ASHLEY SERVICES GROUP LIMITED — AGM Information 2020

Oct 21, 2020

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Labour Hire Recruitment |

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Training

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2020 ANNUAL GENERAL MEETING

10:00am Thursday 22 October 2020

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▪ Opening Address from Chairman – Ian Pratt

▪ Business Update from Managing Director – Ross Shrimpton

▪ Q1 FY21 Financial Results – Chris McFadden CFO

▪ Resolutions as per Notice of Meeting

• General Business

• Close of Annual General Meeting

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• NPAT for Q1 FY21 at $2.0m was up $0.3 million on the prior corresponding period

• EBITDA for Q1 FY21 at $3.4m is h $0.5m ( h 19%) on prior corresponding period

• Labour Hire h $0.1m h 2%

• Training h $0.4m with $0.2m coming from The Instruction Company (TIC)

• Revenue i $6.7m i 7% ( i $0.9m i 1% excl 14 week impact*) with the decline wholly Labour Hire related * 13 week v FY20 14 week, impact $5.8m

▪ Labour Hire i $6.6m i 7%

• i $0.8m i 1% excl 14 week impact*

$ million	Unaudited Q1 FY21	Unaudited Q1 FY20	Audited H1 FY20	Audited H2 FY20	Audited F20
Revenue by segment
Labour Hire	85.1	91.7	179.0	150.5	329.5
Training	2.1	2.1	4.4	2.9	7.3
Total Revenue	87.2	93.8	183.4	153.4	336.8
EBITDA by segment
Labour Hire	3.7	3.6	7.2	5.3	12.5
Training	0.6	0.2	0.8	-	0.8
Corporate	(0.9)	(0.9)	(1.9)	(1.7)	(3.6)
EBITDA	3.4	2.9	6.1	3.6	9.7
Depreciation & Amortisation	(0.5)	(0.3)	(1.2)	(0.8)	(2.0)
EBIT	2.9	2.6	4.9	2.8	7.7
Net interest expense	(0.1)	(0.1)	(0.3)	(0.3)	(0.6)
Income tax expense	(0.8)	(0.8)	(1.2)	(0.8)	(2.0)
NPAT	2.0	1.7	3.4	1.7	5.1

• Training in line with Q1 FY20 due in part to $0.4m revenue from the newly acquired TIC

Q1 FY21 profitability up on prior year, chiefly due to revenue lift in CCL, improved Training profitability and the first quarter TIC contribution

Labour Hire (excl CCL) was down slightly on revenue declines in Concept Engineering and Concept Recruitment against pre-COVID Q1 FY20 and the impact of Q1 FY20 14 weeks v Q1 FY21 13 weeks

$ million	Unaudited Q1 FY21*	Unaudited Q1 FY20**	Audited FY20***
Assets
Current Assets
Cash and cash equivalents	5.1	7.0	8.1
Trade and other receivables	37.9	30.4	29.4
Other assets	2.9	2.7	1.9
Total Current Assets	46.0	40.2	39.4
Non-Current Assets
Property, plant and equipment	1.0	1.1	1.1
Deferred tax assets	4.7	3.6	4.7
Right-of-use assets	2.1	-	2.3
Intangible assets	10.4	3.3	9.3
Other assets	-	-	0.1
Total Current Assets	18.1	8.0	17.5
Total Assets	64.1	48.2	56.9
Liabilities
Current Liabilities
Trade and other payables	25.8	19.2	18.5
Borrowings	2.4	-	-
Current tax payable	1.8	0.6	1.6
Dividends payable	-	-	0.4
Lease liabilities	0.3	-	0.7
Other liabilities	1.4	-	1.4
Provisions	2.7	2.4	2.5
Total Current Liabilities	34.5	22.2	25.1
Non-Current Liabilities
Deferred tax liabilities	0.8	1.0	0.8
Lease liabilities	1.7	-	1.7
Other liabilities	2.7	-	2.8
Provisions	0.6	1.1	0.7
Total Current Liabilities	5.8	2.0	5.9
Total Liabilities	40.3	24.3	31.1
Net Assets	23.7	23.9	25.8

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• Cash balance down $3m from end FY20 – refer cash flow comments

• Trade Receivables have grown since year end largely due to growth in CCL infrastructure project based labour with longer terms

• Intangibles increase reflects TIC acquisition but still to be finalised through acquisition accounting

• Borrowings are $2.4m at end of quarter following payment of dividend and acquisition in Q1 as well as the working capital swings inherent in the CCL infrastructure labour growth

• Trade Payables increase on end FY20 primarily related to a $3.2m increase in Superannuation payable, $1.5m in Payroll Tax deferral and PAYE timing differences of $1.4m

• Net Assets now at $23.7m reflecting decrease of $1.9m on FY20 being Q1 NPAT of $2.0m less FY20 Dividend of $3.9m

• Q1 FY21 Balance Sheet includes CCL but excludes TIC (acquisition accounting not yet finalised)

• ** Q1 FY20 Balance Sheet excludes CCL (acquisition not concluded until Dec-19) & TIC (pre-acquisition)

• *** FY20 Balance Sheet includes CCL but excludes TIC (pre-acquisition)

$ million	Unaudited Q1 FY21*	Unaudited Q1 FY20**	Audited FY20***
EBITDA	3.4	2.0	9.7
Change in working capital	(1.5)	3.1	7.8
Net interest/tax received / (paid)	(0.7)	(0.1)	(2.8)
Operating cash loss from discontinued operations	-	-	(0.3)
Other	(0.7)	(0.6)	(0.3)
Net Cash from/ (used in) operating activities	0.5	4.4	14.1
Property, plant and equipment	(0.1)	(0.3)	(0.6)
Payment for purchase of businesses	(1.1)		(4.8)
Net Cash used in investing activities	(1.1)	(0.3)	(5.4)
Net proceeds from / (prepayment of) borrowings	2.4	-	-
Repayment of lease liabilities	(0.5)	-	(1.0)
Dividend Paid	(4.3)	(3.9)	(6.5)
Net Cash from/ (used in) financing activities	(2.3)	(3.9)	(7.5)
Net Cash flow	(2.9)	0.2	1.3
Cash at beginning ofperiod	8.1	6.8	6.8
Cash at end ofperiod	5.1	7.0	8.1
Debt at end ofperiod	2.4	-	-
Net Cash/ (Debt) at end ofperiod	2.7	7.0	8.1

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▪ Net Cash from operating activities of $0.5m

• Q1 FY21 EBITDA $3.4m less

• Working Capital demand of $1.5m

  • Trade Receivables h $8.5m – refer Balance Sheet comments

• Trade Payables h $7.3m – refer Balance Sheet comments

• ▪ Tax & Other payments $1.4m

• Net Cash used in investing activities of ($1.1m) reflects initial payment relating to acquisition of The Instruction Company

• Net Cash used in financing activities of ($2.3m) reflects $4.3m in dividend payments and draw down of borrowings through invoice financing facility

• Net Cash position of $2.7m is down on year end FY20 due to a combination of dividend and acquisition payments as well as the working capital demand increase due to growth in CCL infrastructure labour

• Q1 FY21 Cash Flow includes CCL & TIC

• ** Q1 FY20 Cash Flow excludes CCL (acquisition not concluded until Dec-19) & TIC (pre-acquisition) *** FY20 Cash Flow includes CCL but excludes TIC (pre-acquisition)

$ million	Unaudited Q1 FY21	Unaudited Q1 FY20	Audited FY20
Revenue	85.1	91.7	329.5
EBITDA	3.7	3.6	12.5
EBITDA margin %	4.34%	3.98%	3.79%
Labour hours charged (millions)	1.785	1.984	7.001

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• Labour Hire Revenue i $6.6m i 7% ( i $0.8m i 1% excl 14 week impact*)

• 13 week v FY20 14 week, impact $5.8m

• Action Workforce i $3.1m i 5% ( h $1.7m h 3% excl 14 week impact*)

  • 13 week v FY20 14 week, impact $4.8m ▪ Customer exited 3PL contract $4.4m

• Concept Engineering i $4.7m i 38% ( i $3.7m i 32% excl 14 week impact*)

  • 13 week v FY20 14 week, impact $1.0m

▪ Concept Recruitment i $0.7m i 24%

• CCL h $1.9m h 16% with strong growth in infrastructure projects leading the way

• Labour Hire EBITDA at 4.34% ( h 36bps) due primarily to growth in CCL

• Concept Recruitment Specialists is still dealing with a very soft permanent recruitment market impacted by Covid restrictions

$ million	Unaudited Q1 FY21	Unaudited Q1 FY20	Audited FY20
Revenue	2.1	2.1	7.3
EBITDA	0.6	0.2	0.8
EBITDA margin %	28%	7.47%	11.20%

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▪ Training Division has faced a challenging quarter given Covid restrictions particularly in Victoria. We continue to operate across a focused range of qualifications on scope, across Western Australia, Victoria and Queensland

▪ The Instruction Company acquisition announced during Q1 has performed well and is on track with the expectations underlying the business case behind the acquisition

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

	Proxies Cast
	Resolution	For	Against		Proxy Discretion		Abstain
	ITEM 2. Remuneration Report	25,936,975		0		0	84,749,531
	ITEM 3. Re-election of Director: Christopher McFadden	110,055,876		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 22 October 2020 (“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.