014/032444/06)
(JSE share code: LBR)
(ISIN: ZAE000250239)
("Libstar" or the "Company" or the "Group")

REVIEWED INTERIM RESULTS FOR THE 6 MONTHS ENDED 30 JUNE 2018

Salient features:

    -    Successful listing on the JSE Limited in May 2018, raising R3 billion primary and secondary capital;
    -    Revenue increased 14.2% to R4,529 million from R3,967 million;
    -    Gross profit margin of 20.9% (H1 2017: 22.4%), impacted primarily by lower price realisation in mushrooms,
         traditionally lower margins in Sonnendal Dairies and six -week industrial strike action at Dickon Hall Foods;
    -    Operating profit decreased 13.8% to R223 million from R259 million, impacted significantly by unrealised
         foreign exchange losses of R32m relative to unrealised foreign exchange gains of R30m in the comparative period;  
    -    Normalised EBITDA* increased 4.3% to R398 million;
    -    EPS and HEPS from continuing operations of 13 cents (H1 2017: 25 cents);
    -    Integration of three new acquisitions, viz Sonnendal Dairies (Perishables), Millennium Foods (Perishables)
         and Khoisan Tea (Niche Beverages) to build capacity and enter new high-growth sub-categories; and
    -    Consolidation in the Ambient Groceries category (three Denny Foods factories into Montagu Foods).

* Normalised EBITDA is a performance measure presented in accordance with the accounting policies set out in
  Libstar's pre-listing statement dated 24 April 2018, the details of which are set out in the segmental information
  disclosure below.

Andries van Rensburg, CEO, remarked on Libstar's maiden interim results "Notwithstanding the fact that the results
reflect the impact of a challenging trading environment, we were able to generate positive volume and organic
revenue growth. Our focus remains on developing our existing categories and channels with capacity and yield-
enhancing projects, supported by a strong emphasis on innovation.

"Our Lancewood brand continues to deliver exceptional performance, bolstered by the recent launch of a range of
yoghurts and cook-in-sauces. We will further enhance our many growth-initiatives across the Group with significant
investment in projects to drive operational efficiencies."

ABOUT LIBSTAR

Libstar is a leading producer and supplier of high quality products in the consumer packaged goods ("CPG") industry
and markets a wide range of products in South Africa and globally. The Group provides a multi-product offering in
multiple categories across multiple channels, while strategically positioning itself within the food and beverage and
home and personal care ("HPC") sectors and maintaining the flexibility to capitalise on growth areas in the CPG industry.

The Group operates in a number of business units, each with varying autonomy. Although the Group operates a
decentralised business model, the business units are supported from the central office by an experienced team in
all functional business activities such as human resources, finance, sales and marketing and supply chain. Growth is
driven from the central office both organically and through expansion projects, as well as acquisitions. Libstar drives
the broad group strategy, frameworks, guidelines and governance policies and procedures, and generally provides
the platform benefits that assist small to medium-sized business units to grow exponentially. Key to this growth is
the strategic allocation of capital by Libstar to fund investments in working capital and infrastructural development
that builds manufacturing capability and operational efficiencies.

GROUP TRADING AND FINANCIAL PERFORMANCE

Operating conditions in South Africa remain challenging against the backdrop of lower consumer spending and
economic growth in most sectors. Despite this, the Group delivered organic revenue growth of 3.7%, organic volume
growth of 2.7% and total sales growth of 14.2% during the first half of the year.

Gross profit margins of 20.9% were negatively impacted due mainly to the lag effect between rising input costs and
the implementation of price increases to customers. Lower production volumes and lower price realisations of fresh
mushrooms impacted both revenue and gross profit. Sonnendal Dairies, which was acquired in late 2017 for the
strategic purpose of providing manufacturing capacity and expertise in the yoghurt category, experienced lower-
than-Group-average margins. New product innovation in the period under review saw the launch of an exciting range
of premium yoghurt products under the Lancewood brand in August. In addition, the effect of price increases to
customers and the results of cost-saving initiatives resulted in the Group's gross margins being returned to prior
period levels by the end of August which are expected to be maintained through to the end of the year.

Operating expenses were well controlled at 16.4% of net revenue (2017: 16.8%). The impact of unrealised foreign
exchange losses of R32 million on profit before taxation was significant relative to the comparative period in which
an unrealised foreign exchange gain of R30 million was recorded. This resulted in net realised and unrealised foreign
exchange gain in the current period of R3 million relative to R41 million during H1 2017. The Group continues to
purchase foreign exchange contracts on a six to nine month forward-looking basis in order to minimise the impact
of realised foreign exchange losses. Finance costs increased relative to the comparative period, mainly due to higher
levels of borrowing resulting from acquisitions made in the latter part of 2017 and the additional facility utilised to
fund a distribution of capital to shareholders in the first quarter. Net indebtedness following the initial public offering
reduced to R1.3 billion from R1.9 billion at 31 December 2017.

SEGMENTAL RESULTS
                                                                                        6 months        6 months 
                                                                                   ended 30 June   ended 30 June      
                                                                                            2018            2017     Change
                                                                                           R'000           R'000          %
Segmental revenue                                                   
Perishables                                                                            2 172 598       1 673 933       29,8
Ambient Groceries                                                                      1 107 388       1 225 206      (9,6)
Snacks and Confectionery                                                                 212 322         193 125        9,9
Baking and Baking Aids                                                                   255 766         225 627       13,4
Niche Beverages                                                                          296 607         187 513       58,2
Household and Personal Care                                                              377 519         357 795        5,5
Specialised Food Packaging                                                               106 537         103 957        2,5
                                                  
                                                                                        6 months        6 months 
                                                                                   ended 30 June   ended 30 June 
                                                                                            2018            2017     Change
                                                                                           R'000           R'000          %
Segmental EBITDA                                                  
Perishables                                                                              189 388         181 448        4,4
Ambient Groceries                                                                        143 352         148 920      (3,7)
Snacks and Confectionery                                                                  34 977          30 483       14,7
Baking and Baking Aids                                                                    39 758          34 034       16,8
Niche Beverages                                                                           16 697             836    1 897,2
Household and Personal Care                                                               15 922          14 016       13,6
Specialised Food Packaging                                                                 4 139           6 817     (39,3)
                                                  
Perishables

Perishables revenue increased by 29.8% to R2,173 million, driven by volume growth, mainly due to the acquisition
of Sonnendal Dairies and Millennium Foods during the last quarter of 2017. The revenue growth excluding these
acquisitions was 12.5%, due mainly to increased volumes in cheese in the retail, food service and export channels.
Revenue and gross profit margins were negatively impacted by increased promotional activity and discount in
chicken products as well as low price realisation in fresh mushrooms. Production and sales levels of fresh mushrooms
improved during the second quarter, following a particularly slow first quarter. Normalised EBITDA increased by
4.4% to R189 million whilst Normalised EBIT decreased by 1.2% to R162 million.

The Group expects continued strong cheese performance during the second half of the year, bolstered by the launch
of new yoghurts, spreads and sauces. Initiatives are being implemented to control the margins in fresh mushrooms
and focus sales on the upper end of the market.

Ambient Groceries

Ambient Groceries revenue decreased 9.6% to R1,107 million because of production stoppages and industrial action
at Dickon Hall Foods that resulted in six weeks lost production and sales. The effect of the industrial action on
revenue amounted to approximately R63 million. Despite strong growth in the local herbs and spices market, the
Group experienced slow shipments to certain international markets. The consolidation of three wet-condiment
plants into the Montagu manufacturing facility was completed during March. However, commissioning delays
impacted negatively on first quarter results, resulting in approximately R16 million lost sales. Normalised EBITDA
and Normalised EBIT decreased by 3.7% and 8.2% to R143 million and R120 million respectively.

Production at Dickon Hall Foods and Montagu is now fully online with the Group looking forward to the launch of
new private label wet condiments. Exports of herbs and spices are expected to normalise in the second half of the year.

Snacks and Confectionery

Snacks and Confectionery revenue increased 9.9% to R212 million, driven mainly by the introduction of new
products. Normalised EBITDA and Normalised EBIT increased by 14.7% and 14.6% to R35 million and R30 million
respectively.

Baking and Baking Aids

Baking and Baking Aids revenue increased 13.4% to R256 million, due to the transfer of the NCP yeast and Cook 'n
Bake products from the Ambient Groceries category to the Baking and Baking Aids category April 2018, as well as
growth in the baking aids category in the retail channel. Normalised EBITDA and Normalised EBIT increased by 16.8%
and 22.3% to R40 million and R31 million respectively.

The launch of new private label baking aids in the retail channel and commissioning of a par-bake artisanal breads
and rolls facility during the fourth quarter, is expected to support the category's growth trajectory.

Niche Beverages

Niche Beverages revenue increased 58.2% to R297 million, driven by increased water sales in the first quarter as a
result of the drought in the Western Cape and the acquisition of Khoisan Gourmet during the last quarter of 2017.
Normalised EBITDA and Normalised EBIT increased to R17 million and R12 million respectively.

The Group expects continued strong performance from tea products.

Household and Personal Care

Household and Personal Care revenue increased 5.5% to R378 million, mainly due to improved sales volumes.
Normalised EBITDA and Normalised EBIT increased by 13.6% and 29.2% to R16 million and R7 million respectively.

The cost-savings and efficiency initiatives within the category have borne fruit during the first half of the year, with
these savings expected to continue into the latter part of the year supported by the launch of new private label
cotton products.

Specialised Food Packaging

Specialised food packaging revenue increased 2.5% to R107 million, driven primarily by price increases. Volumes
have been under pressure because of the loss of key accounts in the second half of 2017. Normalised EBIT decreased
44.3% to R3 million. Normalised EBITDA decreased 39.3% to R4 million. Initiatives focusing on environmentally-friendly
packaging solutions are expected to bolster second half performance.

CASH FLOW AND CAPITAL EXPENDITURE

During the period under review, the Group invested R152 million in capital expenditure, representing 3.3% of net
sales, and made a capital distribution of R800 million to shareholders on 28 February 2018. Of the proceeds from
the initial public offering of R1.5 billion, R1.1 billion was utilised to repay term loans. Net working capital at the close
of the period was well managed at 50 days (2017: 54 days), although higher inventory levels were maintained
throughout the period to improve service levels in dairy and HPC products which resulted in a net investment in
working capital of R86 million (2017: net reduction of R31 million). The Group generated R80 million from
operating activities (2017: R233 million).

STRATEGY

Libstar's strategy is to remain focussed on:

    -    Channel and category growth;
    -    Export growth;
    -    Supply chain optimisation;
    -    Significant enhancement of our go-to-market and execution capabilities; and
    -    The active pursuit of value and earnings enhancing acquisitions.

OUTLOOK

Although market conditions are expected to remain tough, the Group is looking forward to a stronger
performance in the second half of the year.

There are growth opportunities across our business driven by the completion of several earnings-
enhancing projects and the introduction of higher-margin innovative new products. We have started
producing a new range of dairy products which are already selling extremely well and are launching other
products, including private label wet condiments and prepared meals. We are commissioning a par-bake
artisanal breads and rolls facility in the fourth quarter.

We are focused on margin improvements through lower cost manufacturing and packaging as well as
procurement and other supply chain efficiencies. We are also concentrated on the more resilient upper-
end of the market.

Benefits from the integration of recently acquired businesses are coming through. Additionally, the
integration of Denny Foods into Montagu Foods has been a success and there are further consolidation
exercises underway.

We are not expecting any repeat of the once-off incidents from the first half of the year which reduced
our revenues quite considerably. Dickon Hall's trading is catching up following the strike earlier in the year.

Libstar's Normalised EBITDA is typically weighted 60% towards the second half of the year, particularly in
the fourth quarter.

DIVIDEND

The Board will, at the next year-end reporting date, assess the full year operational performance of the Group and
make an appropriate recommendation as to the declaration of a dividend to shareholders. Accordingly, the
Company will not declare an interim dividend. The Company has an initial target dividend pay-out ratio of 30-40%
of profit after tax. The amount, timing and frequency of future dividends will be at the sole discretion of the Board
and will be a function of the profitability, growth opportunities and strategy of the Group.

CHANGES TO THE BOARD AND COMMITTEE COMPOSITIONS

With effect from 9 May 2018:

    -   Wendy Luhabe was appointed as Chairperson of the Board, and the Nominations Committee;
    -   Phumzile Langeni was appointed as Chairperson of the Audit and Risk Committee and Social and Ethics
        Committee;
    -   JP Landman was appointed as Lead-independent Director and Chairperson of the Investment and Strategy
        Committee; and
    -   Wahid Hamid was appointed as Chairperson of the Remuneration Committee.

By order of the Board

W Luhabe                  A van Rensburg                       R Smith
Chairperson               Chief Executive Officer              Financial and Commercial Director

Johannesburg
4 September 2018

FORWARD-LOOKING STATEMENTS

Any forward-looking statements included in this results announcement involve known and unknown risks,
uncertainties and other factors, which may cause the actual results, performance or achievements of the Group to
differ materially from any future results, performance or achievements expressed or implied by such forward-looking
statements. Any reference to forward-looking information included in this results announcement does not
constitute an earnings forecast and has not been reviewed or reported on by the Group's external auditors.

REVIEWED CONDENSED INTERIM CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
                                                                                                     6 months          6 months   Year ended 31
                                                                                                ended 30 June     ended 30 June        December
                                                                                        Notes            2018              2017         2017(1)
                                                                                                                                       Restated
                                                                                                     Reviewed          Reviewed         Audited
                                                                                                        R'000             R'000           R'000
CONTINUING OPERATIONS              
Revenue                                                                                             4 528 738         3 967 156       8 796 450
Cost of sales                                                                                     (3 584 172)       (3 079 789)     (6 788 632)
Gross profit                                                                                          944 566           887 367       2 007 818
Other income                                                                               5            7 053            50 019         146 653
Operating expenses                                                                                  (728 130)         (678 102)     (1 558 640)
Operating profit                                                                           6          223 489           259 284         595 831
Investment income                                                                                      21 027            10 816          25 754
Finance costs                                                                                       (154 493)         (122 084)       (254 431)
Profit before tax                                                                                      90 023           148 016         367 154
Income tax expense                                                                                   (24 882)          (34 737)       (134 174)
Profit for the period from continuing operations                                                       65 141           113 279         232 980
              
DISCONTINUED OPERATIONS              
Loss for the period from discontinued operations                                                      (2 849)          (13 350)        (43 283)
Profit for the period                                                                                  62 292            99 929         189 697
Other comprehensive income for the period, net of tax                                                   (247)                 -           (459)
Defined benefit plan actuarial (losses)/gains                                                           (247)                 -           (459)
Total comprehensive profit/(loss) for the period                                                     62 045              99 929         189 238
Profit/(loss) attributable to:              
    Equity holders of the parent                                                                       63 820           101 914         188 354
    Non-controlling interest                                                                          (1 528)           (1 985)           1 343
                                                                                                       62 292            99 929         189 697
Total comprehensive income attributable to:              
  Equity holders of the parent                                                                         63 573           101 914         187 895
  Non-controlling interest                                                                            (1 528)           (1 985)           1 343
                                                                                                       62 045            99 929         189 238
Basic and diluted earnings per share (cents)               
    From continuing operations                                                             7               13                25              49
    From continuing and discontinued operations                                            7               12                22              40
Headline earnings per share (cents)                
    From continuing operations                                                             7               13                25              60
    From continuing and discontinued operations                                            7               12                23              57
(1)The December 2017 numbers have been restated to reflect Pasta Nova as a discontinued operation.

REVIEWED CONDENSED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
          
                                                                                                   At 30 June        At 30 June  At 31 December  
                                                                                                         2018              2017            2017 
                                                                                                     Reviewed          Reviewed         Audited
                                                                                                        R'000             R'000           R'000
ASSETS                    
Non-current assets                                                                                  6 031 717         5 687 698       6 033 319
Property, plant and equipment                                                                       1 103 649           857 005       1 041 225
Goodwill                                                                                            2 521 058         2 445 579       2 521 058
Intangible assets                                                                                   2 376 992         2 379 953       2 449 507
Other financial assets                                                                                  8 860               -             9 600
Operating lease asset                                                                                   4 248             3 686           5 439
Deferred tax assets                                                                                    16 910             1 475           6 490
Current assets                                                                                      3 667 931         2 762 296       3 459 378
Inventories                                                                                         1 188 231           971 397       1 137 107
Trade and other receivables                                                                         1 482 091         1 350 053       1 618 108
Biological assets                                                                                      26 990            23 118          26 162
Other financial assets                                                                                 24 562            22 921         115 647
Current tax receivable                                                                                 61 031            54 125          11 646
Cash and bank balances                                                                                885 026           340 682         550 708
Assets classified as held for sale                                                                     21 834            12 000               -
Total assets                                                                                        9 721 482         8 461 994       9 492 697
                    
EQUITY AND LIABILITIES                    
Capital and reserves attributable to equity holders of the parent                                   5 260 384         4 145 150       4 559 273
Share capital                                                                                       4 829 235         3 886 410       4 187 177
Defined benefit plan reserve                                                                          (1 587)             (881)         (1 340)
Retained earnings                                                                                     509 716           365 966         445 896
Premium on acquisition of non-controlling interests                                                  (67 484)          (18 390)        (63 624)
Put options exercisable by non-controlling interests and executive                              
management                                                                                            (9 496)          (87 955)         (8 836)
Non-controlling interests                                                                              10 028             7 538           7 696
Total equity                                                                                        5 270 412         4 152 688       4 566 969
Non-current liabilities                                                                             2 439 078         2 785 485       2 878 889
Other financial liabilities                                                                         1 604 677         1 981 405       2 014 548
Deferred tax liabilities                                                                              805 761           768 131         815 948
Employee benefits                                                                                       8 197             6 854           8 372
Share appreciation rights                                                                              12 342            20 689         34 019
Operating lease liability                                                                               8 101             8 406           6 002
Current liabilities                                                                                 2 001 834         1 523 821       2 046 839
Trade and other payables                                                                            1 388 058         1 110 872       1 498 817
Other financial liabilities                                                                           372 077           254 425         348 146
Current tax payable                                                                                     3 442             1 520             495
Bank overdraft                                                                                        238 257           157 004         199 381
Liabilities directly associated with assets                     
classified as held for sale                                                                            10 158                 -               -
Total liabilities                                                                                   4 451 070         4 309 306       4 925 728
Total equity and liabilities                                                                        9 721 482         8 461 994       9 492 697
    
REVIEWED CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                                                                                                           Put options
                                                                                                        exercisable by
                                                                               Premium on                         non-
                                                                           acquisition of                  controlling
                                                                  Defined            non-                interests and         Non-
                                                             benefit plan     controlling     Retained       executive  controlling
                                              Share capital    reserve(1)    interests(2)     earnings   management(3)    interests       Total
                                                      R'000         R'000           R'000        R'000           R'000        R'000       R'000
Balance at 1 January 2017                         3 886 410         (881)        (18 390)      264 052        (55 129)        9 523   4 085 585
Total comprehensive income for the period                 -             -               -      101 914               -      (1 985)      99 929
Profit or loss for the period                             -             -               -      101 914               -      (1 985)      99 929
Transactions with owners of the Company     
Movement in put options                                   -             -               -            -        (32 826)            -    (32 826)
Fair value adjustment taken through equity                -             -               -            -        (32 826)            -    (32 826)
Balance at 30 June 2017                           3 886 410         (881)        (18 390)      365 966        (87 955)        7 538   4 152 688
Total comprehensive income for the period                 -         (459)               -       86 440               -        3 328      89 309
Profit or loss for the period                             -             -               -       86 440               -        3 328      89 768
Other comprehensive income for the period                 -         (459)               -            -               -            -       (459)
Transactions with owners of the Company 
Contributions and distributions                     300 767             -               -     (33 816)               -            -     266 951
Share buy back                                     (25 530)             -               -     (33 816)               -            -    (59 346)
Issue of shares                                     326 297             -               -            -               -            -     326 297
Changes in ownership interests                            -             -        (45 234)            -               -      (3 170)    (48 404)
Purchase of non-controlling interest in     
subsidiary                                                -             -        (45 234)            -               -      (3 170)    (48 404)
Movement in put options                                   -             -               -       27 306          79 119            -     106 425
Put options exercised                                     -             -               -            -          97 458            -      97 458
Fair value adjustment taken through equity                -             -               -            -          14 777            -      14 777
Transfer from retained earnings on exercise  
of put options by executive management                    -             -               -       27 306        (33 116)            -     (5 810)
Balance at 31 December 2017                       4 187 177       (1 340)        (63 624)      445 896         (8 836)        7 696   4 566 969
Total comprehensive income for the period                 -         (247)               -       63 820               -      (1 528)      62 045
Profit or loss for the period                             -             -               -       63 820               -      (1 528)      62 292
Other comprehensive income for the period                 -         (247)               -            -               -            -       (247)
Transactions with owners of the Company 
Contributions and distributions                     642 058             -               -            -               -            -     642 058
Capital distribution                              (800 000)             -               -            -               -            -   (800 000)
Issue of shares                                   1 500 730             -               -            -               -            -   1 500 730
Held as treasury shares                               (730)             -               -            -               -            -       (730)
Capitalisation of costs directly attributable      (57 942)             -               -            -               -            -    (57 942)
to issue of shares
Changes in ownership interests                            -             -         (3 860)            -               -        3 860           -
Purchase of non-controlling interest in subsidiary        -             -         (3 860)            -               -        3 860           -
Movement in put options                                   -             -               -            -           (660)            -       (660)
Fair value adjustment taken through equity                -             -               -            -           (660)            -       (660) 
Balance at 30 June 2018                           4 829 235       (1 587)        (67 484)      509 716         (9 496)       10 028   5 270 412

Notes
1. Defined benefit plan reserve: Reserves comprises actuarial gains or losses in respect of defined benefit obligations that are recognised
   in other comprehensive income.
2. Premium on non-controlling interests: Represents the difference between the carrying amount of the non-controlling interests and the
   fair value of the consideration given on acquisition of non-controlling interests.
3. Put options exercisable by non-controlling interest and executive management relates to the liability raised in respect of put options
   exercisable by non-controlling interests and executive management.

REVIEWED CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
                                                                                             6 months          6 months      Year ended
                                                                                        ended 30 June     ended 30 June     31 December 
                                                                                                 2018              2017            2017
                                                                             Notes           Reviewed          Reviewed         Audited
                                                                                                R'000             R'000           R'000
NET CASH FLOW FROM OPERATING ACTIVITIES                                                        80 104           233 232         572 614 
Cash generated from continuing operations                                     10              308 219           430 701         955 204
Finance income received                                                                        21 027            10 816          25 754
Finance costs paid                                                                          (154 493)         (122 084)       (254 431)
Taxation paid                                                                                (91 645)          (91 173)       (145 191)
Cash (utilised by) / generated from discontinued operations                                   (3 004)             4 972         (8 722)

NET CASH FLOW FROM INVESTMENT ACTIVITIES                                                    (150 845)         (138 861)       (605 779) 
Purchase of property, plant and equipment and computer software                             (151 582)         (138 861)       (315 115)
Sale of property, plant and equipment and computer software                                       737                 -         (6 914)
Acquisition of businesses (net of cash acquired)                                                    -                 -       (283 750)
                 
NET CASH FLOW FROM FINANCING ACTIVITIES                                                       362 533          (28 576)         266 609
Proceeds from issue of equity shares                                                        1 500 000                 -         132 151
Capital distribution                                                                        (800 000)                 -               -
Share issue costs                                                                             (5 483)                 -               -
Share buyback                                                                                       -                 -        (39 961)
Loans (repaid to)/advanced by shareholders                                                   (19 384)                 -          19 384
Loans repaid by/(advanced to) shareholders                                                     41 767                 -        (43 059)
Proceeds from other financial liabilities                                                    (35 040)                 -          35 040
Repayment of loans from non controlling interests                                            (28 880)             (915)         (6 518)
Proceeds from term loans and asset based financing                                            846 206            51 478         300 274
Repayment of term loans and asset based financing                                         (1 136 653)          (79 139)       (130 703)
Net increase in cash and cash equivalents                                                     291 792            65 795         233 444
Cash and cash equivalents at the beginning of the period                                      351 327           117 883         117 883
Cash and cash equivalents at the end of the period                                            643 119           183 678         351 327
Continuing operations                                                                         646 769           183 678         351 327
Discontinued operations                                                                       (3 650)                 -               -

REVIEWED CONDENSED INTERIM CONSOLIDATED SEGMENTAL INFORMATION
        
BASIS OF SEGMENTATION
The executive management team of the Group has chosen to organise the Group into categories and manage the operations in
that manner. The information reported to the chief operating decision maker for the purposes of resource allocation and
assessment of segment performance is based on seven categories.
The following summary describes each segment:
- Perishables
  Perishable products are products that are likely to decay or spoil within a short period of time.
- Ambient Groceries
  Ambient groceries (also known as "shelf-stable" groceries) is a category of foods that can be stored and preserved at room
  temperature.
- Snacks and Confectionery
  Premium snacks and confectionery products.
- Baking and Baking Aids
  Baked goods, specialised gluten free offering and baking aids.
- Niche Beverages
  The niche beverages product category consists of beverages that do not fall within the mainstream beverage market.
- Household and Personal Care
  Detergents and household cleaning products.
- Specialised Food Packaging
  The specialised food packaging product category is made up of custom-made packaging solutions for various food and drink
  products sold largely in the food services industry.
                                                                                      6 months          6 months                     Year ended
                                                                                 ended 30 June     ended 30 June          Change    31 December
                                                                                          2018              2017                           2017
                                                                                         R'000             R'000               %          R'000
INFORMATION ABOUT REPORTABLE SEGMENTS
Revenue
Perishables                                                                          2 172 598         1 673 933            29,8      3 729 670
Ambient Groceries                                                                    1 107 388         1 225 206           (9,6)      2 614 824
Snacks and Confectionery                                                               212 322           193 125             9,9        428 505
Baking and Baking Aids                                                                 255 766           225 627            13,4        515 406
Niche Beverages                                                                        296 607           187 513            58,2        428 278
Household and Personal Care                                                            377 519           357 795             5,5        826 887
Specialised Food Packaging                                                             106 537           103 957             2,5        252 879
                                                                                     4 528 738         3 967 156            14,2      8 796 450
Operating profit (EBIT)        
Perishables                                                                            137 810           152 324           (9,5)        371 759
Ambient Groceries                                                                       53 517           119 612          (55,3)        284 270
Snacks and Confectionery                                                                30 221            22 855            32,2         51 569
Baking and Baking Aids                                                                  25 893            20 028            29,3         52 383
Niche Beverages                                                                          8 086           (4 468)           281,0       (57 057)
Household and Personal Care                                                                489           (1 815)           126,9          4 847
Specialised Food Packaging                                                               2 399             5 283          (54,6)         13 872
Corporate                                                                             (34 925)          (54 535)            36,0      (125 812)
                                                                                       223 489           259 284          (13,8)        595 831
        
Reconciliation of operating profit per segment to profit before tax        
Operating profit                                                                       223 489           259 284          (13,8)        595 831
Investment income                                                                       21 027            10 816            94,4         25 754
Finance costs                                                                        (154 493)         (122 084)          (26,5)      (254 431)
Profit before tax                                                                       90 023           148 016          (39,2)        367 154

The chief operating decision maker reviews the revenue and operating profit on a regular basis. The chief operating decision
maker does not evaluate any of the Group's assets or liabilities on a segmental basis for decision making purposes.

                                                                                      6 months          6 months                     Year ended
                                                                                 ended 30 June     ended 30 June          Change    31 December
                                                                                          2018              2017                           2017
                                                                                         R'000             R'000               %          R'000
Normalised EBIT and EBITDA
Group - continuing operations
Operating profit                                                                       223 489           259 284          (13,8)        595 831
Amortisation of customer contracts                                                      70 420            65 551                        131 486
Due diligence costs                                                                        738             1 899                          4 428
Expenses relating to share appreciation rights granted                                (21 677)            13 330                         26 660
Fair value adjustment to put options                                                         -             1 667                        (1 436)
Government grants                                                                            -             (137)                          (256)
Impairment losses on goodwill and customer relationships                                     -                 -                         50 000
Loss on disposal of property, plant and equipment                                        1 383               306                            959
Costs and fees attributable to the Initial Public Offering                               7 303                 -                         22 583
Retrenchment and settlement costs                                                        1 459             5 479                         15 193
Securities transfer tax                                                                      -                 -                            275
Straight lining of operating leases                                                      2 181               136                          (459)
Strategic advisory fees                                                                     77             1 662                          2 291
Unrealised loss/(gain) on foreign exchange                                              32 173          (29 761)                       (40 211)
Normalised EBIT                                                                        317 546           319 416           (0,6)        807 344
Amortisation of software                                                                 2 816             2 030                          8 120
Depreciation of property, plant and equipment                                           77 329            59 875                        124 901
Normalised EBITDA                                                                      397 691           381 321             4,3        940 365
         
Perishables         
Operating profit                                                                       137 810           152 324           (9,5)        371 759
Amortisation of customer contracts                                                      22 338            18 675                         37 873
Due diligence costs                                                                         81                 -                             17
Gain on disposal of property, plant and equipment                                        (177)             (584)                          (425)
Retrenchment and settlement costs                                                          747             3 015                          3 807
Straight lining of operating leases                                                      1 765                 -                            511
Strategic advisory fees                                                                      3                 -                              -
Unrealised gain on foreign exchange                                                      (619)           (9 469)                        (1 633)
Normalised EBIT                                                                        161 948           163 961           (1,2)        411 909
Amortisation of software                                                                   293                77                             87
Depreciation of property, plant and equipment                                           27 147            17 410                         34 284
Normalised EBITDA                                                                      189 388           181 448             4,4        446 280
         
Ambient Groceries         
Operating profit                                                                        53 516           119 612          (55,3)        284 270
Amortisation of customer contracts                                                      30 575            30 576                         60 408
Government grants                                                                            -             (137)                          (137)
Loss/ (gain) on disposal of property, plant and equipment                                1 775               (9)                          1 102
Retrenchment and settlement costs                                                          491             1 568                          7 704
Straight lining of operating leases                                                       (79)             (319)                             72
Strategic advisory fees                                                                      -             1 309                          1 716
Unrealised loss/(gain) on foreign exchange                                              34 192          (21 338)                       (43 217)
Normalised EBIT                                                                        120 469           131 262           (8,2)        311 918
Amortisation of software                                                                   453               173                            582
Depreciation of property, plant and equipment                                           22 430            17 485                         37 763
Normalised EBITDA                                                                      143 352           148 920           (3,7)        350 263
         
Snacks and Confectionery                         
Operating profit                                                                        30 221            22 855            32,2         51 569
Amortisation of customer contracts                                                       2 201             2 201                          4 402
Government grants                                                                            -                 -                           (24)
Loss on disposal of property, plant and equipment                                           24                49                            124
Retrenchment and settlement costs                                                            -                 -                            354
Straight lining of operating leases                                                          -                 -                            448
Strategic advisory fees                                                                     74                 -                              -
Unrealised loss/(gain) on foreign exchange                                             (2 353)             1 213                          4 831
Normalised EBIT                                                                         30 168            26 318            14,6         61 704
Amortisation of software                                                                   365               323                            257
Depreciation of property, plant and equipment                                            4 444             3 842                          9 590
Normalised EBITDA                                                                       34 977            30 483            14,7         71 551
                        
Baking and Baking Aids                        
Operating profit                                                                        25 893            20 028            29,3         52 383
Amortisation of customer contracts                                                       4 703             4 703                          9 406
Gain on disposal of property, plant and equipment                                            -                 -                           (51)
Retrenchment and settlement costs                                                          117                56                            306
Straight lining of operating leases                                                       (51)               219                        (2 268)
Unrealised loss/(gain) on foreign exchange                                                (67)                 1                             21
Normalised EBIT                                                                         30 594            25 007            22,3         59 797
Amortisation of software                                                                   397               384                            669
Depreciation of property, plant and equipment                                            8 766             8 643                         16 659
Normalised EBITDA                                                                       39 758            34 034            16,8         77 125
                        
Specialised Food Packaging                        
Operating profit                                                                         2 399             5 283          (54,6)         13 872
Amortisation of customer contracts                                                       1 133             1 133                          2 267
Government grants                                                                            -                 -                           (95)
Gain on disposal of property, plant and equipment                                         (45)             (135)                          (141)
Unrealised loss gain on foreign exchange                                                     9                 -                              -
Normalised EBIT                                                                          3 496             6 281          (44,3)         15 903
Amortisation of software                                                                    54                 -                            155
Depreciation of property, plant and equipment                                              588               536                          1 162
Normalised EBITDA                                                                        4 139             6 817          (39,3)         17 220
Household and Personal Care                        
Operating profit                                                                           489           (1 815)           126,9          4 847
Amortisation of customer contracts                                                       6 092             6 092                         12 183
Loss/ (gain) on disposal of property, plant and equipment                                (192)               991                            994
Retrenchment and settlement costs                                                            -                92                          2 118
Straight lining of operating leases                                                        546               236                            653
Strategic advisory fees                                                                      -                63                            212
Unrealised loss/(gain) on foreign exchange                                                 160             (168)                            468
Normalised EBIT                                                                          7 095             5 491            29,2         21 475
Amortisation of software                                                                     -                 -                          4 052
Depreciation of property, plant and equipment                                            8 827             8 525                         18 202
Normalised EBITDA                                                                       15 922            14 016            13,6         43 729

Niche Beverages                 
Operating profit                                                                         8 086           (4 468)           281,0       (57 057)
Amortisation of customer contracts                                                       3 377             2 172                          4 948
Impairment losses on goodwill                                                                -                 -                         50 000
Gain on disposal of property, plant and equipment                                         (29)              (14)                          (651)
Retrenchment and settlement costs                                                          105               371                            527
Straight lining of operating leases                                                          -                 -                            125
Unrealised loss on foreign exchange                                                        851                 -                          (681)
Normalised EBIT                                                                         12 390           (1 939)           739,0        (2 789)
Amortisation of software                                                                     -                 4                             21
Depreciation of property, plant and equipment                                            4 307             2 771                          5 894
Normalised EBITDA                                                                       16 697               836          1897,2          3 126

Corporate                  
Operating profit                                                                      (34 925)          (54 535)            36,0      (125 812)
Due diligence costs                                                                        656             1 899                          4 411
Expenses relating to share appreciation rights granted                                (21 677)            13 330                         26 660
Fair value adjustment to put options                                                         -             1 667                        (1 436)
Loss on disposal of property, plant and equipment                                           28                 7                              7
Costs and fees attributable to the Initial Public Offering                               7 303                 -                         22 583
Retrenchment and settlement costs                                                            -               377                            377
Securities transfer tax                                                                      -                 -                            275
Strategic advisory fees                                                                      -               290                            363
Normalised EBIT                                                                       (48 615)          (36 965)          (31,5)       (72 572)
Amortisation of software                                                                 1 253             1 068                          2 297
Depreciation of property, plant and equipment                                              820               664                          1 347
Normalised EBITDA                                                                     (46 542)          (35 233)          (32,1)       (68 928)

 Export revenue
 The Group mainly operates in South Africa. Revenue derived from customers domiciled within South Africa is classified as
revenue from South Africa. Revenue from customers domiciled outside of South Africa is classified as export revenue.

Export revenue for the year                                                            586 126           510 234            14,9      1 004 528

Major customers
During the period under review, revenue from certain customers exceeded 10% of total revenue.
Customer A                                                                                 19%               17%                            18%
Customer B                                                                                 14%               14%                            14%
Customer C                                                                                 12%               13%                            10%

NOTES TO THE REVIEWED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

1.   Reporting entity

     Libstar is a leading producer and supplier of high quality products in the CPG industry and markets a wide
     range of products in South Africa and globally. The Group provides a multi-product offering in multiple
     categories across multiple channels, while strategically positioning itself within the food and beverage and
     HPC sectors and maintaining the flexibility to capitalise on growth areas in the CPG industry.

2.   Financial preparation and review opinion

     These reviewed condensed consolidated interim financial statements have been prepared in accordance
     with International Financial Reporting Standards (IFRS), including the disclosure requirements of IAS 34
     Interim Financial Reporting (IAS 34) and comply with the Financial Reporting Guides as issued by the
     Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial
     Reporting Standards Council, as well as the JSE Listings Requirements and the Companies Act, No 71 of 2008.

     These condensed consolidated interim financial statements have been prepared by R Dhlembeu CA(SA) and
     P Makate CA(SA) under the supervision of R Smith CA(SA), the Group Financial and Commercial Director,
     and CB de Villiers CA(SA). The results were approved by the Board of Directors on 3 September 2018 and
     the Directors take full responsibility for the preparation thereof.

     The financial results presented have been reviewed by the Group's independent external auditors, Moore
     Stephens, who expressed an unmodified review conclusion. A copy of the auditor's review report is
     available for inspection at the Company's registered office.

     The auditor's report does not necessarily report on all of the information contained in this announcement.
     Shareholders are therefore advised that in order to obtain full understanding of the nature of the auditor's
     engagement they should obtain a copy of that report together with the accompanying financial information
     from the Company's registered office.

3.   Accounting policies

     The accounting policies applied by the Group in these reviewed condensed consolidated interim financial
     statements are consistent with those applied in the consolidated annual financial statements for the year
     ended 31 December 2017 except as detailed below:

       -   The Group adopted IFRS 15 - Revenue from contracts from customers with effect from 1 January
           2018. The new standard features a contract-based five step analysis of transactions to determine
           whether, how much and when revenue is recognised. The new standard has not had any effect on
           the timing or quantum of revenue recognition for the Group.

       -   The Group adopted IFRS 9 - Financial instruments with effect from 1 January 2018. Given the
           nature of the Group's financial instruments, there has been no change to the classification and
           measurement as a result of the adoption of IFRS 9.

4.   Accounting judgements and estimates

     Management is required to make estimates and assumptions that affect the amounts presented in the
     financial statements and related disclosures. Use of available information and the application of judgement
     is inherent in the formation of estimates. Actual results in the future could differ from these estimates.

     In preparing these condensed consolidated interim financial statements, the significant judgments made
     by management in applying the Group's accounting policies and the key sources of estimation uncertainty
     were the same as those that applied to the consolidated annual financial statements for the year ended 31
     December 2017.

5.   Other income
                                                                                                     6 months          6 months      Year ended 
                                                                                                ended 30 June     ended 30 June     31 December   
                                                                                                         2018              2017            2017 
                                                                                                        R'000             R'000           R'000
     Other income  
     Bad debts recovered                                                                                   13                27             173
     Commissions received                                                                                  16                20              39
     Gain on foreign exchange                                                                           2 851            41 472         129 337
       Realised gain on foreign exchange                                                               35 024            11 711          89 126
       Unrealised gain / (loss) on foreign exchange                                                  (32 173)            29 761          40 211                                                                                                                           
     Fair value adjustment to put options exercisable by executive management                               -             1 667           1 436
     Government grants(1)                                                                                   -               450             684
     Insurance claims received                                                                            159             1 439             552
     Recoveries                                                                                             -                 -              11
     Rental income                                                                                      2 256             2 581           4 311
     Sundry income                                                                                      1 758             2 363          10 110
                                                                                                        7 053            50 019         146 653
 
      (1) Income from government grants includes income received under the Manufacturing Competitiveness Enhancement Program, 
      Skills Development Program and the Employer Tax Incentive program

6.   Operating profit

     Operating profit from continuing operations is calculated after taking into
     account the following:

       Operating expenditure
       Depreciation of property, plant and equipment                                                   77 874            61 277         125 104
       Amortisation of computer software                                                                2 842             2 036           8 120
       Amortisation of customer relationships                                                          70 784            66 235         132 462
       Impairment loss on goodwill                                                                          -                 -          50 000
       Loss on disposal of property, plant and equipment                                                1 383               306             959
       Employee benefits                                                                              552 265           500 089       1 038 333
         Salaries and wages                                                                           550 806           494 610       1 022 457
         Retrenchment and settlement costs                                                              1 459             5 479          15 876
       Strategic advisory fees                                                                             78             1 662           2 291
       Due diligence costs                                                                                738             1 899           4 428
       Charges relating to/(reversal of) share appreciation rights granted                           (21 677)            13 330          26 660
       Securities transfer tax                                                                              -                 -             275
       Operating lease charges                                                                         40 209            23 323          91 478
         Premises                                                                                      32 551            19 789          80 534
         Straight-lining of operating leases                                                            2 181               136           (459)
         Motor vehicles & equipment                                                                     5 477             3 398          11 403

7.   Earnings per share
                                                                                                     6 months          6 months      Year ended
                                                                                                     ended 30          ended 30     31 December
                                                                                                    June 2018         June 2017            2017
                                                                                                        R'000             R'000           R'000
     Earnings per share

       The earnings and weighted average number of ordinary shares used in
       the calculation of basic earnings per share are as follows:

       Earnings used in the calculation of basic earnings per share                                    63 820           101 914         188 354
       From continuing operations                                                                      66 669           115 264         231 637
       From discontinued operations                                                                   (2 849)          (13 350)        (43 283)

       Weighted average number of ordinary shares for the purposes of basic
       earnings per share ('000)                                                                      523 347           468 915         468 189

       Basic earnings per share in cents
       From continuing operations                                                                          13                25              49
       From discontinued operations                                                                       (1)               (3)             (9)
       From continuing and discontinued operations                                                         12                22              40

     Diluted earnings per share
        There are no convertible shares, share options, warrants or any other
      instruments in issue that have a potential dilutive effect on the earnings   
      per share.   
   
     Headline earnings per share                                                                                          Gross             Net
       Headline earnings is calculated based on HEPS Circular 2 of 2015 -
       Headline Earnings issued by the South African Institute of Chartered
       Accountants.

        The headline earnings used in the calculation of headline earnings per
       share are as follows:

       Six months ended 30 June 2018
       Basic earnings from continuing operations                                                                         66 669          66 669
       Adjustments                                                                                                        1 383           1 073
         Loss on disposal of property, plant and equipment                                                                1 383           1 073
       Headline earnings from continuing operations                                                                      68 052          67 743

       Six months ended 30 June 2017
       Basic earnings from continuing operations                                                                        115 264         115 264
       Adjustments                                                                                                          306             237
        Loss on disposal of property, plant and equipment                                                                   306             237

       Headline earnings from continuing operations                                                                     115 570         115 502

Year ended 31 December 2017
Basic earnings from continuing operations                                                                               231 637         231 637
Adjustments                                                                                                              50 959          50 744
  Impairment of goodwill                                                                                                 50 000          50 000
  Loss on disposal of property, plant and equipment                                                                         959             744
Headline earnings from continuing operations                                                                            282 596         282 381

                                                                                                     6 months          6 months            Year   
                                                                                                     ended 30          ended 30        ended 31
                                                                                                    June 2018         June 2017   December 2017
                                                                                                        R'000             R'000           R'000
Basic earnings from discontinued operations                                                           (2 849)          (13 350)        (43 283)
Adjustments (net of tax)                                                                                    -             5 825          28 658
  Impairment of property, plant and equipment                                                               -             5 825           5 825
  Impairment of intangible assets                                                                           -                 -           5 990
  Impairment of goodwill                                                                                    -                 -          16 844
Headline earnings from discontinued operations                                                        (2 849)           (7 525)        (14 624)
                           
Headline earnings from continuing and discontinued operations                                          64 894           107 977         267 757
                              
Headline earnings per share in cents                              
From continuing operations                                                                                 13                25              60
From discontinued operations                                                                              (1)               (2)             (3)
From continuing and discontinued operations                                                                12                23              57
                          
8.   Property, plant and equipment

     During the 6-month period ended 30 June 2018, the Group acquired plant, equipment and computer
     software in the amount of R152 million (2017: R139 million). R28 million related to Lancewood in respect of
     capacity enhancing equipment and leasehold improvements. Further significant capital expenditure
     related to capacity enhancing projects at Ambassador Foods comprising facility upgrades and new
     expansionary machinery of R29 million.

     There has been no major change in the nature of property, plant and equipment, the policy regarding the
     use thereof, or the encumbrances over the property, plant and equipment as disclosed in the audited
     financial statements for the year ended 31 December 2017.

9.   Financial instruments

     At the reporting dates, the financial assets and liabilities of the Group that are classified at fair value through
     profit and loss comprise forward exchange contracts. These are classified at a Level 2 in terms of the fair
     value hierarchy.
   
10. Cash generated from continuing operations   
                                                                                                     6 months          6 months      Year ended
                                                                                                ended 30 June          ended 30     31 December
                                                                                                         2018         June 2017            2017
                                                                                                        R'000             R'000           R'000
Cash generated from continuing operations       
Profit before taxation from continuing operations                                                      90 023           148 016         367 154
Adjustments for:                                                                                      304 581           251 720         517 426
  Depreciation, amortisation and impairments                                                          151 500           129 548         315 685
  Loss on disposal of property, plant and equipment                                                     1 383               306             959
  Investment income                                                                                  (21 027)          (10 816)        (25 754)
  Finance costs                                                                                       154 493           122 084         254 431
  Fair value adjustment on put options exercisable by executive management                                  -           (1 667)         (1 436)
  Fair value adjustment on forward exchange contracts                                                  36 794             1 513        (47 901)
  Movements in employee benefits                                                                        (175)             (122)           1 396
  Movements in operating lease assets and accruals                                                      3 290           (2 456)         (6 613)
  Movements in share appreciation rights                                                             (21 677)            13 330          26 659
Changes in working capital:                                                                          (86 385)            30 965          70 624
  Inventories                                                                                        (54 517)            21 663        (34 373)
  Trade and other receivables                                                                         126 781           109 416        (80 281)
  Biological assets                                                                                     (828)             (558)         (3 602)
  Trade and other payables                                                                          (157 821)          (99 555)         188 880
                                                                                                      308 219           430 701         955 204 
11. Subsequent events
    There have been no material subsequent events from reporting date to the date of issue of this announcement.

CORPORATE INFORMATION
Address
1st Floor, 62 Hume Road, Dunkeld, Johannesburg, 2196, South Africa
(PO Box 630, Northlands, 2116)

Website
www.libstar.co.za

Directors
Wendy Luhabe (Chairperson)
Phumzile Langeni (Independent non-executive)
Wahid Suleiman Hamid (Non-executive)
Sandeep Khanna (Non-executive)
JP Landman (Lead-independent)
Andries Vlok van Rensburg (CEO)
Robin Walter Smith (CFO)

Company Secretary
Solach Pather
1st Floor, 62 Hume Road, Dunkeld, Johannesburg, 2196, South Africa
(PO Box 630, Northlands, 2116)

Investor Relations
Nicholas Williams, Patamola
+27 (0)82 600 2192
nicholas@patamola.co.za 

Sponsor
The Standard Bank of South Africa Limited
30 Baker Street, Rosebank, Johannesburg, 2196, South Africa
(PO Box 61344, Marshalltown, 2107)

Auditors
Moore Stephens Cape Town Inc
Block 2, Northgate Park, Corner Section Street and Koeberg Road, Paarden Eiland, Cape Town,
7405, South Africa
(PO Box 1955 Cape Town, 8000)

Transfer secretaries
Computershare Investor Services Proprietary Limited
Rosebank Towers, 15 Biermann Avenue, Rosebank, Johannesburg, 2196, South Africa
(PO Box 61051, Marshalltown, Johannesburg, 2107)
Date: 04/09/2018 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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