ASHLEY SERVICES GROUP LIMITED — AGM Information 2019

Oct 23, 2019

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2019 Annual General Meeting

10:00am Thursday 24[th] October 2019

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▪ Opening Address from Chairman – Ian Pratt

▪ Business Update from Managing Director – Ross Shrimpton

▪ Q1 FY20 Financial Results – Chris McFadden CFO

▪ Resolutions as per Notice of Meeting

• General Business

• Close of Annual General Meeting

• NPAT for Q1 FY20 at $1.2m was unchanged on prior corresponding period

• EBITDA for Q1 FY20 at $2.0m is i $0.1m ( i 5%) on prior corresponding period ▪ Labour Hire i $0.2m i 7%

• Training h $0.1m i 136% off a low base

• Revenue h $7.5m h 10% with Labour Hire the driving force of this growth

• Q1 FY20 14wk v Q1 FY19 13wk, so adjusting both to 13wk Revenue h $1.6m h 2%

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$ million	Unaudited Q1 FY20	Unaudited Q1 FY19	Audited H1 FY19	Audited H2 FY19	Audited FY19
Revenue by segment
Labour Hire	79.9	72.5	144.2	135.4	279.6
Training	2.1	2.0	4.0	4.0	8.0
Total Revenue	82.0	74.5	148.2	139.4	287.6
EBITDA by segment
Labour Hire	2.8	3.0	5.8	5.6	11.5
Training	0.2	0.1	0.5	0.6	1.0
Corporate	(0.9)	(0.9)	(1.8)	(1.6)	(3.4)
EBITDA	2.0	2.1	4.5	4.6	9.1
Depreciation & Amortisation	(0.3)	(0.2)	(0.4)	(0.6)	(1.0)
EBIT	1.7	1.9	4.1	4.0	8.1
Net interest expense	(0.1)	(0.1)	(0.4)	(0.3)	(0.6)
Income tax expense	(0.4)	(0.6)	(1.0)	(1.1)	(2.1)
NPAT	1.2	1.2	2.7	2.7	5.4

• Labour Hire h $7.4m h 10%

• 13wk adjusted h $1.6m h 2%

• Action Workforce h $9.8m h 18%

  • 13wk adjusted h $5.0m h 9%

• Concept Engineering i $2.4m i 16% 13wk adjusted i $3.2m i 21%

• Training h $0.1m h 4%

First Quarter NPAT in line with prior year, with a lift in Action Workforce largely offsetting a decrease in Concept, which was still well down against what was a strong Q1 FY19 but with significantly improved revenue levels against more recent quarters

$ million	Unaudited Q1 FY20	Unaudited Q1 FY19	Audited FY19
Assets
Current Assets
Cash and cash equivalents	7.0	6.8	6.8
Trade and other receivables	30.4	33.2	28.5
Other assets	2.7	1.5	2.0
Total Current Assets	40.2	41.5	37.3
Non-Current Assets
Property, plant and equipment	1.1	1.5	1.1
Deferred tax assets	3.6	5.4	3.6
Intangible assets	3.3	3.1	3.2
Total Current Assets	8.0	10.0	7.9
Total Assets	48.2	51.5	45.3
Liabilities
Current Liabilities
Trade and other payables	19.2	18.3	13.9
Borrowings	-	4.0	-
Current tax payable	0.6	0.4	0.3
Provisions	2.4	2.7	2.3
Total Current Liabilities	22.2	25.4	16.5
Non-Current Liabilities
Deferred tax liabilities	1.0	1.8	1.0
Provisions	1.1	1.9	1.2
Total Current Liabilities	2.0	3.7	2.1
Total Liabilities	24.3	29.1	18.6
Net Assets	23.9	22.4	26.6

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▪ Cash balance has held firm over the first quarter despite the $3.9m dividend payment, reflecting the underlying cash flow strength

▪ Trade Receivables have largely held at consistent levels across the quarter but have improved significantly on the position one year ago

• Other Assets increase primarily related to increase in Prepayments and a slight lift in Training WIP

• Borrowings are undrawn despite the dividend payment, again reflecting underlying cash flow strength

• Trade Payables increase on year end FY19 primarily related to a $4m increase in Superannuation payable

• Net Assets now at $23.9m reflecting increase of $1.2m from Q1 NPAT less FY19 Dividend of $3.9m

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Unaudited Unaudited Audited
$ million
Q1 FY20 Q1 FY19 FY19
EBITDA 2.0 2.1 9.1
Change in working capital 3.1 (0.9) (3.0)
Net interest received / (paid) (0.1) (0.1) (0.6)
- -
Income tax received / (paid) (0.8)
- - -
Operating cash loss from discontinued operations
Other (0.6) (0.8) -
Net Cash from / (used in) operating activities 4.4 0.3 4.7
Property, plant and equipment (0.3) (0.3) (0.9)
Proceeds from sale of property, plant and equipment 0.2
Net Cash used in investing activities (0.3) (0.3) (0.7)
Net proceeds from / (prepayment of) borrowings - 4.0 -
Dividend Paid (3.9) (3.6) (3.6)
Net Cash from / (used in) financing activities (3.9) 0.4 (3.6)
Net Cash flow 0.2 0.4 0.4
Cash at beginning of period 6.8 6.4 6.4
Cash at end of period 7.0 6.8 6.8
Debt at end of period - 4.0 -
Net Cash / (Debt) at end of period 7.0 2.8 6.8
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• Net Cash from operating activities of $4.4m was very strong reflecting improved working capital position:

• Trade Receivables i $2.8m on Q1 FY19 despite stronger revenue, reflecting in part strong Q1 collections and also the shorter payment cycle of AWF (v Concept)

• Trade Payables h $0.9m primarily due to slightly higher statutory payment outstanding balances due to weekly timings

• Net Cash used in investing activities of $0.3m reflects modest investment primarily in our Training division

• Net Cash used in financing activities of

($3.9m) reflects $3.9m dividend payment

• Net Cash position of $7.0m is consistent with both year end FY19 and Q1 FY19, with dividend funded from operating cash

$ million	Unaudited Q1 FY20	Unaudited Q1 FY19	Audited FY19
Revenue	79.9	72.5	279.6
EBITDA	2.8	3.0	11.5
EBITDA margin %	3.46%	4.10%	4.10%
Labour hours charged (millions)	1.88	1.69	6.73

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• Labour Hire Revenue h $7.4m h 10% (13wk h $1.6m h 2%)

• Action Workforce h $9.8m h 18% (13wk h $5.0m h 9%) with 4 of our top 15 customers experiencing very strong average weekly growth (>25%)

• Concept Engineering i $2.4m i 16% (13wk i $3.2m i 21%) down against a strong Q1 FY19 ( h 42% on Q1 FY18) ▪ Q1 FY20 Avg weekly $0.89m, its strongest level since Q1 FY19 (FY19: Q1 $0.95m, Q2 $0.77m, Q3 $0.81m, Q4 $0.73m)

• Blackadder Recruitment i $25k i 0.9% (13wk i $0.2m i 7%)

• Revenue mix has swung back to AWF: ▪ AWF Q1 mix: FY20 81% v FY19 75%

• Concept Q1 mix: FY20 16% v FY19 21%

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• Labour Hire EBITDA at 3.46% ( i 64bps) due primarily to AWF v Concept mix shift

• Concept Recruitment Specialists launched in Q1, focusing on specialist permanent recruitment, but revenue is negligible during this initial phase

$ million	Unaudited Q1 FY20	Unaudited Q1 FY19	Audited FY19
Revenue	2.1	2.0	8.0
EBITDA	0.2	0.1	1.0
EBITDA margin %	7.47%	3.28%	12.98%

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▪ Training Division continues to perform well, operating with a focused range of qualifications on scope, across Western Australia, Victoria and Queensland

▪ Revenue is slightly up on prior year and the pipeline of students is strengthening, so in addition to the pleasing lift in profitability seen in the first quarter we remain confident that our Training division will continue to improve over FY20

▪ The Training division continues to deliver from a solid base built on its strong culture of Compliance

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	Proxies Cast
	Resolution	For	Against		Proxy Discretion		Abstain
	ITEM 2. Remuneration Report	17,353,106 100%		0		0	84,373,524
	ITEM 3. Re-election of Director: Ian Pratt	101,726,630 100%		0		0	0
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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 24 October 2019 (“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.