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Labels for AfricaTHE MIGRATION TO DIGITAL
WWW.L ABELSFORAFR ICA.CO.ZA0860L ABELS
The Market How big is the label market?
How big is the digital label market?
What are the expected growth trends moving forward?
HOW BIG IS THE LABEL MARKET?
North America * USDTotal label market $12.2bilion
Digital label market $1.037billion
% of market that is digital 8.5%
Number of label converters 2,000
Number of digital presses 918
South Africa (2% of the USA)** RandTotal label market R3.057billion
Digital label market R260million
% of market that is digital 8.5%
Number of label converters 200+
Number of digital presses 25
** Based on SA GDP compared to US
* Source: TLMI North American Digital Label Study 2015
MARKET TRENDS
67%
33%
PressSales2011
Conventional DigitalPress sales in the USA
48%52%
PressSales2014
Conventional Digital
Press Sales (USA)*
For the first time in 2014, Digital press sales, out paced conventional press sales
Anticipated that conventional press sales will decrease at 7% per year, while digital press sales will increase at 12.5% per year (by
2020, 3 in 4 press sales to be digital).
33%
77%
PressSales2020F.Cast
Conventional Digital
* Source: TLMI North American Digital Label Study 2015
The TechnologiesCo
mm
erci
al P
ress
Xeikon
HP
ScreenD
eskt
op P
ress
Edge 850PrimeraAnytron
THE BIG BOYSA comparison
ElectrophotographyWebwidth between 330 and 500 widePrint speed between 19m/min & 30m/minuteVC determined on substrate/tonner/parts/coverageCapital investment between R6m and R9m
InkJetWebwidth between 330 and 340 widePrint speed between 15m/min & 60m/minuteVC determined by substrate and click chargeCapital investment between R9m and R18m
InkJetWebwidth 330 widePrint speed between 30m/minuteVC determined by substrate/ink/parts/coverageCapital investment R9m
The Extra Costs Involved
Commercialpress
Finishing unit(R1,5m)
Machine operator(R0.5m)
Graphic design team
(R180k)
Building conditioning
(R0.5m)Insurance
(R50k)
IT costs(R25k)
Electricity(R50k)
Learning Curve(R?k)
Revenue break even point…….
R450k per MONTH!!
The LFA Offering What is Labels for Africa?
What benefits do I get from being part of Labels for Africa?
How much will it cost me?
What does this mean for my digital future?
What is Labels for Africa?
We supply full colour digital labels to all size organisations
Exclusive access to two Xeikon digital presses, coupled with GM finishing units
Infrastructure to support the press in place (machine operators/graphic design team etc.)
Management team with expert knowledge in digital
What are the benefits?
Central Marketing (online/radio/magazine etc.), with forwarding of leads from your area
20% discount on Spec purchases
50% on Spec graphic design fees
Use of Xeikon press technology
Personalised support through franchise co-ordinator
Free access to state of the art job tracker with which to manage open orders
Partner in getting you to digital (build your business into digital)
How much will it cost me?
• R100,000(Ex Vat)• AnnualJoining fee
• 8% of Spec purchases• MonthlyManagement fee
My Digital FutureThe migration to digital
Sign-up with LFA
Build customer base to desired level (R450kpm)
LFA to advise on press along the
way
Time to go digital
Deal structuring(Incl DTI Claims)
Benefit from lower input costs
(centralised buying)
Financial planning (flexing model)
FLEXING INPUTS Year 1Digi purchases 50 000 Business GP (LFA) 25%Business GP (current) 20% Prime LabelsSales growth rate pa (LFA) 25%Sales growth rate pa (current) 15%
Labels for Africa
Year 1 Year 2 Year 3 Year 41 2 3 4 5 6 7 8 9 10 11 12 Total Total Total Total
Joining fee (100 000) (100 000) (100 000) (100 000) (100 000)Spec purchases (50 000) (51 042) (52 105) (53 191) (54 299) (55 430) (56 585) (57 764) (58 967) (60 195) (61 450) (62 730) (673 756) (862 900) (1 105 144) (1 415 392)Marketing fee (4 000) (4 083) (4 168) (4 255) (4 344) (4 434) (4 527) (4 621) (4 717) (4 816) (4 916) (5 018) (53 900) (69 032) (88 411) (113 231)Spec Discount 10 000 10 208 10 421 10 638 10 860 11 086 11 317 11 553 11 793 12 039 12 290 12 546 134 751 172 580 221 029 283 078KS Markup 66 667 68 056 69 473 70 921 72 398 73 907 75 446 77 018 78 623 80 261 81 933 83 640 898 341 1 150 534 1 473 525 1 887 190Net profit (77 333) 23 139 23 621 24 113 24 615 25 128 25 652 26 186 26 732 27 289 27 857 28 437 205 436 291 181 400 998 541 644 Cumulative NP (77 333) (54 194) (30 573) (6 460) 18 155 43 283 68 935 95 121 121 853 149 141 176 998 205 436
ResellerYear 1 Year 2 Year 3 Year 4
1 2 3 4 5 6 7 8 9 11 12 Total Total Total Total TotalJoining fee - - - - Spec purchases (50 000) (50 625) (51 258) (51 899) (52 547) (53 204) (53 869) (54 543) (55 224) (55 915) (56 614) (57 321) (643 018) (746 386) (866 371) (1 005 644)Marketing fee - - - - Spec Discount - - - - KS Markup 62 500 63 281 64 072 64 873 65 684 66 505 67 336 68 178 69 030 69 893 70 767 71 652 803 773 932 983 1 082 964 1 257 055Net profit 12 500 12 656 12 814 12 975 13 137 13 301 13 467 13 636 13 806 13 979 14 153 14 330 160 755 186 597 216 593 251 411 Cumulative NP 12 500 25 156 37 971 50 945 64 082 77 383 90 850 104 486 118 292 132 271 146 424 160 755
Better/(Worse) (89 833) (79 351) (68 544) (57 406) (45 927) (34 100) (21 916) (9 365) 3 561 16 871 30 574 44 681 44 681 104 585 184 406 290 233Annual ROI 45% 105% 184% 290%
Inflow/(Outflow)Months
Inflow/(Outflow)Months