ASHLEY SERVICES GROUP LIMITED — AGM Information 2018

Oct 24, 2018

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2018 Annual General Meeting

10:00am Thursday 25[th] October 2018

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▪ Opening Address from Chairman – Ian Pratt

▪ Business Update from Managing Director – Ross Shrimpton

▪ Q1 FY19 Financial Results – Chris McFadden CFO

▪ Resolutions as per Notice of Meeting

• General Business

• Close of Annual General Meeting

• EBITDA for Q1 FY19 at $2.1m is h $0.2m ( h 8%) on prior corresponding period

• Labour Hire h $0.1m h 4%

• Corporate Costs i $0.1m i 9%

• Revenue i 9% reflecting previously announced major contract exit ( h 10% excluding contract exit impact)

• Labour Hire h $6.4m h 10% excl. contract exit impact (headline revenue was i $7.1m i 9%)

• Action Workforce h $2.2m h 4% excl. contract exit

• Concept Engineering h $4.4m h 42%

• Depreciation & Amortisation remains minimal following significant asset write downs in FY17

• Income Tax expense of $0.6m with FY19 seeing us move back into a tax paying mode

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$ million	Unaudited Q1 FY19	Unaudited Q1 FY18	Audited H1 FY18	Audited H2 FY18	Audited FY18
Revenue by segment
Labour Hire	72.5	79.6	166.0	160.1	326.1
Training	2.0	2.1	3.5	3.2	6.7
Total Revenue	74.5	81.7	169.5	163.3	332.8
EBITDA by segment
Labour Hire	3.0	2.9	5.6	6.2	11.8
Training	0.1	0.1	0.1	(0.1)	-
Corporate	(0.9)	(1.0)	(1.9)	(1.9)	(3.8)
EBITDA	2.1	1.9	3.8	4.2	8.0
Depreciation & Amortisation	(0.2)	(0.1)	(0.3)	(0.4)	(0.7)
EBIT	1.9	1.8	3.5	3.8	7.3
Net interest expense	(0.1)	(0.1)	(0.3)	(0.2)	(0.5)
Income tax credit / (expense)	(0.6)	(0.6)	(1.0)	(1.0)	(2.0)
NPAT	1.2	1.1	2.2	2.6	4.8

First quarter FY19 delivered EBITDA growth of 8% with another strong Labour Hire performance, continuing reduction in Corporate costs and a minimal contribution from Training

$ million	Unaudited Q1 FY19	Unaudited Q1 FY18	Audited FY18
Assets
Current Assets
Cash and cash equivalents	6.8	7.2	6.4
Trade and other receivables	33.2	33.7	29.8
Other assets	1.5	0.8	0.9
Total Current Assets	41.5	41.7	37.1
Non-Current Assets
Property, plant and equipment	1.5	1.5	1.3
Deferred tax assets	5.4	6.7	5.4
Intangible assets	3.1	3.2	3.2
Total Current Assets	10.0	11.4	9.9
Total Assets	51.5	53.1	47.0
Liabilities
Current Liabilities
Trade and other payables	18.3	20.7	15.7
Borrowings	4.0	5.0	-
Current tax receivable	0.4	-	-
Provisions	2.7	3.0	2.8
Total Current Liabilities	25.4	28.7	18.5
Non-Current Liabilities
Deferred tax liabilities	1.8	1.6	1.8
Provisions	1.9	1.7	1.9
Total Current Liabilities	3.7	3.3	3.7
Total Liabilities	29.1	32.0	22.2
Net Assets	22.4	21.1	24.8

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• Cash balance high at end Q1 due to Borrowings of $4m, drawn late in Q1 due to end of month/quarter timing challenges including public holiday(s)

• Fully repaid in first two days of Q2

• Trade Receivables increased despite exit of major contract, more than offset by a ramp up on a couple of customers and EOM receipts challenges caused by the Victorian public holiday on the final business day of the quarter

• Other Assets increase primarily related to Prepaid full year FY19 expenses

• Trade Payables increase on FY18 primarily related to increase in Superannuation payable

• Net Assets now at $22.4m reflecting increase of $1.2m from Q1 NPAT less FY18 Dividend of $3.6m

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Unaudited Unaudited Audited
$ million
Q1 FY19 Q1 FY18 FY18
EBITDA 2.1 1.9 8.0
Change in working capital (0.9) (3.8) (4.3)
Net interest received / (paid) (0.1) 0.2 (0.6)
Income tax received / (paid) - - 0.3
-
Operating cash loss from discontinued operations (0.1) (0.2)
Other (0.8) - -
Net Cash from / (used in) operating activities 0.3 (1.8) 3.2
Property, plant and equipment (0.3) (0.4) (0.7)
Proceeds from sale of property, plant and equipment 0.2
Net Cash used in investing activities (0.3) (0.4) (0.5)
Net proceeds from / (prepayment of) borrowings 4.0 5.0 (0.7)
Dividend Paid (3.6) - -
Net Cash from / (used in) financing activities 0.4 5.0 (0.7)
Net Cash flow 0.4 2.8 2.0
Cash at beginning of period 6.4 4.4 4.4
Cash at end of period 6.8 7.2 6.4
Debt at end of period 4.0 5.0 -
Net Cash / (Debt) at end of period 2.8 2.2 6.4
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• Net Cash from operating activities of $0.3m is in contrast to our normal Q1 outflow pattern. Working Capital ($0.9m) with:

• Trade Receivables up by $3.4m despite major contract exit, offset by new/expanded customer and negative impact on EOM receipts of ending the quarter on a VIC public holiday

• Trade Payables up by $2.6m mainly due to increase in Superannuation payable

• Net Cash used in investing activities of $0.3m reflects modest investment in our Training division and some minor leasehold improvements across the group

• Net Cash from financing activities of $0.4m reflects $3.6m Dividend payment and $4m Borrowings drawn late in Q1 due to end of period timing challenges

• Net Cash position of $2.8m after allowing for $4m debt position

$ million	Unaudited Q1 FY19	Unaudited Q1 FY18	Audited FY18
Revenue	72.5	79.6	326.1
EBITDA	3.0	2.9	11.8
EBITDA margin %	4.10%	3.58%	3.61%
Labour hours charged (millions)	1.69	2.03	7.63

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• Safety performance continues to exhibit industry best practice with zero Lost Time Injuries (LTI) in Q1 FY19

• Successful integration of two new large clients during the quarter and expansion nationally of two existing customers

• Labour Hire Revenue h $6.4m h 10% excl. contract loss impact (headline revenue was i $7.1m i 9%) ▪ Action Workforce h 4% excl. contract loss

• Concept Engineering h 42%

• Blackadder Recruitment i 5.9%

• Revenue mix has changed following the AWF revenue contraction due to major contract exit ▪ AWF Q1 mix: FY19 75% v FY18 83%

• Concept Q1 mix: FY19 21% v FY18 13%

• Labour Hire EBITDA at 4.10% ( h 52bps) due primarily to Concept mix shift

$ million	Unaudited Q1 FY19	Unaudited Q1 FY18	Audited FY18
Revenue	2.0	2.1	6.7
EBITDA	0.1	0.1	0.0
EBITDA margin %	3.28%	5.67%	0.0%

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▪ Training Division continues to operate on a narrow range of qualifications on scope, across Western Australia, Queensland and Victoria ▪ Western Australia continues to trade profitably ▪ Queensland is trading near breakeven with the Telco training area performing well whilst we are in the process of growing our job network focused business ▪ Victoria is also near breakeven with our Civil training performing particularly well ▪ We continue to have a strong culture of Compliance and have continued to deliver good results in recent state audits

▪ Q1 minimal profit was slightly below expectations but we believe the division to be well placed to improve over the balance of FY19

	Proxies Cast
	Resolution	For	Against		Proxy Discretion	Abstain
	ITEM 2. Re-election of Director: Ross Shrimpton	98,745,563		0	3,304,842	2,649,522
	ITEM 3. Remuneration Report	17,389,101		0	4,842	2,888,561
	ITEM 4. Appointment of auditor	98,745,563		0	3,304,842	2,649,522
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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 25 October 2018 (“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.

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.