ASHLEY SERVICES GROUP LIMITED — AGM Information 2017

Nov 1, 2017

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Annual General
Meeting 2017
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1

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• Opening Address from Chairman – Ian Pratt

• Business Update from Managing Director – Ross Shrimpton

• Q1 FY18 Financial Results – Chris McFadden

• Resolutions as per Notice of Meeting

• General Business

• Close of Annual General Meeting

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Unaudited Unaudited Audited Audited Audited
$ million
Q1 FY18 Q1 FY17 H1 FY17 H2 FY17 FY17
Revenue by segment
Labour Hire 79.6 67.1 145.0 144.2 289.2
Training 2.1 11.3 18.3 7.2 25.5
Total Revenue 81.7 78.4 163.3 151.4 314.7
EBITDA by segment
Labour Hire 2.8 1.9 3.8 4.0 7.8
Training 0.1 2.1 2.5 0.4 2.9
Corporate (1.0) (1.3) (2.4) (2.6) (5.0)
Underlying EBITDA 1.9 2.7 3.9 1.8 5.7
Depreciation & Amortisation (0.1) (0.8) (1.6) (0.3) (1.9)
Underlying EBIT 1.8 1.9 2.3 1.5 3.8
Net interest expense (0.1) (0.1) (0.3) (0.4) (0.7)
Income tax credit / (expense) (0.6) (0.6) 2.6 (0.7) 1.9
Underlying NPAT 1.1 1.2 4.6 0.4 5.0
- -
Significant items (10.0) (0.7) (10.7)
NPAT from continuing operations 1.1 1.2 (5.4) (0.3) (5.7)
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• Q1 FY18 characterised by strong Labour Hire performance, reduction in Corporate costs and a minimal profit out of the reduced Training division

• Underlying EBITDA for Q1 FY18 at $1.9m is i $0.9m on Q1 FY17 due to impact of reduced Training division despite Labour Hire division strength and significant cost reduction

• Training i $2.0m

• Labour Hire h $0.9m h $51%

• Corporate Costs i $0.3m i $25%

• Revenue h 4.2% despite impact of significant reduction in Training revenue  Labour Hire h $12.5m h 18.6%

• Depreciation & Amortisation well down following significant asset write downs in FY17

• Income Tax expense of $0.6m notional only, tax effect position trued up at H1 and FY18

$ million	Unaudited Q1 FY18	Unaudited Q1 FY17	Audited FY17
Assets
Current Assets
Cash and cash equivalents	7.2	3.9	4.4
Trade and other receivables	33.7	34.8	26.4
Current tax receivable	-	-	0.3
Other assets	0.8	1.4	1.4
Total Current Assets	41.7	40.1	32.5
Non-Current Assets
Property, plant and equipment	1.5	5.6	1.2
Deferred tax assets	6.7	6.9	7.3
Intangible assets	3.2	9.7	3.3
Total Current Assets	11.4	22.2	11.8
Total Assets	53.1	62.3	44.3
Liabilities
Current Liabilities
Trade and other payables	20.7	17.7	17.2
Borrowings	5.0	5.9	0.7
Provisions	3.0	6.2	3.1
Total Current Liabilities	28.7	29.8	21.0
Non-Current Liabilities
Deferred tax liabilities	1.6	3.7	1.6
Provisions	1.7	0.6	1.7
Total Current Liabilities	3.3	4.3	3.3
Total Liabilities	32.0	34.1	24.3
Net Assets	21.1	28.2	20.0

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• Cash balance high at end Q1 due to fully drawn Borrowings late in Q1 due to end of month/quarter timing challenges  Fully repaid in week 2 Q2

• Trade Receivables and Trade Payables increases reflective of seasonal ramp up and an additional customer brought on during the quarter

• Property, Plant & Equipment and Intangible assets both well down on pcp reflecting FY17 write downs

• Provision reduction on pcp in part related to restructuring impact on Training workforce

• Net Assets increase since end FY17 reflects Q1 profitability

$ million	Unaudited Q1 FY18	Unaudited Q1 FY17	Audited FY17
Underlying EBITDA	1.9	2.7	5.7
Change in working capital	(3.8)	(7.6)	(4.9)
Net interest received / (paid)	0.2	(0.2)	(0.5)
Income tax received / (paid)	-	2.8	2.9
Operating cash loss from discontinued operations	(0.1)	(0.4)	(0.2)
Net Cash from/ (used in) operating activities	(1.8)	(2.7)	3.0
Property, plant and equipment	(0.4)	(0.1)	(0.7)
Payment for purchase of businesses		(0.6)	(0.6)
Proceeds from sale of property, plant and equipment			0.6
Proceeds from sale of intangibles			0.5
Payments for IP		(0.1)
Net Cash used in investing activities	(0.4)	(0.8)	(0.2)
Net proceeds from / (prepayment of) borrowings	5.0	5.7	(0.1)
Net Cash from/ (used in) financing activities	5.0	5.7	(0.1)
Net Cash flow	2.8	2.2	2.7
Cash at beginning ofperiod	4.4	1.7	1.7
Cash at end ofperiod	7.2	3.9	4.4
Debt at end ofperiod	5.0	5.9	0.7
Net Cash/ (Debt) at end ofperiod	2.2	(2.0)	3.7

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 Net Cash used in operating activities of $1.8m reflects seasonal ramp up of Labour Hire division  This compares very favourably with Q1 FY17 outflow of $2.7m or $5.5m excluding tax refund received

 Net Cash used in investing activities of $0.4m reflects technology investment primarily across our Labour Hire division  Net Cash from financing activities of $5.0m reflects fully drawn Borrowings late in Q1 due to end of period timing challenges  Fully repaid in week 2 Q2  Net Cash position of $2.2m after allowing for $5m debt position  As per announcement at year end FY17, assuming we continue to see these trends remain on track at the half year, we anticipate we will be revisiting the dividend policy with a view to returning to dividend payments in FY18

$ million	Unaudited Q1 FY18	Unaudited Q1 FY17	Audited H2 FY17	Audited FY17
Revenue	79.6	67.1	144.2	289.2
EBITDA	2.8	1.9	4.0	7.8
EBITDA margin %	3.58%	2.82%	2.7%	2.70%
Labour hours charged (millions)	2.03	1.69	3.53	7.13

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• Safety record maintained with one Lost Time Injury (LTI) in Q1 FY18 for an LTIFR of 0.59

• Successful integration of one large client during the quarter

• Weekly activity levels currently at December 2016 peak level and building

• Labour Hire Revenue h $12.5m h 18.6%, maintaining strong momentum established in FY17, esp. H2 FY17

• Action Workforce h 17.8%

• Concept Engineering h 29.8%

• Blackadder Recruitment h 3.1%

• Labour Hire EBITDA at 3.58% ( h 76bps) due in part to Concept mix growth but also an efficiency dividend with overheads i $0.1m i 3.4% on Revenue growth of h 18.6%

$ million	Unaudited Q1 FY18	Unaudited Q1 FY17	Audited H2 FY17	Audited FY17
Revenue	2.1	11.3	7.2	25.5
EBITDA	0.1	2.1	0.4	2.9
EBITDA margin %	5.67%	18.93%	5.56%	11.37%

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• Restructured Training Division now operates with a far reduced range of qualifications on scope, across a reduced geographical distribution

• Queensland and Western Australia operations, where funding contracts are in place, are both trading profitably

• Victoria continues primarily in train out mode with no current state funding contract with application submitted for calendar 2018-19

• We continue to invest in our Compliance function with good results in recent state audits

• Q1 minimal profit was within expectations and in line with H2 FY17

• In the absence of additional state funding the Training division is not anticipated to be a significant

contributor to overall group profitability

		Proxies Cast
		Resolution	For	Against	Proxy Discretion	Abstain
		ITEM 2. Re-election of Director: Ian Pratt	102,589,545	3,840	83,206	0
		ITEM 3. Election of Director: Chris McFadden	102,589,545	3,840	83,206	0
		ITEM 4. Remuneration Report	18,118,706	12,000	83,206	45,256
8

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Purpose and Date: This presentation contains general background information about the activities of Ashley Services Group Limited ABN 92 094 747 510 (“ASH”) as at 2 November 2017 (“Presentation Date”).

No financial advice: The information in this presentation does not constitute financial product advice and does not take into account the investment objectives, financial situation, taxation position or particular needs of any particular person. The information in this presentation should not be relied upon by any person as the sole basis for any decision regarding ASH securities. A person should obtain independent professional advice before making any investment decision regarding ASH securities.

No offer of securities: This presentation does not constitute, or form part of, an offer to sell or the solicitation of an offer to subscribe for or buy or sell any ASH securities. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law and accordingly any person in such jurisdictions should inform themselves about, any observe and comply with, any such restrictions.

Forward looking statements: This presentation contains certain forward looking statements and comments about future events, conditions and circumstances and expectations about the future financial performance of ASH. Forward looking statements can generally be identified by the use of words such as ‘expect’, ‘expected’, ‘anticipate’, ‘scheduled’, ‘ likely’, ‘intend’, ‘should’, ‘could’, ‘may’, ‘predict’, ‘plan’, ‘propose’, ‘will’, ‘believe’, ‘forecast’, ‘estimate’, ‘target’ and variations of such words and phrases or state that certain actions, events, circumstances or results ‘may, ‘could’, ‘would’, ‘might’, or ‘will’ be taken, occur or be achieved. Indications of, and guidance on, future earnings or financial position or performance are also forward looking statements. All estimates and projections contained in this presentation are illustrative only and ASH’s actual results may be materially affected by changes in economic or other circumstances which cannot be foreseen. The forward looking statements contained in this presentation are not guarantees or predictions of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond ASH’s control and which may cause actual results to differ materially from those expressed in the statements contained in this presentation. Accordingly all forward looking statements contained in this presentation should not be relied on as an indication or guarantee of future performance. Nothing in this presentation is, or should be relied on as, a promise or representation either as to future results or events or as to the reasonableness of any assumption or view expressly or impliedly contained in this presentation.

None of ASH, its directors or officers can give any assurance that the results implied by any of the forward looking financial information contained in this presentation will be achieved. Events and outcomes might differ in quantum and timing from the assumptions with material consequential impacts on such forward looking financial information.

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. All references to the pro forma results are to be read as unaudited. This presentation has been reported in Australian currency, unless otherwise stated.

No warranty: None of ASH or its related bodies corporate or any of their directors, officers, employees and advisers makes any representation or warranty (express or implied) in relation to the accuracy and completeness or likelihood of fulfilment of any forward looking statement or information contained in this presentation. None of the forward looking statements contained in this presentation will be updated for events that occur after the Presentation Date. While all due care and attention has been taken in the preparation of this presentation, any person reading this presentation should note that there are inherent risks and uncertainties involved in estimating future financial performance.