ASHLEY SERVICES GROUP LIMITED — AGM Information 2014

Nov 13, 2014

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2014 ANNUAL GENERAL MEETING Ashley Services Group Limited (ASX: ASH)

14 NOVEMBER 2014

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NOTICE AND DISCLAIMER

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This document is a presentation of general background information about the activities of Ashley Services Group Limited ABN 92 094 747 510 (“ASH”) current at the date of the presentation, (14 November 2014). The information contained in this presentation is of general background and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account any investment objectives or financial situation of any particular investor. These should be considered, with or without professional advice, when deciding if an investment is appropriate.

No representation or warranty is made in relation to the accuracy and completeness of the information within this presentation. No responsibility or liability will be accepted by ASH (and its subsidiaries, affiliates and associated companies).

The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law. Accordingly, any persons in such jurisdiction should inform themselves about such restrictions. This presentation does not constitute, or form part of, an offer to sell or the solicitation of an offer to subscribe for or buy any securities, no the solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issue or transfer of securities. Forward looking statements

This document contains certain forward looking statements and comments about future events, including ASH expectations about the performance of its businesses. Forward looking statements can generally be identified by the use of forward looking words such as, ‘expect’, ‘anticipate’, ‘likely’, ‘intend’, ‘should’, ‘could’, ‘may’, ‘predict’, ‘plan’, ‘propose’, ‘will’, ‘believe’, ‘forecast’, ‘estimate’, ‘target’ and other similar expressions within the meaning of securities laws of applicable jurisdictions. Indications of, and guidance on, future earnings or financial position or performance are also forward looking statements.

Forward looking statements involve inherent risks and uncertainties, both general and specific, and there is a risk that such predictions, forecasts, projections and other forward looking statements will not be achieved. Forward looking statements are provided as a general guide only, and should not be relied on as an indication or guarantee of future performance. Forward looking statements involve known and unknown risks, uncertainty and other factors which can cause ASH actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward looking statements and many of these factors are outside the control of ASH. As such, undue reliance should not be placed on any forward looking statement. Past performance is not necessarily a guide to future performance and no representation or warranty is made by any person as to the likelihood of achievement or reasonableness of any forward looking statements, forecast financial information or other forecast. Nothing contained in this presentation nor any information made available to you is, or shall be relied upon as, a promise, representation, warranty or guarantee as to the past, present or the future performance of ASH. Pro forma financial information

ASH uses certain measures to manage and report on its business that are not recognised under Australian Accounting Standards. These measures are referred to as non-IFRS financial information. ASH considers that this non-IFRS financial information is important to assist in evaluating the performance of ASH. The information is presented to assist in making appropriate comparisons with prior periods and to assess the operating performance of ASH’s businesses. In particular, this information is important for comparative purposes with Pro forma historical and forecast for the year ending 30 June 2005 financial information contained in the Initial Public Offering Prospectus lodged with ASIC on 7 August 2014 (Prospectus).

All references to the FY14 Pro forma results are to be read as unaudited. This presentation has been reported in Australian currency, unless otherwise stated. All references to “Prospectus” contained within this document refer to the ASH prospectus lodged with ASIC on 7 August 2014.

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ASHLEY SERVICES GROUP LIMITED – MANAGING DIRECTOR ADDRESS

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BUSINESS OVERVIEW

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Ashley Services delivers vocational education and training, labour hire and recruitment services through a multi-brand delivery structure

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Training
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Labour Hire
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Overview of Ashley Services

• Ashley Services was founded in 1968 and is one of the largest integrated VET and labour hire businesses in Australia

• National footprint with 40 strategically located offices and 62 additional training locations in each state and territory

• Delivers a broad range of VET services across 24 industries to the Public and Corporate Markets

• Specialist labour hire provider to large scale organisations across industries such as transport & logistics, FMCG and food

• Strong history of growth, both organic and via acquisition – 14 acquisitions completed since 2000

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BUSINESS OPERATIONS

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Ashley services has a national footprint with strategically located offices and training centres in each state and territory to service the demands in each region

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Offices	40
Additional Training locations	62
Staff1	355
Trainers1	149
Qualifications1	97
Enrolments2	~19,700
Weekly Labour Hire workers2	~3,800
Annual Labour Hire hours2	~6.0 million
Labour Hire clients2	265
Note:
1. As at 30 June 2014
2. FY14F

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AN INTEGRATED MODEL

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The integration of Ashley Services’ Training and Labour Hire businesses generates material synergies and value through cross selling initiatives and provides value-adding intra-company services

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Training
Work experience/Jobs for candidates
Corporate relationships
Captive workforce
Trainers/Competitive
Corporate relationships
advantage Cross selling
opportunities Skills, qualifications, enhanced
service offering and margins
Quality control/Cost savings
Recruitment Labour Hire
Corporate relationships
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Ashley Services integrated business model

• Holistic approach to clients’ business service requirements enhances service quality and competitiveness;

• Generates synergies through cross-referrals between business segments;

• Training improves skills of the Ashley Services labour force – attractive and beneficial to Labour Hire clients; and

• Integrated returns superior to stand-alone businesses.

• Material incremental revenue and margin contributions:

• 11% of FY14 Training revenue from Ashley Services Labour Hire clients; and

• Recruitment has provided 82 trainers and 94 staff members to Ashley Services in FY14.

Ashley Services integration success stories

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GROWTH DRIVERS - TRAINING

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Progress update on Training growth opportunities

Growth plans at IPO

Progress to date

• Leverage Labour Hire and other corporate relationships to expand corporate market share

• In discussions with major labour hire client to extend contract to include training operations also

• Introduction of demand driven model (DDM) in QLD has commenced. Enrolments are tracking well against budget so far

• WA GTO (Group Training Organisation) licence granted and WA now operational. See

• • Pursue new funding opportunities following slide for more details. • VET FEE-HELP application in progress – anticipate granting of licence in December Quarter. VET FEE-HELP will allow Ashley to access funding and offer students higher education courses (at Advanced Diploma level and above)

• • Scope expansion and entry into new industries, aligned • Qualifications on scope now total 103 (97 at IPO)

• with: – National Skills Needs List • Introduction by Ashley of new Telecommunications qualification since IPO plus introduction of 5 new qualifications through the Cantillon acquisition

• – the Labour Hire client base – • Cantillon bolsters Ashley’s scope, particularly in hospitality and commercial cookery high growth industries

• • Geographic expansion • Continued geographic expansion, with 4 new offices opened in QLD • CRICOS registration for international students • The Cantillon Institute acquisition – provides Ashley with the ability to enrol students in key NSW and VIC markets

• • VET in secondary schools • MoU signed with a South Australian based school to commence in January. This is the first step in exploring the opportunities within this sector

• • The Cantillon Institute was Ashley’s first bolt-on acquisition target since IPO • The acquisition meets all criteria, including opportunity to enter new markets and

• • Target bolt-on acquisition opportunities industries, leverage the Labour Hire client base, access new revenue sources, expand scope, expand client base and grow geographical footprint

• • Ashley will continue to assess other accretive and strategic acquisition opportunities 7

GROWTH DRIVERS – LABOUR HIRE

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Progress update on Labour Hire growth opportunities

Growth plans at IPO

Progress to date

• Leverage existing Labour Hire clients to increase demand for services

• In discussions with major labour hire client to extend contract to include training operations also

• Tender pipeline

• Strong pipeline of tender work

• Geographic expansion

  • No change since IPO

  • WA GTO (Group Training Organisation) licence has been granted in WA and is now operational

• Expand Group Training Organisation nationally:

• provides the ability to employ apprentices

• accreditation received in WA as first stage

  • The GTO licence allows Ashley to enrol trainees or apprentices into relevant training programs. These programs facilitate access to state and commonwealth funding programs for both training and labour hire in WA

  • Ashley participates in equivalent regimes in other states and these have been in operation for some time

• Pursue new industry sectors:

• heavy maintenance and construction

  • No change since IPO

• Telecommunications

• Target businesses that justify investment on stand-alone basis plus drive significant synergies through the potential overlay of the Training business

• Assessing a number of possible acquisition targets but only intend to pursue transactions that are both EPS accretive and can be leveraged by the Training business

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VET QUALIFICATIONS

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Ashley Services’ offers a broad range of qualifications and is focussed on the design and development of high quality training solutions

Increase in scope of qualifications

 6 new qualifications added since IPO:

• 5 through acquisition of The Cantillon Institute, including a qualification at the Advanced Diploma level

• 1 new qualification in Data/Voice added within Telecommunications

Qualification scope and offering

• Comprehensive and diverse VET offering: 103 nationally accredited qualifications covering 24 industries

• Strategic focus on qualifications in skill shortage areas that are most likely to receive ongoing government funding support

• In-house curriculum development IP and capabilities allow Ashley Services to bring new courses to market quickly to capitalise on market opportunities

• Highly experienced trainers typically sourced from within industry

Training courses scope summary

	Course	2011	2012	2013	**20141 **	Current
	Aged Care / Health Services Assist Occupational Health and Safety Asset Maintenance
	Marketing and Human Resources Business
	Customer Contact
	Civil Construction
	Mining / Quarrying
	Childcare
	Training and Assessment
	Transport & Logistics
	Hospitality
	Manufacturing Systems
	Retail Operations
	Engineering Production Systems
	Disabilities
	Food Processing
	Telecommunications / NBN
	Commercial Cookery / Bakery
	Horticulture Meat Retailing / Smallgoods Manufacture English and Vocational Preparation
	Construction / Scaffolding Automotive
	Total Qualifications on scope =Qualifications offered	59	60	80	97	103	9
	1. As at IPO

VET INDUSTRY DRIVERS

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Structural changes in the vet sector have significantly increased enrolments and government funding and sector revenue

Industry sector drivers

Significant growth in enrolments and funding since 2008

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Demand Driven Model

National Skills Needs List

Government policy & reform

Mandatory skills legislation

VET enrolments in Australia (‘000s)

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VET sector revenue ($ billion)

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Technological advancements

Skilled migration incentives

Unemployment rate

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ASHLEY SERVICE’S CLIENTS

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Labour hire has established and long tenure relationships with high quality clients

Clients

• Diversified client base with more than 265 active clients;

• Strong presence in the warehouse, logistics, fast-moving consumer goods, food, pharmaceutical and manufacturing and trade industries;

• Supply to clients nationally, with capability to cater for large national clients; and

• Strategy of supplying labour to high quality businesses with low WH&S risk and safe working environments.

Enrolment Volume by Level FY14

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Strength of relationships

• Strong, long tenure relationships with an average relationship length of 4.7 years with the top 20 clients

• Established relationships attributed to depth of candidate database, quality and availability of candidates, sound customer service/processes and competitive pricing models

• Focus on quality service results in expansion of existing contracts and referrals – result is strong client concentration

Enrolment Volume by Level FY14

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DEMAND DRIVEN MODEL

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Vet enrolments and private RTO funding increased substantially in states post implementation of the demand driven model (DDM). Implementation is now underway in WA, QLD and NSW

Government payments to private VET providers by state

Demand Driven Model

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Implementation of DDM in SA
45% Implementation of DDM in VIC
40%
35%
30%
25%
20%
15%
10%
5%
0%
2008 2009 2010 2011 2012
VIC NSW QLD WA SA TAS NT ACT
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Impact of DDM on RTO enrolments & funding

		Enrolments increase	Private RTO funding pre DDM (% of total funding)	Private RTO funding post DDM (% of total funding)
VIC (2009	introduction)	31%	10%	39%
SA (2012	introduction)	16%	7%	23%

• All state and territory governments signed up to the COAG agreement on skills reform in 2012 requiring a transition to demand driven funding

• The introduction of the DDM in Victoria and South Australia has substantially increased VET enrolments and payments to private RTOs

• Other states have commenced implementation of the DDM in 2014

Implementation	of	**the DDM in Australia1 **	**the DDM in Australia1 **	**the DDM in Australia1 **
VIC				2009
SA				August 2012
TAS				January 2014
WA				January 2014
QLD				July 2014
NSW				January 2015

Source: NCVER, 2012

Note:

1. ACT and NT have not provided definitive statements on timing of implementation

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VET SECTOR OVERVIEW

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	VET	VET	Higher Education	Higher Education
Key Sources of	•	Employees wanting to up-skill	•	Students
Demand	•	Employees maintaining compulsory	•	Post-graduate students
		certification standards	•	Professionals
	•	Unemployed job seekers
	•	New workforce entrants
Key Features	•	More hands-on and practical approach	•	More theoretical approach
	•	Required for a number of professions	•	Required for a number of professional occupations
	•	Shorter duration (< 3 years)	•	Longer duration (> 3 years)
Qualifications	•	Certificates I – IV	•	Bachelor
	•	Diplomas	•	Honours
	•	Advanced Diploma	•	Graduate Diploma / Graduate Certificate
			•	Masters / Doctoral
Funding Sources	•	State and Federal Government funding	•	Higher Education Contribution Scheme
	•	Fee-for-service	•	Private funding
	•	VET FEE-HELP
	•	Private funding
Providers	•	TAFE Colleges	•	Universities
	•	RTOs	•	TAFE Colleges
			•	Private VET providers

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PRO-FORMA FY2014 RESULTS VS PROSPECTUS AND FY2013

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CRICOS ACQUISITION

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Acquisition of The Cantillon Institute, a CRICOS training business

The Cantillon Institute acquisition[1 ]

• The Cantillon Institute is an established Registered Training Organisation (RTO) focused on the fee for service international student market

• It has a Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) licence, which enables it to train international students

• Perth-based with a focus on commercial cookery and hospitality

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• Maximum purchase price of $2.8 million and is forecast to be EPS positive in FY 2016

Acquisition benefits

• Access to a national CRICOS licence

• Expansion of international student training into the larger Victorian and New South Wales markets, using Ashley Services’ existing national footprint

• Market reputation in commercial cookery and hospitality and ability to introduce these courses across NSW and VIC provides strong market opportunity under Ashley Services’ integrated labour hire business model

• Flow on effect: International students likely to prefer training providers that can also offer them employment options

International Student market

• International student fee for service education market in Australia estimated to be worth more than $15.6 billion[1 ]

• In the period 1 August 2013 to 31 July 2014, there were 494,625[1] enrolments of full fee paying students in Australia on student visas, a 12% increase over the previous year

• The vocational education and training (VET) component of the total overseas paying students represents 23.9% of total enrolments

• Forms part of Ashley Services’ strategy of diversification of its client and student base and strategy to pursue training for international students

• See announcement dated 29 September 2014 for more details

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UPDATE ON FUNDING CONTRACTS

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Successful resolution of minor funding contract issue

Successful resolution of notice to remedy default

Update on other Ashley Services funding contracts

• In September, Ashley Services announced the successful resolution of notice to remedy default on a minor funding contract (as detailed in the IPO prospectus)

• Ashley Services has recommenced funded enrolments in that State and the funding contract is now fully operational

• Ashley Services has 15 funding contracts across a number of state and Federal Government authorities

• Ashley Services has no outstanding contractual matters for any state funding contracts held and is in full compliance with all 15 state and Federal government funding contracts

• Ashley Services is compliant with the registration conditions of all four of its RTOs

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